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The hegemony constraints in the neoliberal years of capitalism
This paper examines interactions between the economic and political spheres, focusing on income inequality, a recent topic of interest by many researchers. In particular, unlike Meltzer-Richard (1981), the reasons redistribution policy does not work well under democracy despite increasing income inequality are examined from a "political economy" viewpoint. This paper examines the interactions between politics, economics and nations-a combined perspective that has not hitherto attracted much attention in economics-and how conflicts among these three areas affect the adoption and implementation of income redistribution policy. We analyze income inequality, but we are mainly interested in how interactions between the political and economic domains lead to income inequality, rather than income inequality itself. In other words, we use an eco-political lens to view the problems of income inequality and redistribution. We take the position that income inequality and income redistribution are affected by the institutions, policies and laws created by the political system, and that these institutions, policies and laws are determined by the distribution of sociopolitical group power. The institutions and policies thus established determine the distribution of power of sociopolitical groups. Economics has mainly been concerned with the development of sophisticated policy, assuming that political problems have already been adequately worked out. However, we have focused on the complex political processes behind redistribution that take place through clashes of interests, and have looked at how policy decisions are made, who makes those decisions and why they make them.
After the Lehman Shock of 2008 and the ensuing global financial crisis, many political economists have pointed out the limitations of neoliberalism and market fundamentalism or confirmed a crisis of finance-led capitalism. Today, however, almost 10 years after the Shock, neoliberal ideas and policies, including political control being exercised by Wall Street in the United States, seem to be as dominant as ever in spite of their serious failures. It also does not seem that the form of capitalism dominated by finance has disappeared. Worse still, we may now be witnessing a new wave of chauvinism and trade protectionism, especially in the US and some of the countries belonging to the EU. Are there any signs of the sprouting of strong new politico-economic systems or ideas that will replace those of neoliberalism? Ten years after the shock, frankly speaking, it is difficult for us to be sure about the direction in which the current regime is evolving. We must therefore consider both the tenaciousness and variability of institutions and regimes. This leads us to the question of what determines institutional change and how it occurs.
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