Richard D. Wolff

The Biden Democrats already show they learned little from Trump's loss

The spectacle of political "leaders" disconnected from basic social realities survived Trump's defeat. He and his GOP had shown little grasp of the two great crises of 2020: the crash of capitalism and the COVID-19 pandemic. Trump's resulting political defeat did not reconnect them. The Biden Democrats already show they learned little from Trump's loss; disconnection governs them too.

A basic social reality of the United States is its capitalist economic system that organizes enterprises internally into a small minority (employers) dominating the majority (employees), with markets to distribute resources and products. Like capitalisms everywhere, the U.S. version crashes recurringly. Variously called crises, recessions, or depressions, they have happened, on average, every four to seven years throughout capitalism's history. With three in this century's first 20 years ("dot-com" in 2000, "subprime mortgage" in 2008, and "COVID-19" in 2020), the United States illustrates that four-to-seven-year schedule. The 2020 crash is second only to the Great Depression of the 1930s in its social impact. That fact alone demands major policy interventions on the scale, at least, of what was done then (including the creation of Social Security, federal unemployment insurance, the first minimum wage, and the creation of millions of federal jobs). Moreover, the 1930s were not simultaneously a time of deadly viral pandemic. Given the uniquely immense challenge of 2020's two crises, no remotely adequate policies were undertaken nor even contemplated by Trump, Biden, Republican or Democratic establishments. They just don't get it.

The COVID-19 pandemic replicates past viral outbreaks: from the deadly 1918 influenza pandemic to recent SARS, MERS, and Ebola outbreaks. Coping with them requires having ready (or quickly acquiring) adequate supplies of tests, masks, ventilators, hospital facilities, and trained personnel. Where supplies of these essential resources were left mostly to the private capitalist sector, fatal failure resulted. It was not privately profitable (and far too risky) to produce, stockpile, and maintain these supplies for years until a pandemic enabled them to be sold. Private capitalists chose other more profitable and/or less risky investments. Private capitalism, as many had forewarned, was unreliable for protecting public health.

Of course, the government could have intervened to offset private capitalism's failure to safeguard public health. It could have purchased tests, masks, and ventilators as fast as private capitalists produced them at prices profitable for those capitalists. The government could then have stockpiled them at taxpayers' expense for use when the next dangerous virus threatened. In fact, the U.S. government already does that, but not for public health. It buys and stockpiles missiles, warships, and tanks from private capitalists because profit-driven capitalists would not stockpile them. In the United States, Republican and Democratic establishments promote the government's full socialization of military costs as patriotism while they demonize and block an equivalent socialization of public health costs as "socialism."

Inadequate preparation for COVID-19 was followed by failure to contain it. Trump and the GOP never considered, let alone implemented, massive government intervention. Many other countries did, mobilizing private and public resources effectively against COVID-19. Crude laissez-faire ideology plus corrupt political calculation drove Trump and the GOP. As to the pandemic's effects, they just did not get it.

Either a capitalist crash or the COVID-19 pandemic alone would have been a critical challenge for the United States. Having both occur together, a staggering combination, requires just what Trump did not and Biden is not doing: a similarly unprecedented government response. Thus, House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell are not even trying for an adequately large stimulus. Their joint product promises to be a prime example of too little, too late. Neither party leadership advanced policies enlarging upon what worked well in the 1930s: a massive federal jobs program to end unemployment, a Green New Deal, and a national system of COVID-19 testing, tracking, and treatment in additionally constructed hospitals and clinics. Nothing suggests Biden's centrist Cabinet sees the magnitude of the need. They just don't get it.

For both Republican and Democratic establishments, political strategies are similar. Each endorses, privileges, and supports private capitalism. Each blames the other party for negative results that flow from the social dominance of private capitalism. Neither dares blame private capitalism for social problems like unemployment and pandemic casualties. Instead, each has its preferred set of scapegoats to blame. Republicans blame immigrants, foreign trading partners (especially China), non-whites, pro-abortion rights activists, mainstream media, liberals, and socialists. Democrats blame Russia and Russians, China, gun enthusiasts, white supremacists and racists, Fox News, and Trump and his supporters.

