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- Herausgeber: John Wiley & Sons
- Kategorie: Geisteswissenschaft
- Sprache: Englisch
Capitalism is failing us. Instead of bringing a decent life for the majority, it generates an outrageous gap between the rich and the rest, unaffordable housing, a profit-driven healthcare system, skyrocketing educational debt, racial and gender inequality, and the threat of climate disaster. Economist David Kotz argues that it’s time we built a new socialism for the unique challenges of the twenty-first century.
The problems of capitalism are too profound for reform, Kotz writes. Reform can help, but only temporarily, and not for all. Nor can we turn back to the socialist experiments of the twentieth century. But we can learn from those experiments, both their successes and failures, to build a democratic and participatory economic and political system. The result would be a sustainable future of economic justice, equality, material comfort, human development, and meaningful freedom. The journey towards a new socialism may be difficult. But Kotz combines a clear and rigorous account of how socialism can be made to work with a realistic strategy for how to get there. This is the book we need to help us escape the cruelties of our capitalist present.
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Table of Contents
Cover
Title Page
Copyright Page
Preface
Acknowledgments
List of Figures and Tables
Figures
Tables
1 Introduction
Declining pay
Rising income inequality
Increasing economic insecurity
Homelessness
Rising housing costs
Perils of a for-profit healthcare system
Skyrocketing cost of education
Racial inequality
Climate change
The economic crisis of 2008‒9 and its aftermath
Lessons of history
The plan of this book
Notes
2 Capitalism
Defining features of capitalism
Consequences of the pursuit of profit
Income inequality and capitalism
Insecurity and capitalism
Inequality based on race, ethnicity, gender, and capitalism
Public goods
The need for community
Capitalism and imperialism
Capitalism and democracy
Notes
3 Reform of Capitalism
Regulated capitalism
The benefits of regulated capitalism for working people
Another period of regulated capitalism?
The shortcomings of regulated capitalism
The unsustainability of reformed capitalism
Reform through changes within enterprises
Notes
4 Lessons from the Past for a Socialist Future
The Soviet model
Market socialism
Conclusion
Appendix: Critique of the optimality of competitive markets
Notes
5 Socialism
Democratic participatory planning
Social property
Workers under democratic socialism
New small businesses, new products, and new technologies
The state
Overcoming non-class oppression
Freedom under democratic socialism
A sustainable economy
Advances and remaining problems
Notes
6 From Capitalism to Socialism
Transition and the state
Workers’ armed revolutionary seizure of power
The parliamentary road to socialism
The political base of the socialist movement
The working class
Oppressed minorities
Women
Young people
Environmental activists and peace advocates
Methods of struggle for socialism
Confronting the threat of fascism
Final points
Notes
References
Index
End User License Agreement
List of Tables
Chapter 3
Table 3.1
Main features of regulated capitalism
Table 3.2
Main features of neoliberal capitalism
List of Illustrations
Chapter 1
Figure 1.1
Annual Growth Rate of GDP from Trough Quarter to Following Peak Quarter, 1949‒2019.
Chapter 3
Figure 3.1
Annual Growth Rate of Average Hourly Earnings in the United States, 1948‒...
Figure 3.2
Annual Growth Rate of Labor Productivity in the United States, 1948‒73 an...
Figure 3.3
Percentage Increase in Average Family Income in Constant Dollars in the United S...
Figure 3.4
Share of the Top 1% in US National Income.
Figure 3.5
Average Annual Unemployment Rate in the United States in Two Periods.
Figure 3.6
Earnings of Black Workers as a Percentage of Earnings of White Workers in the Un...
Figure 3.7
Annual Growth Rate of Earnings for Black and White Workers in the United States.
Figure 3.8
Female Workers’ Earnings as a Percentage of Male Workers’ Earnings...
Figure 3.9
Annual Growth Rate of Earnings for Female and Male Workers in the United States.
Figure 3.10
Annual GDP Growth Rate in the United States, 1948‒79 and 1979‒2019...
Figure 3.11
Investment as a Percentage of Output in the United States.
