Different growth models overwhelmed the global scenario: while some countries have presented a consumption-driven growth model fueled by credit, generally followed by current account deficits, other countries have shown an export-driven growth model, mainly characterized by modest consumption growth and large current account surpluses, as E. Stockhammer clearly pointed out.
In spite of the growth pattern, the finance-led accumulation regime has presented some distinctive features. A redefinition of the role of the state justified privatization and deregulation in product, labor and financial markets. Changes in macroeconomic policies turned out to focus inflationary targets instead of employment goals. As Eric Hobsbawm warned, investment has become increasingly transnational.
Besides, there has been a redefinition of labor and working conditions that affected income distribution. The evolution of the capitalist relations of production reveals changing labor organizing principles to cope with the dictates of increasing capital mobility: automatic production control; redefinition of tasks in the context of transformations in the varieties of capitalist management towards new kinds of control, job rotation and suppression of skilled workers. Attacks on labor unions or the diminishing organizational strength of collective demands need to be underlined.
In this scenario, the deterioration of income distribution put a downward pressure on consumption. However, on behalf of financial liberalization, households could expand the levels of consumption because they have access to credit, not only to mortgages but also to consumer loans, such as credit cards and overdraft bank accounts.Consequently, households’ consumption have become increasingly dependent on banks’ credit strategies and central bank’s monetary policy.
Central banks´ and Treasuries’ actions have not been independent from private pressures: governments had to intervene to prevent a collapse of the global financial system. As a result, many countries’ banking sectors proved to dependent on massive government support. The role of banks in the credit crunch and the cost of the financial sector bail-out have undermined the idea of efficiency of self-regulated markets.
In the aftermath of the crisis, the pursuit of macroeconomic austerity turns out to subordinate the social dynamics. At the pragmatic level, fiscal policy proves to subordinate the whole policy decision making process. Fiscal measures regarding the obtaining of surplus, such as tax increases and expenditure cuts, turn out to be highlighted in the macroeconomic and financial stabilization attempts. In this scenario, changes in expectations on economic growth dampen future levels of investment, consumption and employment. Indeed, the recent protest marches have revealed the economic roots of social discontent.