Hostname: page-component-848d4c4894-pftt2 Total loading time: 0 Render date: 2024-06-07T16:30:46.424Z Has data issue: false hasContentIssue false
  • English
  • Français

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
Get access Rights & Permissions [Opens in a new window]

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

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Australian Bureau of Statistics (ABS) (2014a) Australian National Accounts: finance and wealth. Cat. No. 5232.0, September. Available at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5232.0 (accessed 22 April 2017).Google Scholar
Australian Bureau of Statistics (ABS) (2014b) Managed funds, Australia. Cat. No. 5655.0, December. Available at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5655.0 (accessed 22 April 2017).Google Scholar
Australian Bureau of Statistics (ABS) (2015) Australian System of National Accounts. Concepts, sources and methods, Australia. Cat. No. 5216.0. Available at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5216.0 (accessed 22 April 2017).Google Scholar
Australian Bureau of Statistics (ABS) (2016a) Australian National Accounts: National income, expenditure and product. Cat. No. 5206.0. Available at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5206.0 (accessed 22 April 2017).Google Scholar
Australian Bureau of Statistics (ABS) (2016b) Australian System of National Accounts, 2014–15 (Cat. No. 5204.0). Available at: http://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/0F04061CB20BC0A3CA258059000EE63D?opendocumentGoogle Scholar
Australian Bureau of Statistics (ABS) (various years) Yearbook Australia. Cat. No. 1301.0. Canberra, ACT, Australia: ABS.Google Scholar
Australian Council of Social Services (ACOSS) (2015) Inequality in Australia. A Nation Divided. Strawberry Hills, NSW, Australia: ACOSS.Google Scholar
Australian Private Equity and Venture Capital Association (AVCAL) (2014) 2014 yearbook. Australian private equity and venture capital activity report. November. Sydney, NSW, Australia: AVCAL.Google Scholar
Australian Securities and Investments Commission (ASIC) (2013) Dark liquidity and high-frequency trading. Report 331. Available at: http://asic.gov.au/regulatory-resources/find-a-document/reports/rep-331-dark-liquidity-and-high-frequency-trading/ (accessed 22 April 2017).Google Scholar
Australian Securities and Investments Commission (ASIC) (2015) Snapshot of the Australian Hedge Funds Sector. Report 439. Available at: http://download.asic.gov.au/media/3278608/rep439-published-1july2015.pdf (accessed 22 April 2017).Google Scholar
Battellino, R (2000) Australian financial markets: looking back and looking ahead. Reserve Bank of Australia Bulletin, March, pp. 16–25.Google Scholar
Bergman, M (2016) The rise in dividend payments. Reserve Bank of Australia Bulletin, March, pp. 47–56.Google Scholar
Black, S, Kirkwood, J (2010) Ownership of Australian equities and corporate bonds. Reserve Bank of Australia Bulletin, September, pp. 25–34.Google Scholar
Black, S, Kirkwood, J, Rai, A, et al . (2012) A history of Australian corporate bonds. Research Discussion Paper, 2012-09. Sydney, NSW, Australia: Reserve Bank of Australia.Google Scholar
Brown, C, Handley, J, Lamba, A (2015) On-market share buybacks in Australia: disclosure, transparency and regulation. Available at: https://www.business.uq.edu.au/sites/default/files/events/files/buybacks_policy_paper_oct_16_2015.pdf (accessed 22 April 2017).Google Scholar
Bryan, D (2010) The duality of labour and the Financial Crisis. Economic and Labour Relations Review 20(2): 49–60.CrossRefGoogle Scholar
Burkhauser, R, Hahn, M, Wilkin, R (2015) Measuring top incomes using tax record data: a cautionary tale from Australia. Journal of Economic Inequality 13(2): 181–205.CrossRefGoogle Scholar