Figure 3.12
Annual Growth Rate of GDP per Person, United States and Western Europe.
Guide
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Table of Contents
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Socialism for Today
Escaping the Cruelties of Capitalism
DAVID M. KOTZ
polity
Copyright Page
Copyright © David M. Kotz 2025
The right of David M. Kotz to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.
First published in 2025 by Polity Press
Polity Press
65 Bridge Street
Cambridge CB2 1UR, UK
Polity Press
111 River Street
Hoboken, NJ 07030, USA
All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.
ISBN-13: 978-1-5095-6146-9
ISBN-13: 978-1-5095-6147-6 (pb)
A catalogue record for this book is available from the British Library.
Library of Congress Control Number: 2024940581
by Fakenham Prepress Solutions, Fakenham, Norfolk NR21 8NL
The publisher has used its best endeavours to ensure that the URLs for external websites referred to in this book are correct and active at the time of going to press. However, the publisher has no responsibility for the websites and can make no guarantee that a site will remain live or that the content is or will remain appropriate.
Every effort has been made to trace all copyright holders, but if any have been overlooked the publisher will be pleased to include any necessary credits in any subsequent reprint or edition.
For further information on Polity, visit our website: politybooks.com
Preface
This book makes a case for democratic socialism as the only alternative to the cruelties of capitalism today. While socialists have long been marginalized in the United States, recently socialism has garnered significant support, particularly among young people. This book explains why capitalism gives rise to the severe problems afflicting the majority in the United States and the world today. Those problems have been driving the upsurge in interest in socialism. In my view, a future socialism that is democratic is the only alternative foundation for a good society.
My past research and writing have prepared me to write this book. My last book, The Rise and Fall of Neoliberal Capitalism (Harvard University Press 2015), analyzed the raw form of capitalism that has dominated the global system since around 1980. My 2007 book Russia’s Path from Gorbachev to Putin (Routledge, coauthored with Fred Weir) presented a critique of the first attempt to build a socialist alternative to capitalism, along with an analysis of the disastrous transition to a particularly raw and violent form of capitalism in post-Soviet Russia. It also analyzed the Putin presidency that followed the disgrace and resignation of President Yeltsin at the end of 1999. That first attempt to build socialism gave rise to an authoritarian and repressive post-capitalist system. The history of the USSR and its demise holds lessons, both positive and negative, about building a system of democratic socialism in the future.
Socialism for Today: Escaping the Cruelties of Capitalism argues that democratic socialism is the only alternative system that can replace capitalism today. Democratic socialism would bring a future of material comfort, human development, social and economic equality, and environmental sustainability. I hope that this book will counter the widespread claim that socialism must inevitably take away individual freedom by creating an all-powerful state. The democratic socialism advocated here would empower people to participate in making the decisions that affect their lives, while protecting individual rights and freedoms.
This book is intended for a general audience. I have avoided technical economic analysis, except in the appendix to chapter 4.
David M. Kotz
Acknowledgments
I first learned about socialism as a babe on my father’s knee. Both of my parents, Gerald Kotz and May Gippa Kotz, were left-wing activists in the 1920s and 1930s. My father told me at a very young age that socialism is good and Stalin was bad. Over the years I have found both judgments to stand the test of history.
Pat Devine, Professor Emeritus at the University of Manchester, UK, had a major influence on my concept of socialism and the relation between democracy and socialism. I benefited from a series of discussions over many years with Pat Devine, Al Campbell, and David Laibman. The journal Science and Society kept alive the question of what a future socialism might look like, with special issues of the journal about a future socialism coming out in 2002, 2012, 2021, and 2022. I was also influenced by discussions with Terry McDonough, Professor Emeritus at the National University of Ireland at Galway, who died prematurely in 2023, and with Terry’s former doctoral student Cian McMahon.
My understanding of the Soviet model and of socialism was enhanced by communications with Alexander Buzgalin, Professor Emeritus at Moscow State University, and with David Lane, Professor Emeritus at Cambridge University in the United Kingdom.