A solution would be a genuinely level political playing field. It would include a new political party that criticizes and opposes the capitalist system because of its responsibility for critical social problems. It would break the political monopoly run by Republicans and Democrats just as many economic monopolies have ended in the nation's past. Today's crises, inequalities, divisions, and the sufferings of so many deserve no less. Yet the political monopolists want to keep their control.

They just don't get it.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

This article was produced by Economy for All, a project of the Independent Media Institute.

How Biden could pave the way for the next Trump

Since the 1970s, U.S. real wages have largely stagnated. After a century of real wages rising every decade, that stagnation changed the lives of the U.S. working class in traumatic ways. Likewise, since the 1970s, labor productivity grew steadily, aided sequentially by computers, robots, and artificial intelligence. The combination of stagnant real wages and rising productivity lowered labor's share of national income in favor of capital's. Profits consequently soared and took the stock markets with them. Income and wealth were redistributed sharply upward.

The post-1970 trauma of the working class was worsened, as traumas often are, by being minimally recognized and even less discussed in the media, among politicians, or in the academy. Workers thus encountered the end of the century of rising real wages individually as a mysterious evaporation of the American Dream or loss of an earlier American Greatness. They also reacted individually. More members of households (especially adult women) undertook more hours of paid labor outside the home to compensate for stagnant real hourly wages. Households also compensated by borrowing more heavily than any working class anywhere had ever done. Workers wanted so desperately to hold on to that American Dream.

Capital obliged: mortgage and auto debts spread more widely and deeply throughout the U.S. population. Credit cards were newly promoted to consumers who filled millions of wallets with many of them. Toward the end of the 20th century, capital added massive student lending that now exceeds total U.S. credit card debt. Capital thereby supplemented its profits from production (boosted by stagnant wages) by adding interest on consumer and student debts (undertaken because of stagnant wages). No wonder the U.S. stock market boomed in the 1980s and 1990s. No wonder that the Clintons and other centrist Democrats celebrated that debt boom for their political advantage instead of attending to its immense risks and disruptive social costs.

Late 20th-century U.S. capitalism boomed until it could no longer support rising debt levels. Households stressed, families dissolved, and individuals exhausted by ever more hours of labor added severe anxieties to their burdens as rising debts exceeded capacities to service them. Deepening loneliness, divorce, opioid and other addictions, and suicides were among the social costs. Three crashes of U.S. capitalism in the 21st century (2000, 2008, and 2020), each far worse than its predecessor, brought home to the U.S. working class how far its social situation had deteriorated. Individual responses no longer sufficed for millions. They were ready to participate in social movements to express their accumulated anger, bitterness, and rage. They needed such populist movements to do something—or at least to support politicians—to reverse the downward economic and social spiral so many felt trapped in and by.

Donald Trump opportunistically tapped enough of the U.S. working class's bitterness to swing the votes needed to win the presidency in 2016. However, the interconnected finances and ideologies of the centrist Democrats who had taken over the party after the 1970s shared with Republicans the responsibility for that bitterness. They led the Democratic Party into increasing dependence on donations from the capitalist class. They likewise drifted ever further from the working-class base that had rallied for the Democrats during the Great Depression of the 1930s. The neoliberal turn in U.S. capitalism under Ronald Reagan had two key impacts on the U.S. working class. First, neoliberalism endorsed capitalist globalization and the export of jobs—especially the better-paying, more-unionized jobs—after the 1970s. Second, by accelerating the deregulation of industries and markets, neoliberalism facilitated automation and weakened or removed various labor protections. In short, the neoliberal turn was and remains a major cause of the U.S. working class's decline and its resulting bitterness and anger.

With progressive leaders, Democrats might have shown the working class that its distress followed from how capitalism functions. Capital flows to where the profits are greatest (where wages are far lower and regulations far fewer than in the United States, for example). Capitalists fund politicians like Reagan to turn policies toward neoliberalism. However, centrists in the Democratic Party shied away from such explanations. The centrist leaders of the Democratic Party were those closest to the party's capitalist donors (and vice versa). Centrist control of the party blocked it from offering a powerful voice to mobilize working-class opposition to neoliberal job exports, deregulations, attacks on unions, etc. The centrists wanted and depended on capitalists' donations; that dependence only increased as the party's working-class support ebbed.

