In the second half of 2008 a serious financial crisis that had begun with the bursting of the property price bubble in the USA turned into the worst economic crisis since the 1930s. This paper contributes to understanding the macroeconomic dynamics that underlie the present crisis. In doing so, first, the notion of the neoliberal mode of regulation and the finance-dominated accumulation regime, in which the pattern of accumulation is shaped by developments in the financial sector, are proposed. This accumulation regime is characterized by low and fragile growth.
Second, the interaction of distributional dynamics and the dynamics of accumulation are highlighted. A polarization of income distribution has been an important feature of the finance-dominated accumulation regime, even if the macroeconomic effects have been different in different countries. While some countries have compensated a stagnant demand with debt-financed consumption, others have compensated it with increasing net exports. Third, the present crisis and the stagnation of wages for large parts of the working classes are intrinsically linked. One underlying cause of the present crisis has been the persistent international imbalances and the associated massive capital flows.