Financialisation and Income Distribution in Australia: Theory and Evidence

Abstract

While rising income inequality and financialisation are widely recognised as prominent features of advanced capitalist economies, theoretical explanations of these phenomena, and how they interact, have varied significantly. Many of these explanations involve the construction of all-encompassing cross-country narratives, which result in a lack of analytical specificity. By framing inequality through the lens of the functional distribution of income, and focusing on the case study of Australia, this thesis aims to paint a detailed picture of what the financialisation-income distribution nexus can look like in practice. The key theoretical approach adopted is a Sraffian model of financialisation, which proposes that an increase in the relative size of the financial sector, higher financial sector productivity, and reduced labour bargaining power, lead to a fall in the wage share of income. This model is synthesised with other heterodox perspectives in order to establish a nuanced understanding of the key historical events that have driven the financialisation process in Australia. In doing so, this thesis seeks to disentangle Australia’s experience of financialisation and a falling wage share from the ambiguity of neoliberalism, deregulation, and globalisation.