Workers turned away first from activity in and for the Democratic Party; eventually many stopped voting for its candidates. For them, the Democratic Party had failed to advance beyond the New Deal's achievements. Worse, the party had failed even to protect workers against the multiple ways that neoliberalism undid the New Deal. Many workers felt betrayed. In protest, often unspoken, some began to cross over to vote Republican. Unions increasingly had to downplay or reduce their traditional links to the Democratic Party because growing portions of their members had shifted toward the GOP.

The Republicans, traditionally the employers' party, had long tried to counter the Democratic Party's appeal to workers as the traditional employees' party. Republicans dared not use economic issues, and so they used religion, regionalism, and racism. They could pry portions of the working class away from the Democratic Party by appealing to such noneconomic concerns among workers. Their prime targets included evangelical Christian and other religious fundamentalists portrayed as victims of secularists, the South's and other regions' sense of unfair treatment by Washington and coastal elites, and white supremacists portrayed as threatened by rising Black and Brown populations including immigrants.

The centrist Democrats countered by trying to carve out other portions of the working class: women, Black and Brown people, immigrants, and various other minorities. Trump went further than previous Republicans in prying workers away from the Democrats. Joe Biden went further than previous Democrats (including Barack Obama) in focusing his campaign and his new administration on those portions of the working class Democrats prioritized. In these ways, each party's strategy provoked more extreme versions of the other party's strategy. Hence the increasingly harsh and rageful tones of major party discourse and behavior generally.

Both major parties, following the dictates of the Cold War, together eviscerated the class-based politics stressed from the 1930s to 1945. An integral part of the undoing of the New Deal was canceling a politics where Republicans confronted Democrats as representatives of employers versus employees. Instead, class conflict quickly faded from both parties' statements and thinking. They focused instead on carving up the same working class into different, competing portions. Employers are chief funders of both parties, who then limit themselves to minimal references to class issues except for occasional, fleeting campaign rhetoric.

However, the class silence of the major parties created the need and the opportunity for a revival of what they had repressed. Progressives such as Bernie Sanders, Alexandria Ocasio-Cortez, and a growing number of others across U.S. politics are riding the wave of protest against all that was lost when centrists took over the Democratic Party. That takeover presumed the undoing of the New Deal, the repression of the strong communist and socialist parties built in the 1930s and early 1940s, and the neoliberal turn that came to dominate public policy. Many (not all) of today's progressives—inside and outside the Democratic Party—want to reconstruct U.S. politics as once again a class politics.

Both major parties are now stuck with their commitments to a system that has failed spectacularly. Private and public sectors were unprepared for and could not contain a deadly virus handled far more successfully in many other countries. U.S. capitalism likewise failed to prepare for or contain the social damage from the latest in its regularly recurring cyclical crashes. These new failures compounded earlier, ongoing failures to overcome global warming and the crisis of U.S. race relations. These and other systemic failures are eroding mass support for those parties just as the mounting sufferings of the working class seek political expression and solutions.

Trump's right-wing Republicanism solved none of the United States' basic economic problems; it did worsen income and wealth inequalities. Yet it spoke to millions of working-class people who feel betrayed by the Democrats and attracted by the usual Republican references to religion, region, and race. Obama's regime had likewise solved nothing in the United States' basic economic problems while worsening income and wealth inequalities and barely overcoming the 2008 capitalist crash in ways that set up the next one. Obama did speak to millions of working-class people gathered around issues of gender, race, ethnicity, and sexual orientation. Biden gives every sign—in conditions of even worse economic and political decline—of repeating these oscillating failures. In so doing, he prepares the way for the next Trump.

The key question then revolves around progressives inside and outside the Democratic Party. Do enough of them have the needed clarity of understanding, courage to act, and wisdom to see their deficit in terms of strong organization? Can those who do seize the opportunity to ride a return of class politics into U.S. society? Will they effectively resist both major parties' efforts to silence and destroy them? Meanwhile, the establishment Democrats and Republicans will continue their oscillating failures as the U.S. system's mode of decline.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

This article was produced by Economy for All, a project of the Independent Media Institute.

