Abstract
This paper provides an empirical investigation into the empirics of cumulative and circular causation (CCC) model. Relying on their corporate power, corporations have stimulated the rising consumerism, which has increased both private consumption and debt. On the other hand, increasing debt has enhanced the process of rising inequality due to the lack of funding to invest in education or create savings. Rising inequality has further increased the bargaining power of capital and closed the CCC model. This paper tests the proposed theoretical model on a sample of OECD countries in the period between 1990 and 2013. We show that the growing corporate power causes increased consumption, growing household and public debt, as well as higher inequality. The paper makes several original contributions to the existing literature. First, it is the first empirical investigation of the CCC relationship. Second, it extends the knowledge about the trends of rising corporate power and consumerism at macro level.
Highlights
ObjectivesThe purpose of this paper is to empirically evaluate the validity of the proposed mechanism on a sample of Organization for Economic Co-operation and Development (OECD) countries between 1990 and 2013
The results show that trust enables welfare state policies, i.e. redistribution to decrease net inequality, this reduction in inequality does not increase trust
Three corporate indicators grew sharply: total assets by 282 per cent, total sales by 193 per cent and total employment by 137 per cent, respectively. The latter coincides with the gross domestic product (GDP) growth in the same period for OECD countries, whereas the growth of total assets significantly outpaced the growth of GDP
Summary
The purpose of this paper is to empirically evaluate the validity of the proposed mechanism on a sample of Organization for Economic Co-operation and Development (OECD) countries between 1990 and 2013. The aim of this paper is to provide an empirical investigation of the CCC model
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