Financial Crisis, Inequality, and Capitalist Diversity: A Critique of the Capital as Power Model of the Stock Market

Joseph Baines, Sandy Brian Hager*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)
111 Downloads (Pure)

Abstract

The relationship between inequality and financial instability has become a thriving topic of research in heterodox political economy. This article offers the first critical engagement with one framework within this wider literature: the Capital as Power (CasP) model of the stock market developed by Shimshon Bichler and Jonathan Nitzan. Specifically, we extend the CasP model to other advanced capitalist countries, including Germany, France, the United Kingdom, and Japan. Our findings affirm the core prediction of the CasP model, showing that unequal power relations reliably predict future stock market performance. Yet when it comes to the CasP model’s explanation of why power relations predict stock market returns, our findings are more ambiguous. We find little empirical support for the claims that capitalist power is dialectically intertwined with systemic fear, and that systemic fear and capitalised power are mediated through strategic sabotage. The main lesson of our analysis is that any model of the stock market must be attentive to the geographical unevenness and continued national diversity in capitalist development.

Original languageEnglish
Pages (from-to)122-139
Number of pages18
JournalNew Political Economy
Volume25
Issue number1
Early online date9 Jan 2019
DOIs
Publication statusPublished - 2 Jan 2020

Keywords

  • capital as power
  • comparative capitalisms
  • Financial crisis
  • inequality
  • stock market

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