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Cambridge Journal of Economics 2004 28(5):719-741; doi:10.1093/cje/beh032
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Cambridge Journal of Economics, Vol. 28, No. 5, © Cambridge Political Economy Society 2004; all rights reserved

Financialisation and the slowdown of accumulation

Engelbert Stockhammer*

Address for correspondence: Department of Economics, VWL 1, Wirtschaftsuniversität Wien, Wien, Austria; email: engelbert.stockhammer{at}wu-wien.ac.at

Over the past decades, the financial investment of non-financial businesses has been rising, and the accumulation of capital goods has been declining. The first part of the paper offers a novel theory to explain this phenomenon. Financialisation, the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus changed management priorities, leading to a reduction in the desired growth rate. In the second part, the link between accumulation and financialisation is tested econometrically by means of a time series analysis of aggregate business investment for the USA, the UK, France and Germany. Extensive tests of robustness are performed. For the first three countries, evidence supporting the negative effect of financialisation on accumulation is found.

Key Words: Financialisation • Business investment • Class analysis • Theory of the firm

JEL classifications: E2, D2, G2

Manuscript received November 13, 2000; final version received November 4, 2002.


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