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Financialisation and inequality in Australia

Published online by Cambridge University Press:  01 January 2023

Mark Westcott  and
John Murray
Mark Westcott*
Affiliation:
University of Sydney, Australia
John Murray
Affiliation:
Stockholm University, Sweden
*
Mark Westcott, School of Business, University of Sydney, Sydney, NSW 2006, Australia. Email: mark.westcott@sydney.edu.au
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Abstract

The process of financialisation has been cast as a major contributor to increasing inequality of wealth and income in a number of advanced industrialised economies, but the nature of the link requires precise clarification. In this article, we argue that financialisation in Australia has advanced inequality, but in a particular way. Charting several features of ‘financialisation of the macroeconomy’, we accept that this process has contributed to increased inequality in the sense that the wealthy have increased their wealth faster than households and individuals at the lower end of the wealth distribution. However, there is limited Australian evidence to suggest that income redistribution has occurred as a result of the ‘financialisation of the firm’. At the level of the firm, increased inequality of wealth can be attributed directly to financialisation if firm practices are oriented to increasing shareholder value at the expense of returns to other stakeholders such as workers or suppliers, and increased income inequality can be linked specifically to financialisation through increases in earnings to financial agents. We suggest several reasons for the relative absence of a firm-level dimension of financialisation but caution that such a trend remains possible, particularly if regulation of the labour market is weakened.

Keywords

P16E40G30J01Financialisation of the firmfinancialisation of the macroeconomyincome redistributioninequalityinvestmentwealth distribution
Type
Articles
Information
The Economic and Labour Relations Review , Volume 28 , Issue 4: Financialisation, construction work and inequality , December 2017 , pp. 519 - 537
Copyright
Copyright © The Author(s) 2017

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