How Inequality Increases Through Financialization

This essay integrates the Post-Keynesian theory of capital and steady-state growth with selected aspects of financialization to demonstrate how these dynamics can intensify intra-class differentiation in contemporary capitalism and amplifies inequality in the personal distribution of income, particularly within the middle class. It also engages with Piketty’s contribution as a point of reference to highlight how the present framework diverges from Neoclassical theoretical foundations beginning with the definition of capital to the explanation of increasing share of profit in national income under the assumption of a constant rate of profit. We show instead why a more satisfactory definition of value of capital is crucial for understanding the problem of increasing inequality due to financialization in contemporary capitalism.