Why capitalism was destined to come out on top in the 2020 election

No matter who "won" the U.S. election, what will not change is the capitalist organization of the country's economy.

The great majority of enterprises will continue to be owned and operated by a small minority of Americans. They will continue to use their positions atop the capitalist system to expand their wealth, "economize their labor costs," and thereby deepen the United States' inequalities of wealth and income.

The employer class will continue to use its wealth to buy, control, and shape the nation's politics to prevent the employee class from challenging their ownership and operation of the economic system. Indeed, for a very long time, they have made sure that (1) only two political parties dominate the government and (2) both enthusiastically commit to preserving and supporting the capitalist system. For capitalism, the question of which party wins matters only to how capitalism will be supported, not whether that support will be a top governmental priority.

No matter who won, the private sector and the government will continue their shared failure to overcome capitalism's socially destructive instability. Economic crashes ("downturns," "busts," "recessions," and "depressions") will continue to occur on average every four to seven years, disrupting our economy and society. Already in this young century, we have endured, across Republicans and Democrats, three crashes (2000, 2008, and 2020) in 20 years: true to the historic average. Nothing capitalism tried in the past ever stopped or overcame its instability. Nothing either party now proposes offers the slightest chance of doing that in the future.

No matter who won, the historic undoing of the New Deal after 1945 will continue. The GOP and Democrats will both keep reversing the 1930s' reduction of U.S. wealth and income inequalities (forced from below by the Congress of Industrial Organizations [CIO], socialists, and communists). As usual, the GOP reverses these gains for Americans further and faster than Democrats, but both parties have condoned and managed the upward redistribution of wealth and income since 1945.

The GOP will likely celebrate explicitly the wealthy they serve so slavishly. The Democrats will likely moan occasionally about inequality while serving the wealthy quietly or implicitly. The GOP will "economize on government costs" by cutting social programs for average people and the poor. The Democrats will expand those programs while carefully avoiding any questioning, let alone challenging, of capitalism.

No matter who won, what U.S. politics lacks is real choice. Both major parties function as cheerleaders for capitalism under all circumstances, even when a killer pandemic coincides with a major capitalist crash. Real political choice would require a party that criticizes capitalism and offers a path toward social transition beyond capitalism. Countless polls prove that millions of U.S. citizens want to consider socialist criticisms of capitalism and socialist alternatives to it. The mass of voters for Bernie Sanders, Alexandria Ocasio-Cortez, and other socialists provided yet more evidence. However, the system allowed and enabled a near-fascistic right wing to take over the GOP and the presidency. At the same time, it aided and abetted the Democrats in excluding a socialist from even running for that presidency. Trump and Biden are long-standing, well-known cheerleaders for capitalism. Sanders was, in contrast, a critic.

A new political party that offered systemic criticisms of capitalism and advocated for a transition to a worker-coop based economic system would bring real choice into U.S. politics. It would place before the electorate a basic question of vital importance: what mix of capitalist and worker-coop organized enterprises do you wish to work for, buy from, and live with in the United States? Voters could thereby genuinely participate in deciding the range of job descriptions from which each of us will become able to choose. Will we mostly have to accept positions as employees whose jobs are designed exclusively by and for employers? Or will all job descriptions include at least two basic tasks: a specific function within an enterprise's division of labor plus an equal share (alongside all other enterprise workers) of the powers to design and direct the enterprise as a whole?

Any community that wishes to call itself a "democracy" for more than rhetorical, self-promotional reasons should welcome a one-person, one-vote decision-making process governing how work is organized.

Most adults spend most of their lives at work. How that work is organized shapes how their lives are lived and what skills, aptitudes, appetites, and relationships they develop. Their work influences their other social roles as friends, lovers, spouses, and parents. In capitalism, the work experience of the vast majority (employees) is shaped and controlled by a small minority (employers) to secure the latter's profit, wealth accumulation, and reproduction as the socially dominant minority. In a real democracy, the economy would have to be democratically reorganized. Workplace decisions would be made on the basis of one person, one vote inside each enterprise. Parallel, similarly democratic decision-making would govern residential communities surrounding and interacting with workplaces. Workplace and residential democracies would have significant influences over one another's decisions. In short, genuine economic democracy would be the necessary partner to political democracy.