In the 1990s I interviewed a number of former leaders of the Soviet state, including Nikolai Rhyzhkov, the Prime Minister of the Soviet Union from 1985 to 1990, and Anatoly Lukyanov, the former chairman of the USSR Supreme Soviet. In post-Soviet Russia I had several discussions with Leonid Abalkin, Deputy Prime Minister for Economic Reform during the Gorbachev era. Unlike other leading economists in the USSR, Abalkin never gave up his pursuit of the goal of democratic socialism and held to that belief in his retirement.
I learned about the difficulty of making a transition to socialism from an interview with Mikhail Khodorkovsky, one of the richest oligarchs in post-Soviet Russia. A former leader of the Soviet youth organization Komsomol, Khodorkovsky told me how he had used Communist Party and state funds to found Menatep Bank at the end of the Soviet era, which made him the richest person in Russia during the period of Boris Yeltsin’s presidency.
In recent years I had a series of email communications with Sam Gindin, former Education Director of the Canadian United Auto Workers’ Union. Those communications helped to clarify some questions about the complex relation between democracy and socialism. I also had helpful email communications with David Duhalde, a long-time leader of the Democratic Socialists of America (DSA), who played a key role in keeping the organizational structure of DSA alive until a new moment of socialist possibilities arose in the United States in 2016.
The many doctoral students who took my graduate class on socialism at the University of Massachusetts Amherst contributed valuable ideas about socialism and about how to understand the several countries where communist parties came to power after 1917. My connections with Chinese universities exposed me to useful discussions about “real” socialism in China. Starting in 2006 I benefited from meetings with Professor Cheng Enfu, a leading Marxist economist in China and former advisor to several of China’s presidents.
Henrique de Brue, a doctoral student at UMass Amherst, provided research assistance for the project that led to this book.
Finally, my wife Karen Pfeifer, Professor Emeritus of Economics at Smith College in Northampton, Massachusetts, has been a continuing commenter on and critic of my ideas about socialism.
David M. Kotz
July 29, 2024
Northampton, MA, USA
List of Figures and Tables
Figures
1.1 Annual Growth Rate of GDP from Trough Quarter to Following Peak Quarter, 1949‒2019.
3.1 Annual Growth Rate of Average Hourly Earnings in the United States, 1948‒73 and 1979‒2007.
3.2 Annual Growth Rate of Labor Productivity in the United States, 1948‒73 and 1979‒2007.
3.3 Percentage Increase in Average Family Income in Constant Dollars in the United States, for Fifths and Top 5% of Families, 1948‒79 and 1979‒2021.
3.4 Share of the Top 1% in US National Income.
3.5 Average Annual Unemployment Rate in the United States in Two Periods.
3.6 Earnings of Black Workers as a Percentage of Earnings of White Workers in the United States.
3.7 Annual Growth Rate of Earnings for Black and White Workers in the United States.
3.8 Female Workers’ Earnings as a Percentage of Male Workers’ Earnings in the United States.
3.9 Annual Growth Rate of Earnings for Female and Male Workers in the United States.
3.10Annual GDP Growth Rate in the United States, 1948‒79 and 1979‒2019.
3.11 Investment as a Percentage of Output in the United States.
3.12 Annual Growth Rate of GDP per Person, United States and Western Europe.
Tables
3.1 Main features of regulated capitalism
3.2 Main features of neoliberal capitalism
1Introduction
Interest in socialism has surged in the United States since the big financial crisis and Great Recession of 2008‒9, as support for capitalism has waned, particularly among young people. The annual Gallup Poll on socialism and capitalism found that between 35% and 39% of respondents had a positive view of socialism in polls from 2010 through 2021.1 That was a much higher level of support than had been expected before the financial crisis in the United States, where socialism had long appeared to have only marginal support. The 2021 Gallup Poll also found that between 56% and 61% of respondents had a positive view of capitalism over that period, much lower than had been expected. Among registered Democrats, an astonishing 65% were found to have a positive view of socialism in 2021. An earlier Gallup Poll, in 2018, found that, of those aged 18‒29, 51% supported socialism versus 45% supporting capitalism.2 Other polls have shown similar results. This runs counter to the widespread claim that capitalism faces no challenge for the allegiance of the American people.
