Financial fragility plus stagnant wages produce debt-driven growth regimes prone to crisis

Evidence

Accumulation scholars argue that the volatility of asset prices and the accumulation of debt have heightened systemic risk in financialized capitalism, making it prone to reoccurring crisis (Stockhammer, 2012). Drawing on Keynes and Minsky, accumulation scholars explain how increased financial fragility in combination with declining wages has created a growth regime that relies on debt-driven consumption and housing bubbles—‘an enormous superstructure of debt, critically undermining its own liquidity and solvency’ (Lapavitsas, 2009, p. 138). It is therefore not surprising that the subprime mortgage crisis of 2008 has been regarded by accumulation scholars as the culmination of the financialization process, thus rejecting alternative explanations of regulatory failure or investor irrationalities (Blackburn, 2008; Lapavitsas, 2009; Deutschmann, 2011). — Natascha van der Zwan, Making Sense of Financialization, 34

Categorization

• DEFINE: This is a crisp statement of the Minsky-Keynes accumulation-school position on how financialization generates crisis — foundational for the reader’s finance syllabus.
• XREF: Connects to the reader’s financialization reading on debt-driven consumption and the 2008 crisis as systemic, not regulatory, failure. — connects to: REBLL growth was built on foreign borrowing and structurally vulnerable to external shocks — Mark Blyth, Austerity: The History of a Dangerous…, 595; The Baltic austerity ‘success stories’ grew from unstable credit-bubble economies — Mark Blyth, Austerity: The History of a Dangerous…, 603; Deindustrialization made Spain’s growth model dependent on external income and debt — Mark Blyth, Austerity: The History of a Dangerous…, 186 (+5 more)
• corroborated: 2 independent passages support this claim — Natascha van der Zwan, Making Sense of Financialization, 34

Related

• Financial bubbles burst when current production cannot repay loans borrowed from the future. (similarity 0.81)
• Financial deepening is linked to bankruptcies, bank failures, and recession. (similarity 0.81)
• The 2008 subprime crisis confirmed central predictions of financialization studies. (similarity 0.80)
• Capital-account liberalization creates surplus-deficit imbalances and boom-bust cycles (similarity 0.79)

Broader Connections

• Capital-account liberalization creates surplus-deficit imbalances and boom-bust cycles #expands (0.80) — Natascha van der Zwan, Making Sense of Financialization, 34
• Financialization theory links wage-compromise collapse and shareholder value to inequality #expands (0.75) — Natascha van der Zwan, Making Sense of Financialization, 109
• Each great economic transformation produces its own characteristic type of crisis #exemplifies (0.72) — Yanis Varoufakis, Technofeudalism, 517