Many "capitalist" societies today include significant sites of enterprises organized as worker cooperatives. What they need but lack are allied political parties to secure the legislation, legal precedents, and administrative decisions to protect worker coops and facilitate their growth. Early capitalist enterprises and enclaves within feudalism likewise had to find or build political parties for the same reasons. Anti-feudal and pro-capitalist parties contested with feudal lords and their monarchs first to protect capitalist enterprises' existence and then to facilitate their growth. Eventually, pro-capitalist parties undertook revolutions to displace feudalism and monarchies in favor of parliaments in which those capitalist parties could and did dominate.

Today, pro-capitalist parties publicly deny but privately fear that their political dominance is threatened. Mass disaffection from capitalism is growing. One reason is the relocation of capitalism's growth from its old centers (Western Europe, North America, and Japan) to new centers (China, India, and Brazil). Globalization—the polite but confused term for that relocation—generates economic declines in the old centers that destabilize communities unable to admit let alone prepare for them. There, vanishing job opportunities, incomes, and social services provoke increasing questions and challenges confronting capitalism. These are now leading to broad and growing disaffection from the capitalist system. Polls and other signs of that disaffection abound. In the United States, on the one hand, the Republican Party lurched to the right. Trump-type quasi-fascism wants to impose a nationalist turn to "save" U.S. capitalism. On the other hand, the old, pro-capitalist establishment running the Democratic Party blocked Bernie Sanders and other socialists from any real power or voice. Saving capitalism was and also remains that establishment's goal.

Capitalism eventually defeated and displaced feudalism by combining micro-level construction and expansion of capitalist enterprises with macro-focused political parties finding ways to protect those enterprises and facilitate their growth. Capitalists' profits funded their parties' activities. Socialism will defeat and displace capitalism by a parallel combination of expanding worker coops and a political party using government to protect them and facilitate their growth. The worker coops' net revenues will finance their parties' activities.

The emergence of politically significant socialist parties is well underway in the United States. Besides the small remainders of past socialist parties, Occupy Wall Street, the recent growth and prominence of the Democratic Socialists of America, the two Sanders campaigns, and the rise of other socialist politicians such as Ocasio-Cortez are all signs of socialist renewal. But those signs also reveal a huge remaining problem: disorganization on the left. The social movements, labor unions, and the new socialist initiatives need to coalesce into a broad, new socialist party. If that party could also become the political voice of a growing worker-coop sector of the economy, many key conditions for a transition beyond capitalism will have been achieved.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

This article was produced by Economy for All, a project of the Independent Media Institute.

How capitalism is leading us to instability, inequality, and fascism

The looming election has brought forward intensifying debates over a capitalism in crisis, rising nationalism and state power, and the possibility of a renewed fascism. Polarized politics and ideologies alongside long-accumulated social problems and movements shape the objects and tones of debate. Can fascism happen here; is it underway? Or can current capitalism avoid a return to fascism? Such questions reflect the high stakes of the election and this moment in history.

Should the state—the institution that organizes, enforces, and adjudicates the rules governing our behavior in society—exist in capitalism? That question has been important chiefly for certain ideologues who defend capitalism. Their major idea is that the problems of modern society are caused by the state. They are not caused by the employer-employee structure of capitalist enterprises or the markets, unequal distributions of wealth, and other institutions those enterprises support. Those ideologues imagine a pure, perfect, or good capitalism undistorted by any state apparatus. The capitalism they seek to achieve is very utopian. They conclude that by reducing the state (bad by definition), modern capitalism's problems can also be reduced. By eliminating the state, a thereby purified capitalism will solve those problems. From libertarians to Republican Party hacks, this ideology serves to deflect the justified resentment and anger of capitalism's victims away from capitalism and onto the state.

