Income Inequality and Crisis Theories

Abstract

This paper aims to review the relationship between crisis theories in Mainstream economics, Post-Keynesian economics, Marxian economics and income inequality, especially within the context of the great recession in 2007-2008. The emergence of the great recession and its devastating effects, not only on financial sectors likewise on the real economy brought discussions of the origin of crises back in fashion. Inequality was accepted as an important factor contributing to the great recession and it is brought to the fore in crisis theories due to sharply increased income inequality before the great recession even though there is disagreement amongst different schools of thought on causes of the crisis