Global imbalances and modern capitalism: a structural approach to understanding the present economic crisis

Keith Cowling, Stephen P. Dunn, Philip R. Tomlinson

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

The world economy is riven by very large imbalances, with the U.S. economy exhibiting high levels of consumption but low savings ratios and a high current account deficit while China provides the mirror opposite. In this paper, we explore the structural causes of these imbalances that underpin the current global economic crisis. A key focus here is on the corporate sector in the United States, which has been instrumental in creating unsustainable consumptionist tendencies through the use of excessive advertising strategies. In China, changing demographics and market reforms have led to a significant rise in precautionary saving. Correcting the current imbalances requires recognizing the underlying characteristics of both modern and nonmodern capitalist economies, with appropriate responses being structural in nature in addition to any macroeconomic adjustments.
Original languageEnglish
Pages (from-to)575-596
Number of pages22
JournalJournal of Post Keynesian Economics
Volume33
Issue number4
DOIs
Publication statusPublished - 2011

Keywords

  • modern capitalism
  • advertising
  • consumption and saving
  • global imbalance
  • corporate strategy

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