A contrary view holds that the state always existed throughout the history of societies in which the capitalist economic system prevailed. In them, the state—like other institutions—reflected each society's particular conditions, conflicts, and movement. The capitalist economy rested on a foundation of enterprises whose internal organization divided participating individuals into a minority (employers) and a majority (employees). The minority owned and operated the enterprises, making all of its basic decisions: what, how, and where to produce and what to do with output. The majority sold its labor power to the minority, owned little or nothing of the enterprise, and was excluded from the basic enterprise decisions. One result of that basic economic structure was the existence of a state. Another result was a pattern of state interventions in society that reproduced its prevailing capitalist economic system and the employers' dominant position within it.

Of course, the many internal contradictions of societies in which capitalism prevailed also influenced and shaped the state. Employees, for example, could and often did press the state for interventions that employers did not want. Struggles over the state and its interventions ensued. Individual outcomes varied, but the pattern that emerged over time was a state that reproduced capitalism. Likewise, in pre-capitalist societies such as slavery and feudalism, parallel patterns characterized their states. For considerable periods, those states also reproduced their class structures: masters and slaves in slavery and lords and serfs in feudalism. Usually, when a state no longer reproduced a particular class structure, its end was near.

The evolving conditions and conflicts in each society determined the size, activities, and history of its state. This includes determining whether state power is decentralized, centralized, or a mix of both. Social conditions and conflicts also determined the closeness, the intensity of collaboration, and even the possible merger between the state apparatus and the dominant class within each society. In European capitalism, initial decentralization gave way to a strong tendency toward state centralization. In certain extreme conditions, a centralized state merged with a capitalist class of large, concentrated employers into a system called fascism. The 20th century saw several major examples of fascism rise and fall. Now again fascism looms as a possible resort of capitalisms in trouble.

Usually, the transition from decentralized to centralized states reflected social conditions in which dominant classes needed strengthened state power to reproduce the system they dominated. They feared that otherwise, social conditions would provoke a collapse of their system and/or movements to a different economic system. In either case, their social dominance was at stake. Because that situation now looms on our historical agenda, so too does fascism.

Slave systems could persist in decentralized conditions. State power, perhaps localized within each slave master's hands, oversaw the reproduction of the system's two production positions: master and slave. Eventually, when reproduction was threatened—by disruptions to slave markets, slave revolts, or divisive struggles among masters—a separate state was created, given an apparatus, and strengthened. It often had slaves of its own ("state" slaves we might differentiate from "private" slaves owned by persons outside the state). Such a strengthened state was often more closely integrated with masters in a tighter, more coordinated reproduction of slavery. Violence by masters and the state conjointly against slaves recurred often.

In decentralized feudalisms, lords wielded state-type powers alongside their economic positions directing production by their subordinated serfs. Eventually, when pandemics, long-distance trade, serf revolts, or divisive warfare among lords (as dramatized in Shakespeare's plays) threatened feudalism, a centralized state arose from among contending lords. That state—a supreme lord or king—shared social power with the hierarchy of what we might call "private" lords to reproduce feudalism. In medieval Europe, strengthened feudal states evolved into absolute monarchies. Those were tight alliances between kings and hierarchies of lords within boundaries defining different nations. Those tight alliances deployed violence against serfs, serfs' revolts, rebellious lords, external threats, and one another.

Capitalism, like its slave and feudal predecessors, emerged in small, decentralized units of production. Capitalist enterprises, like slave and feudal production units (plantations, manors, or workshops), also displayed a system of two basic production positions. In the case of capitalism, those two positions were employer and employee. The differences were that in capitalism, no person owned another (unlike slavery), nor did one person owe religiously sanctioned labor obligations to another (unlike feudalism). Instead, a market in labor power was established over time. Employers were buyers and employees were sellers in a market exchange.

When problems eventually threatened the reproduction of early capitalism, it strengthened its state apparatus much as slavery and feudalism had done. One such problem was opposition by centralized slaveries and feudalisms to the capitalism that had emerged from them. Likewise, as capitalism grew and expanded across the globe, it disrupted other systems in ways they resisted. Violent interventions by strengthened state apparatuses subdued and reorganized them into what eventually became capitalism's formal and informal colonies. Such interventions encouraged a strong capitalist state and vice versa. The demands and revolts of employees also drove capitalists to construct state apparatuses that could discipline and suppress them. Likewise, "cutthroat" competition among employers required a powerful arbiter to manage and control them.

