ABSTRACT
Chapter 1 elucidates Veblen’s cultural, holistic contribution to macroeconomics, which qualifies us to comprehend better the institutional foundations of financial fragility, insufficient demand and debt-deflation. The analysis focuses on the growth of predatory instincts and pecuniary habits and routines in business and banking and the macro-destabilising effects of over-leverage, manipulation and deleverage. Veblen’s ‘financial instability hypothesis’ is scrutinised in order to depict the cultural foundations of capital and the pecuniary nature of unsustainable leverage and liability structures; and how liquidity allocation and income distribution inefficiencies boost pecuniary efficiency, parasitic spending and waste, which predispose the financial structure of effective demand and economic growth to solvency risk, low-quality balance sheets and industrial inefficiency.