Business Review Weekly (BRW) (2013) Top 1000 companies. Business Review Weekly (BRW) 35(2): 28–45.Google Scholar
Callen, T, Morling, S, Pleban, J (1992) Dividends and taxation: a preliminary investigation. Research Discussion Paper 9211, October. Economic Group, Reserve Bank of Australia. Available at: https://www.rba.gov.au/publications/rdp/1992/pdf/rdp9211.pdf (accessed 22 April 2017).Google Scholar
Chan, S (2013) ‘I am King’: financialisation and the paradox of precarious work. Economic and Labour Relations Review 24(3): 362–379.CrossRefGoogle Scholar
Commonwealth of Australia (2014) Financial System Inquiry, Final Report. Canberra: Commonwealth of Australia.Google Scholar
Davis, G (2009a) Managed by the Market. How Finance Re-Shaped America. Oxford: Oxford University Press.Google Scholar
Davis, G (2009b) The rise and fall of finance and the end of the society of organizations. Academy of Management Perspectives 23(3): 27–44.CrossRefGoogle Scholar
Davis, G, Kim, S (2015) Financialization of the economy. Annual Review of Sociology 41: 203–221.CrossRefGoogle Scholar
Davis, G, Thompson, T (1994) A social movement perspective on corporate control. Administrative Science Quarterly 39(1): 141–173.CrossRefGoogle Scholar
Denk, O, Cournède, B (2015) Finance and income inequality in OECD countries. OECD Economics Department working papers no. 1224. Paris: OECD Publishing. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2649944 (accessed 22 April 2017).Google Scholar
Dignam, A (2007) Transplanting UK takeover culture: the EU takeovers directive and the Australian experience. International Journal of Disclosure and Governance 4(3): 148–166.CrossRefGoogle Scholar
Dignam, A, Galanis, M (2004) Australia inside-out: the corporate governance system of the Australian listed market. Melbourne University Law Review 28(3): 623–653.Google Scholar
Dollman, R, Kaplan, G, La Cava, G, et al. (2015) Household economic inequality in Australia. Research Discussion Paper RDP 2015-15. Reserve Bank of Australia. Available at: http://www.rba.gov.au/publications/rdp/2015/2015-15/references.html (accessed 22 April 2017).Google Scholar
Epstein, G (2005) Financialization and the World Economy. Northampton, MA: Edward Elgar Publishing.Google Scholar
Financial Stability Board (FSB) (2011) Peer review of Australia. Review report. 21 September. Available at: http://www.fsb.org/wp-content/uploads/r_110926b.pdf (accessed 22 April 2017).Google Scholar
Fletcher, M, Guttmann, B (2013) Income inequality in Australia. Economic Roundup, Issue 2, pp. 35–54. Australian Government, The Treasury. Available at: http://www.treasury.gov.au/PublicationsAndMedia/Publications/2013/Economic-Roundup-Issue-2/Economic-Roundup/Income-inequality-in-Australia (accessed 22 April 2017).Google Scholar
Greenville, J, Pobke, C, Rogers, N (2013) Trends in the distribution of income in Australia. Productivity Commission Staff working paper, March. Available at: http://www.pc.gov.au/research/supporting/income-distribution-trends/income-distribution-trends.pdf (accessed 22 April 2017).Google Scholar
Jackson, S, Chen, P (2012) Understanding the Occupy movement in Australia. Journal of Australian Political Economy 69: 5–28.Google Scholar
Krippner, E (2005) The financialization of the American economy. Socio-Economic Review 3(2): 173–208.CrossRefGoogle Scholar
Lazonick, W, O’Sullivan, M (2000) Maximizing shareholder value: a new ideology for corporate governance. Economy and Society 29(1): 13–35.CrossRefGoogle Scholar
Maddock, R (2013) Is the Australian finance sector too big? Available at: http://australiancentre.com.au/wp-content/uploads/2016/04/MMFC040713.pdf (accessed 18 May 2017).Google Scholar
Marshall, S, Anderson, K, Ramsay, I (2009) Are superannuation funds and other institutional investors in Australia acting like ‘Universal Investors’? Journal of Industrial Relations 51(4): 439–458.CrossRefGoogle Scholar