Even as capitalism spawned a strong state, there was a remarkable hesitancy in doing so that has confused the history of capitalism to this day. The hesitancy arose because early capitalism—the period when emerging capitalist enterprises were relatively small and hampered by powerful slave or feudal states—saw those states as its enemy. Capitalists and their spokespersons wanted the state kept out of the economy, blocked from favoring noncapitalist over capitalist enterprises. They wanted capitalist enterprises and the markets they increasingly dominated to be left alone by the state. Hostility to and thus hesitancy about strong states went from advocating "laissez-faire" in the 17th century to celebrating "the free market" in modern times. In the latter form, it is utopian, an imaginary construct useful for ideological projects justifying capitalism (as "efficient") and for libertarian slogans. No actual capitalism in recent centuries ever had a free market without state interventions and regulations.

From the 18th through the 20th centuries, capitalism spread globally from its initial centers in western Europe. The state was crucial to that spread via warfare ("opening" regions to trade) and colonizations. Conflicts among capitalists, especially the endemic struggles between competitive and monopoly capitalists and between capitalists from different nations, necessitated state interventions. Capital-labor conflicts and battles were always goads to state strengthening and interventions. Massive standing military establishments, routinized after World War II, generated military-industrial complexes. Those complexes, especially in the leading capitalist and military power after 1945, were just the kind of mergers of state and big capitalists that became models for parallel mergers among other industries and the state.

In the United States, one such parallel merger yielded the medical-industrial complex. There the role of the state was to protect a monopoly shared among four industries: doctors, hospitals, drugmakers and medical device-makers, and health insurance companies. The government enabled and sustains its merger with the medical-industrial complex. It does so in multiple ways. It exempts the complex from antitrust action. Government-subsidized Medicare and Medicaid—public health insurance for the elderly and the poor—carefully leave the younger, healthier, and more profitable clientele to the private health insurance companies. The government avoids buying pharmaceuticals in bulk and passing savings onto the public. Finally, the government has usually blocked and mostly denounced genuinely progressive reforms of this privately profitable medical system as "socialism."

De facto, if not de yet de jure, mergers of state and capitalist industry punctuated the growth of state power alongside the concentration and centralization of capital.

Now we have much the same happening in finance. Central banks—largely state institutions—long marched in close formations with major private banks in capitalist countries. The Federal Reserve has responded to the three capitalist crashes so far this century by not only greatly increasing its money creation and interest rate reductions but also by extending credit to nonfinancial corporations. The Fed buys corporate bond exchange-traded funds, corporate bonds in the secondary market, and asset-backed securities based on corporate debts. The Fed likewise now owns a third of residential mortgages. Government credit becomes ever more important relative to private credit. The government will soon coordinate its decisions on who gets how much government credit with other government policies including which Chinese companies get banned and which European companies get sanctioned. These financial developments mark more milestones on the road to state-capitalist merger.

Behind the racism, nationalism, and war-mongering that Hitler championed lay the core economic system of fascism. That involved a merger of the state and private big capitalists. The former enforced the conditions of profitability for the latter. In turn, the capitalists accommodated the running of their enterprises to finance, produce, price, and invest in ways supportive of the fascist state's policies. Expropriation of privately owned means of production targeted selected social sub-groups (such as Jews). Aryanization—not abolition—of private capitalism was the state's objective.

In contrast, socialists favored the socialization of private capitalists' enterprises. It was not the merger of the state with private capitalism that socialists sought; it was rather the dispossession of private capitalism. The state was to seize sole possession of means of production to operate a state capitalism. Most socialists saw state capitalism as an intermediate stage necessary to enable the transition to communism. That communism was understood as capitalism's antithesis: social (not private) property in means of production, government planning (not markets) to organize distribution of resources and products, workers' control of and running of enterprises, and distribution of output based on need as socially determined.

