Globalization, Inequality and Financial Instability: Confronting the Marx, Keynes and Polanyi Problems in the Advanced Capitalist Economies

Abstract

Three unique features of the contemporary period of globalization stand out in contrast with the epoch of integration early in the 20th century: the rise of manufacturing capacity in less-developed countries; the expansion in cross-border financial trading; and the fact that integration is occurring within the context of big government capitalism. Considering the effects of these transformations for the U.S. and Western Europe, the paper examines three fundamental issues: the expansion of the reserve army of labor (the Marx problem); increased financial instability and corresponding fluctuations in aggregate demand (the Keynes problem); and a diminishing capacity for governments to promote stability and norms of social solidarity (the Polanyi problem).