Secular stagnation and concentration of corporate power

By Joan R. Rovira

PKES Working Paper 1704

May 2017

We identify a set of key stylised facts characterising the evolution of the seven largest advanced economies from the 1960s to 2015 and develop a small one-sector model of growth and distribution broadly consistent with these facts. The model is used to explore the relationship between falling trend growth, the re-distribution of aggregate income towards profits and the concentration of corporate power and wealth. Theory is confronted with history to illustrate how changes in social structure can affect economic behaviour and performance. We argue that finance-led corporate restructuring, involving debt-financed corporate transactions, may have played a crucial role in shaping long-term patterns of growth and distribution.

Keywords: Stagnation, Distribution, Growth, Financialisation, Heterodox Economics

JEL classification: B22 E11 E12 E44 E65 G01 O11