Martin, A, Kersley, H, Greenham, T (2014) Inequality and Financialisation: A Dangerous Mix. New Economics Foundation & Friedrich-Ebert-Stiftung. Available at: http://www.neweconomics.org/ (accessed 22 April 2017).Google Scholar
OECD (2015) In It Together: Why Less Inequality Benefits All. Paris: OECD Publishing. Available at: http://dx.doi.org/10.1787/9789264235120-en (accessed 21 March 2017).Google Scholar
Parham, D (2013) Labour’s share of growth in income and prosperity. Visiting Researcher Paper, September. Productivity Commission. Available at: http://www.pc.gov.au/research/supporting/income-prosperity/income-prosperity.pdf (accessed 22 April 2017).Google Scholar
Productivity Commission (2015) Workplace relations framework. Inquiry report. Vol. 1. No. 26, 30 November. Available at: http://www.pc.gov.au/inquiries/completed/workplace-relations/report/workplace-relations-volume1.pdf (accessed 22 April 2017).Google Scholar
Reserve Bank of Australia (RBA) (2005) Financial stability review. March. Available at: http://www.rba.gov.au/publications/fsr/2005/mar/pdf/0305.pdf (accessed 21 March 2017).Google Scholar
Reserve Bank of Australia (RBA) (2014) Submission to the Financial Systems Inquiry. March. Available at: http://www.rba.gov.au/publications/submissions/financial-sector/financial-system-inquiry-2014-03/pdf/financial-system-inquiry-2014-03.pdf (accessed 22 April 2017).Google Scholar
Riaz, S (2015) Bringing inequality back in: the economic inequality footprint of management and organizational practices. Human Relations 68(7): 1085–1097.CrossRefGoogle Scholar
Senate, Community Affairs References Committee (2014) Bridging our growing divide: inequality in Australia. The Extent of Income Inequality in Australia, December. Commonwealth of Australia. Available at: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Income_Inequality/Report (accessed 21 March 2017).Google Scholar
Stapledon, GP (1996) Institutional Shareholders and Corporate Governance. Oxford: Clarendon Press.Google Scholar
Stiglitz, J (2013) The Price of Inequality: How Today’s Divided Society Endangers Our Future. New York: WW Norton.CrossRefGoogle Scholar
Thompson, P (2003) Disconnected capitalism: or why employers can’t keep their side of the bargain. Work, Employment and Society 17(2): 359–378.CrossRefGoogle Scholar
Thompson, P (2013) Financialization and the workplace: extending and applying the disconnected capitalism thesis. Work Employment and Society 27(3): 472–488.CrossRefGoogle Scholar
van der Zwan, N (2014) Making sense of financialization. Socio-Economic Review 12(1): 99–129.CrossRefGoogle Scholar
Walby, S (2013) Finance versus democracy? Theorizing finance in society. Work, Employment and Society 27(3): 489–507.CrossRefGoogle Scholar
Westcott, M (2013) Creative destruction and transmission of business: a preliminary analysis. In: Proceedings of the Work, Employment and Employment Relations in an Uneven Patchwork World: 27th conference of the Association of Industrial Relations Academics of Australia and New Zealand (AIRAANZ), Fremantle, WA, Australia, 8 February, pp. 248–257.Google Scholar
Westcott, M, Murray, J (2014) Ambivalent finance and protected labour: alternative investments and labour management in Australia. In: Gospel, H, Pendleton, A, Vitols, S (eds) Financialization, New Investment Funds, and Labour: An International Comparison. Oxford: Oxford University Press, pp. 115–147.CrossRefGoogle Scholar
Wilkins, R (2015) Measuring income inequality in Australia. The Australian Economic Review 48(1): 93–102.CrossRefGoogle Scholar
World Bank (2017) Global Financial Development database. Available at: http://databank.worldbank.org/data/home.aspx (accessed 22 April 2017).Google Scholar
World Federation of Exchanges (WFE) (2017) Statistics. Available at: http://www.world-exchanges.org/home/ (accessed 21 March 2017).Google Scholar