Fascism's economic organization is where economic development is now taking capitalism in general and U.S. capitalism in particular. U.S. capitalism now replicates a parallel tendency toward merger with a strong state that characterized slavery and feudalism earlier. Systemic challenges to capitalism's reproduction are met with growing state power, growing big capitalist business, and eventually their merger into a fascism. Exactly how and when capitalism evolves into fascism varies with the particular conditions and challenges of each national context. Likewise, the internal contradictions of capitalism—for example, its cyclical instability and its tendency toward deepening wealth and income inequality—can provoke mass resistances that can slow, stop, or reverse the evolution, at least for a while, or even redirect economic transition to socialism.

But the tendency of capitalism is toward instability (its cycles), inequality (its upward redistribution of wealth), and fascism (state-capitalist merger). The first 20 years of this new century display these tendencies in stark relief.

This article was produced by Economy for All, a project of the Independent Media Institute.

Socialism or capitalism? Here's the truth about China's economy

Near the end of his life Lenin gave a speech that referred to the USSR as a transitional society. He explained that socialists had taken state power and could thereby take the post-revolutionary economy—which he labeled “state capitalism”—further. The socialists’ state could achieve transition to a genuinely post-capitalist economy. He never spelled out exactly what that meant, but he clearly saw that transition as the revolution’s goal. In any event, conditions inside and outside the USSR effectively halted further transition. Stalin’s USSR came to define socialism as state power in socialists’ hands overseeing an economy that mixed private and state enterprises with market and state planning mechanisms of distribution. The state capitalism originally conceived as a transitional stage en route to a socialism different from and beyond state capitalism came instead to define socialism. The transition had become the end.*

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Why capitalism is in constant conflict with democracy

The capitalist economic system has always had a big problem with politics in societies with universal suffrage. Anticipating that, most capitalists opposed and long resisted extending suffrage beyond the rich who possessed capital. Only mass pressures from below forced repeated extensions of voting rights until universal suffrage was achieved—at least legally. To this day, capitalists develop and apply all sorts of legal and illegal mechanisms to limit and constrain suffrage. Among those committed to conserving capitalism, fear of universal suffrage runs deep. Trump and his Republicans exemplify and act on that fear as the 2020 election looms.

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The consequences of inequality can be fatal

Capitalism, as Thomas Piketty’s Capital in the Twenty-First Century shows, relentlessly worsens wealth and income inequalities. That inherent tendency is only occasionally stopped or reversed when masses of people rise up against it. That happened, for example, in western Europe and the U.S. during the 1930s Great Depression. It prompted social democracy in Europe and the New Deal in the United States. So far in capitalism’s history, however, stoppages or reversals around the world proved temporary. The last half-century witnessed a neoliberal reaction that rolled back both European social democracy and the New Deal. Capitalism has always managed to resume its tendential movement toward greater inequality.

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Why the government mostly helps people who need it the least — even during a crisis

In January 2020, the NASDAQ stock market’s index stood just under 10,000. In the March crash, it fell to 7,000. As of July 10, 2020, it hit 10,600. The U.S. government’s economic policies produced a “recovery” for the rich who own the vast bulk of stocks. Their holdings are worth more now than before COVID-19 hit us. The other major benchmarks for securities, the Dow Jones Industrial Average and the Standard and Poor 500, show similarly dramatic, slightly smaller recoveries.

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The sham of orthodox economics has been exposed in the wake of COVID-19

A cornerstone of orthodox economics is the idea that capitalists’ decisions about investing and producing are inherently “efficient.” This means that capitalists select among all alternative courses of action those whose costs are minimal and whose benefits are maximal. Keeping costs to the lowest possible level while producing goods and services that yield the most possible revenue is what maximizes profit, the difference between costs and revenues. Capitalism, we are told, is the best system because it drives all those in charge of production (the owners and top executives of enterprises) to maximize profits and thus economic efficiency. Capitalists get profits, and the rest of us benefit from the efficiency of production within a capitalist system.

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US global capitalist leadership of the last 50 years is now in decline

The Trump administration has turned sharply toward economic nationalism. It attacks and undermines the World Trade Organization, NATO, and the UN. Trump and other top officials explicitly insult many world leaders. He imposes high tariffs. Official statements renew and sustain Cold War-type attacks on China, Venezuela, Cuba, and Iran. Trump flirts openly with nationalists who also stress white supremacy and anti-Muslim activity.

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