However, it is not clear what poll respondents have in mind when they express support for “socialism.” It can suggest a reform of the current economic system in the United States or a shift to a radically different one. This book seeks to address the widespread discontent with capitalism and the sizable interest in an alternative called “socialism.”
The turn toward socialism stems from growing dissatisfaction with contemporary capitalism and the life it has been offering to people today, particularly young people. This chapter reviews serious problems that have emerged since around 1980. In light of the long list of serious problems afflicting much of the population, it is not surprising that millions of people are thinking that it might be time to give up on the existing economic system and consider a different one.
Perhaps the most pressing problem today is the threat of global climate change, which represents an existential threat to our future. While this dire threat has been widely acknowledged only recently, the concentration of climate-changing gases in the atmosphere has been rising for a very long time. Before further discussion of climate change, I will take up a series of problems that have arisen since around 1980. At that time, the form of capitalism changed in the United States and much of the world, as government regulation of the economy was loosened, social welfare programs were eliminated or cut back, and the strength of trade unions rapidly declined. The resulting free-market, or “neoliberal,” form of capitalism that emerged shows the effects on society of the relatively unrestrained operation of capitalism.3
Declining pay
During the crisis-ridden 1970s, the buying power of the average pay of workers (called the “real wage”) stagnated. After 1979, it declined for the next fifteen years through the early 1990s. By 1993, the real wage had fallen 16.3% below its previous peak in 1972. While the real wage trended up very slowly after 1993, it did not reach the 1972 level until 2019 – 47 years later.4 A widespread sense spread among young people that they would never reach the living standard of their parents.
Rising income inequality
The economy continued to generate rising output of goods and services after the 1970s, but the majority did not get a share of that increase. After 1979, the degree of inequality in the income distribution in the United States surged upward. From 1979 to 2019, the share of the bottom 80% of families in total income fell from 59% to 50%, while the share of the top 5% rose from 15% to 22%.5 The share of total income going to the top 1% began an inexorable rise after 1979, from 10.9% in 1979 to 19.1% in 2019.6 The ratio of CEO pay in a large corporation to the pay of the average worker rose from 20 to 1 in 1965 to a remarkable 366 to 1 in 2020.7
Only 11.6% of the population live in poverty according to official statistics,8 but the measure of poverty used by the government greatly underestimates the prevalence of severe economic hardship today. A major study by a team at Brandeis University found that 35% of American families with two full-time workers do not earn enough income to cover basic needs for housing, food, medical care, transportation, childcare, and minimal household expenses. For Black families, the percentage is 52%, for Hispanics 59%, and for immigrants 44%.9 In New York City, fully half of working households have income below what is required to cover basic needs such as housing, food, healthcare, and transportation.10
Increasing economic insecurity
Another key indicator of the economic welfare of the majority is the prevalence of economic insecurity. That is, can people expect their current job and/or current level of material comfort to continue into the future, or are they liable to be snatched away due to developments beyond their control? The proportion of workers whose jobs are “precarious” – that is, they have no right to stay employed at their current workplace – has increased over time, with the explosion of what is called the gig economy.11 This trend has affected college teachers. About 75% of college teachers in the United States today have temporary or part-time positions that provide little or no job security, up from about half in 1987.12
Homelessness
Around 1980, there was an explosion in the number of homeless people living on the streets of America’s cities. Between 250,000 and 350,000 people were homeless in the United States in 1983, according to an estimate by the US Department of Housing and Urban Development.13 The number has increased since then, and in 2022 an estimated 582,000 people were homeless in the United States. Those living in shelters are not counted as homeless – there were 1.25 million such individuals in the United States in 2020.14
Rising housing costs
Decent and stable housing is a basic human need. Housing costs have been rising rapidly in the United States in recent years, forcing many households to spend more than the recommended maximum of 30% of their income on housing, with some devoting more than 50% of income to housing. In 2019, 36% of households in the United States had to spend more than 30% of income on housing costs, and 13% spent more than half of income on housing.15 One major study found that 50% of households in New York City had to pay more than 30% of their income for housing, while 20% paid more than half of their income for housing.16
Perils of a for-profit healthcare system
The US healthcare system has been increasingly driven by pursuit of profit since around 1980, delivering healthcare that is costly yet ineffective at promoting a healthy population. Despite an expansion of government programs aimed at reaching universal health insurance coverage since 2021, in 2022 11.8% of people aged 18‒64 – about 24 million people – remained uninsured.17 A major health problem can bring with it hospital and medical costs in four or even five digits for the uninsured. Health insurance companies employ what should be called “benefits denial specialists,” whose job is to find a way to avoid paying for treatments. As a result, even those with health insurance can discover too late that the fine print in their insurance policy excludes necessary and costly treatments. Many life-saving drugs have extortionate prices in the United States, and some are not covered by many health insurance policies. The millions of Americans who depend on health insurance through their employer lose the employer-subsidized policy if they leave a job, sometimes forcing a worker to continue in a hated job because a covered family member has major healthcare needs.
