sector in GDP, 1995–2018
7.5 Evolution in economy-wide nominal ULC (1995 = 100), 1995–2019
7.6 Current account balance of selected EMU countries (in billion US dollars), 1997–2019
7.7 Cross-country falls in consumption and pre-crisis debt levels
7.8 Distribution of net housing wealth in the United States, 2000–19
7.9 Distribution of financial wealth in the United States, 2009 and 2019
7.10 Interest rates on ten-year sovereign bonds of selected Eurozone countries, 1995–2018
7.11 Core inflation rates in the Eurozone, January 2007–December 2019
7.12 Five-year moving average of GDP growth in the United States, Eurozone and United Kingdom, 1965–2018
8.1 Top 1 per cent vs bottom 50 per cent national income shares: United States vs Western Europe, 1980–2016
8.2 Labour income share: CMEs, MMEs vs LMEs, 1970–2012
8.3 Mean vote share of right-wing and left-wing populist parties, 1980–2020
8.4 Greenhouse gas emissions (in gigatonnes), 1960–2018
8.5 Fiscal support measures during the coronavirus crisis (in percentage of GDP), mid-April 2020
Tables
1.1 Total income growth and inequality, 1980–2016
1.2 Distribution of net wealth in the OECD world, 2015 or latest available year
2.1 Union membership as a percentage of non-agricultural workers, pre-World War I to 1975
2.2 Left percentage of valid votes, pre-World War I to 1980
2.3 Indicators of growth models, 1995–2007, and income inequality, 1980–2007
3.1 How inflation influences the tax treatment of interest income
3.2 Real rentier fraction of national income, selected countries, 1970s–1990s
3.3 Keynesian and neoliberal macroeconomic regimes compared
4.1 Three worlds of welfare capitalism
4.2 Unemployment rate and contribution of exports to GDP growth (in percentages), 1960–2010
5.1 Average CEO compensation in the US economy, 1973–2013
5.2 CEO-to-worker compensation ratio in selected countries: actual vs ideal, 2012
5.3 Selected measures of corporate finance ownership, 1990–2010
6.1 Increasing banking concentration in the OECD: C5 ratio, 1985–99
6.2 Government support measures of financial institutions (in billion euros unless stated otherwise), October 2008–May 2010
6.3 National index of approach to credit, 2000s
7.1 Sectoral financial balances in selected OECD countries (in percentage of GDP), 1995–2007
7.2 Average annual change in nominal exchange rate and inflation, 1980s and 1990–8
Boxes
1.1 Stocks and bonds
1.2 The market price mechanism
1.3 Supply-side versus demand-side macroeconomics
2.1 The Keynesian revolution in macroeconomics
2.2 The demise of the Bretton Woods system
3.1 The fiscal multiplier
3.2 Instruments of the central bank
3.3 The ‘policy ineffectiveness’ thesis: from monetarism to New Keynesianism
3.4 Negative demand shock in sovereign bond markets
4.1 Centralized wage-setting: principles
4.2 Hartz reforms and labour market dualization in Germany
5.1 Apple’s business strategy
5.2 Capital markets
6.1 CDO, SIV and ABCP
6.2 Mortgage equity withdrawal: an illustration
7.1 The balance of payments
Introduction
In 2008 the world economy was shattered by the deepest financial crisis since the Great Depression of the 1930s (and, according to some criteria, even the severest financial crisis in global history). For more than a decade, capitalism in the advanced market economies has been in the throes of a threefold crisis.1 The global financial crisis was first and foremost a banking crisis stemming from the fact that private banks extended too much credit to households, creating bubbles in housing markets. When these bubbles collapsed, many large US and European banks had to be bailed out by their governments. Public debt ratios skyrocketed in the wake of the crisis as governments had to borrow massive amounts of money to save the banking industry and stabilize the economy, triggering a fiscal crisis in the weaker member states of the Eurozone. To reduce the public debt burden and regain the confidence of the markets, governments in the entire advanced capitalist world imposed drastic cuts in social spending and other harsh austerity policies on their citizens. This resulted in a crisis of the real economy, which manifested itself in persistently low economic growth (or even stagnation) and, in some countries, stubbornly high unemployment levels. The economic fallout of the lockdown measures in 2020 to contain the spread of the coronavirus further deepened these instabilities and plunged advanced capitalism into the worst existential crisis since the Great Depression of the 1930s.
The ‘Great Lockdown’ of 2020 came as an external, ‘exogenous’ shock to the advanced capitalist system. The structural causes of the global financial crisis of 2008, by contrast, were ‘endogenous’ to this system: what happened in 2008 has to be understood as an outgrowth of the financialization of the economy and the outcome of growing levels of income and wealth inequality. In almost all rich countries, since the 1980s the gains of economic growth were distributed unequally. In 2016, the share of total national income accounted for by just