Accounting for Financialization: Stock-Flow-Consistent Political Economy

Abstract

We adopt the Post Keynesian input-output framework pioneered by Wynne Godley to delve into both the causes and consequences of financialization. The distinction between National Income accounting and stock-flow-consistent modelling is showcased. Also, the political economy foundations of financial economics are unearthed. Constructively, the elements of a planned strategy to reinvent the accumulation of capital are sketched. Also, we show how “asset-based reserve requirements” and the issue of government bills and bonds can be “creatively manipulated” by the state to deliver superior and stable social outcomes.