Total healthcare spending per person in the United States in 2021 was the highest by far of any high-income country, at $12,914. That was more than double the average of $6,125 for twelve comparable rich countries.18 Despite all the spending, the United States has a low ranking on health outcomes. One study found the United States ranked last among eleven rich countries on healthcare system performance, including for healthcare outcomes, access to care, equity, and administrative efficiency.19 In 2021, the United States ranked 57th among countries for life expectancy at birth, behind Algeria, Albania, China, and Barbados.20 In maternal mortality, the United States ranked 63rd in 2017, behind Iran, Chile, Russia, and Singapore.21 Black women’s maternal mortality rate in the United States in 2021 was 2.6 times as high as that for White women.22
Some rich countries removed healthcare from the profit system, getting much better health outcomes than the United States. However, neoliberal capitalism has put pressure on every country to cut back public programs that address human needs. As a result, in recent years many countries with comprehensive state-guaranteed access to healthcare have experienced problems of long waits for treatment due to underfunding of healthcare programs.
Skyrocketing cost of education
Education has long been seen as the route to a good job and comfortable income. After the 1970s, the cost of higher education began to rise faster than inflation in the United States. In 1980, the average annual cost at a four-year public college for tuition, fees, and room and board for in-state residents was $8,303 in 2021 prices. After that year, the cost rose steadily through 2019, when it had reached $23,063 in 2021 prices – nearly triple the cost for obtaining the same diploma as in 1980.23 While previously the cost of a college education at public universities was financed primarily out of state funds, over time students have had to finance it largely themselves. The result has been a mushrooming student debt that in 2022 amounted to over $1.76 trillion owed by 45.3 million borrowers, averaging $40,000 per borrower.24
Racial inequality
People of color did not share equally in economic progress in the United States before 1980. However, in the 1960s significant progress was made on that front. The civil rights movement of that era was able to push through laws that banned old-style racial segregation along with racial discrimination in employment. The ratio of Black to White income was rising in the 1960s, and people of color entered jobs that had previously been closed to them. Many Black women got good jobs in the public sector and Black men got well-paying jobs in industry as well as the public sector. However, after 1980 public sector employment was cut back, which disproportionately affected Black workers, while movement of industry out of existing industrial cities affected Black male employment opportunities. Somewhat later, in the early 2000s, the absolute level of employment in manufacturing began to decline sharply. As the number of industrial and public sector jobs shrank, imprisonment replaced employment for growing numbers of Black people. Since around 2016, overt racism and support for White supremacy have emerged from the underground to find expression in the media and in the highest levels of government.
Climate change
The buildup of greenhouse gases in the atmosphere and the link to human economic activity were first discussed by scientists as early as the late nineteenth century. Economic progress since the Industrial Revolution has been powered by burning fossil fuels, a process that emits greenhouse gases, such as carbon dioxide, as a byproduct. Greenhouse gases block the radiation of heat from the Earth’s surface and lower atmosphere into space. As those gases build up in the atmosphere, the average global temperate rises and extreme weather events become more common.
In 1988, James Hansen, a NASA scientist, delivered an early warning in Congressional testimony that human economic activity was causing rising temperatures.25 In 1992, the first step in international negotiations to take action against climate change occurred, giving rise to the United Nations Framework Convention on Climate Change, which was ratified by 197 countries, including the United States. That was followed in 2005 by the Kyoto Protocol, the first binding climate treaty, which required a reduction of emissions by an average of 5% below 1990 levels. While the United States signed it in 1998, Congress never ratified it, and the US signature was later withdrawn. The Paris Agreement of 2015 required countries to adopt emissions-reduction pledges, with the aim of preventing a rise in global average temperature of more than 2°C above pre-industrial levels. The Paris Agreement called for an assessment of progress by countries every five years. President Trump withdrew the United States from the Paris Agreement, and President Biden re-entered it. The Inflation Control Act of 2021 included major steps toward reducing carbon emissions in the United States, but the implementation of that Act faces strong opposition in Congress from fossil fuel-backed Representatives and Senators.
Despite those agreements, the consensus among scientists about the causes of climate change, and a growing global protest movement demanding action, the trajectory of greenhouse gases in the atmosphere continues to point toward climate disaster. At present, we are heading toward a future of increasingly severe storms, fires, floods, droughts, and threats to the global food supply.
The economic crisis of 2008‒9 and its aftermath
By the 1990s, popular discontent with the increasingly globalized capitalist system was growing. The discontent culminated in a militant protest in Seattle in 1999 at a World Trade Organization conference that drew some 40,000 demonstrators. A broad coalition of labor, student groups, NGOs, and media activists denounced the free-trade agenda and human rights failures of global capitalism.
However, it was the severe financial crisis and Great Recession of 2008‒9 that led millions of people to voice a suspicion that the many problems afflicting the majority were not isolated but connected to one another, that they were not just unfortunate accidents or the result of bad policies but rather stemmed from the basic working of the economic system that dominates throughout the world today. That suspicion found expression in the massive Occupy Wall Street protest movement that broke out in New York City in September 2011. It soon spread to an estimated 600 communities across the United States and an estimated 951 cities across 82 countries around the world. The Occupy Movement directly targeted capitalism as the problem, popularizing the class struggle slogan of the 99% against the 1%. Capitalism had become the target, and to many the solution required a shift to its long-time challenger, socialism.
Why did the big crisis have that effect? From around 1980, the conventional wisdom held that a system of free markets, private enterprise, and very limited government involvement in the economy is the only viable way to organize a modern economy. When anyone pointed out a problem arising from that system, the usual answer was “There is no alternative,” a slogan used so often that it acquired its own acronym of “TINA.” This meant that the problem – whether the rich getting richer while everyone else got poorer, increasing economic insecurity, or the rising cost of education – must be accepted as an unavoidable cost of sticking with “the only possible” economic system.
The crisis of 2008‒9 undermined the hold of the previously dominant beliefs in two stages. First, it destroyed the key claim that an unregulated capitalist economy was inherently stable and could not give rise to a severe economic crisis. As the financial system suddenly tottered on the edge of complete collapse, and as some 800,000 jobs disappeared each month in the United States, the world was suddenly staring at the prospect of another Great Depression.
The response of the government to the crisis dealt a second blow to the established beliefs. Suddenly, it turned out that the promise that everyone must sink or swim based on their own efforts turned out not to apply to giant banks and corporations, which were bailed out by the government. However, millions of homeowners faced with foreclosure due to the crisis were largely left to fend for themselves. Wags noted that the United States has “socialism for the rich but capitalism for everyone else.” This was bound to make millions of people wonder whether something called “socialism” might be a good idea.
Soon after the bailout of the banks and giant corporations, all of the major governments passed large spending programs and flooded the economy with money, actions that previously had been viewed as harmful state interventions that could not improve economic performance. While the global economy had been collapsing faster in the first 11 months of the 2008‒9 crisis than in the first 11 months of the Great Depression of the 1930s,26 the massive state interventions in 2008‒9 soon stopped the collapse of production and set off a recovery. A second Great Depression had been narrowly averted.
The crisis of 2008‒9, and the government response to it, provided a dramatic demonstration of the failure of unregulated capitalism to live up to the claims of its advocates. It also demonstrated the potential advantages of an active government role in the economy. Before 2008, it seemed impossible to imagine any alternative to unregulated capitalism. Now unregulated capitalism had been humiliated. It should not have come as a surprise that millions of people, who had long been suffering from increasingly serious economic problems, began to contemplate an alternative to it.
Lessons of history
Some historical perspective is helpful for understanding the recent sharp increase in criticism of the current system and attraction to socialism. About every fifty years or so, the capitalist economy has experienced a severe and persistent economic crisis. Such crises are rooted in the particular institutional structure of capitalism in a period, and so can be called structural crises. In the past, structural crises have not been resolved until a major restructuring of capitalism has taken place, which can take a decade or more to emerge. Structural crises are different from the frequent economic downturns known as recessions. A recession normally ends and economic expansion resumes within a year or two without any major change in the form of capitalism.27
Such structural crises of capitalism took hold in the last 25 years of the nineteenth century, the 1930s, and the 1970s. Each past structural crisis gave rise to demands from various groups and classes for major change in the system, and each was resolved only after some kind of restructuring of capitalism took place. Following each restructuring of capitalism, a long period of more or less stable economic expansion followed. After 1900, the small business capitalism of the nineteenth century gave way to a system of giant corporations and banks. From the mid-1930s to the late 1940s, a state-regulated form of capitalism was constructed. Around 1980, the neoliberal form of capitalism emerged. Each episode of restructuring included a shift in the dominant economic ideas in society as well as changes in economic and political institutions.28
Since 2008, the neoliberal form of capitalism has been stuck in another structural crisis.29 In every past structural crisis period, previously marginalized proposals for major change emerged into the mainstream of political debate. In the 1930s, support for socialist and communist parties surged in many countries, including the United States. The American Communist Party played a role in promoting the beginning of institutional changes that led to a reformed capitalism that emerged fully after World War II. The crisis of the 1930s also enabled fascists to come to power in several major countries. Fascism drew a significant following in the United States in the 1930s. In the next structural crisis, in the 1970s, the previously marginalized free-market economic ideology rapidly came to dominate the public discussion, and economic and political institutions were restructured in accordance with its recommendations. In the 1970s, alternative proposals for a more closely regulated economy also were promoted by some academics and some business leaders, but they were soundly defeated.30
While each past structural crisis of capitalism has had its own distinctive features, the structural crisis since 2008 has significant similarities to that of the 1930s. The Great Depression followed a decade of free-market capitalism in the 1920s, while today’s crisis followed 25 years of a similar neoliberal form of capitalism. The 1930s crisis took the form of an economic collapse followed by prolonged economic stagnation and high unemployment. The crisis since 2008 began with an incipient economic collapse that was arrested by large-scale government intervention, but which was followed by a decade of economic stagnation indicated by very slow economic growth. Figure 1.1 shows that the recovery from the Great Recession of 2008‒9 was by far the slowest of any economic recovery since 1949. The unemployment rate, which hit double digits in the Great Recession, did not fall below 5% until 2017, eight years after the Great Recession had ended.31
Figure 1.1 Annual Growth Rate of GDP from Trough Quarter to Following Peak Quarter, 1949‒2019.
Source: US Bureau of Economic Analysis 2023, National Income and Product Table 1.1.6.
Note: The trough quarter is the last three-month period of a recession, and the peak quarter is the last three-month period of the following expansion.
The historical experience suggests that it should not be surprising that after 2008 previously marginalized proposals for major change, both on the left and the right, have emerged into the public discussion. These have included authoritarian nationalist appeals on the political right, and on the left calls for progressive economic reform through strengthening trade unions and expanding social welfare programs, as well as endorsement of socialism. As long as the current crisis of neoliberal capitalism continues, such previously marginalized political positions can be expected to remain on the table.
