Richard D. Wolff

American capitalism has passed its peak — and the signs of decline are piling up

Like all previous economic systems in recorded history, capitalism is on track to repeat the same three-step trip: birth, evolution, and death. The timing and other specifics of each system's trip differ. Births and evolutions are commonly experienced as positive, celebrated for their progress and promise. The declines and deaths, however, are often denied and usually feel difficult and depressing. Notwithstanding endlessly glib political speeches about bright futures, U.S. capitalism has reached and passed its peak. Like the British Empire after World War I, the trip now is painful.

Signs of decline accumulate. The last 40 years of slow economic growth have seen the top 10 percent take nearly all of it. The other 90 percent suffered constricted real wage growth that drove them to borrow massively (for homes, cars, credit cards, and college expenses). Their creditors were, of course, mostly that same 10 percent. College costs rose as graduates' prospects for good jobs and incomes fell. Those without college degrees faced worse prospects. Inequalities of wealth and income soared. To protect their positions atop those inequalities, the 10 percent increased their donation-fueled sway over politics and culture. Compliant politicians then reinforced the deepening inequalities of wealth and income in that typical spiral of systems in decline.

The relentlessly deepening inequality is especially painful and difficult for the United States because it had been temporarily reversed in the 1930s and 1940s. The sharply reduced inequality then—celebrated as the rise of a vast "middle class"—led to renewed affirmations of American exceptionalism and capitalism's virtues. We lived, it was said, in a post-1930s "people's capitalism." The claim had its grain of truth, if no more than that. It made expectations of "middle class" jobs and incomes seem to be birthrights of most (white) Americans. The ever-deepening inequality since the 1970s first frustrated and then collapsed those expectations. A kind of bitterness at a fading American dream has settled in and agitated popular consciousness. Capitalism became increasingly a disappointment, a sign of system decline. Another sign is the increasing interest in socialism and elections of socialists despite the relentless anti-socialist drumbeats of the Cold War and since.

The nation's response to COVID-19 displays more signs. With 4 percent of the world's population, the United States accounts for 20 percent of the world's COVID-19 deaths. Despite being a rich country with a well-developed medical apparatus, the system as a whole has failed to cope. Its response compares unfavorably with that of many less rich, less medically equipped nations. In the United States, testing, prevention, treatment, and vaccination remain uneven, inadequate, and slow.

During the last capitalist crash of comparable scope, the 1930s Great Depression coupled with World War II, the pre-1930s' extremely unequal distributions of wealth and income were reduced by over a third. In sharp contrast, this latest capitalist crash coupled with a pandemic increased already extremely unequal distributions. U.S. capitalism's flexibility from 1930 to 1945 compares with the rigidity of its income and wealth distributions now. Then a nation rallied in the face of massive dangers. Now that nation splits. A capitalism still ascending back then became ossified, and decline set in.

The last 40 years of redistributing income and wealth upward from the poor and middle class to the top culminated with Trump's 2017 tax cuts. Over the 30-plus years before 2017, corporations and the richest 10 percent (who own more than 80 percent of stock market securities) had enjoyed unprecedented gains, absolutely and relative to the other 90 percent. They "needed" a massive tax cut less than ever. But the GOP's control of the U.S. government could and therefore did gift it to them anyway. This worsened the already fast-rising reliance on deficits and national indebtedness that followed the 2008-09 crash. The unprecedented and continuing explosion of money and national debt increases are the public finance signs of capitalist decline.

When the Roman Empire declined, many blamed the resistances arising within its far-flung areas for the decline. They were called "barbarians," denounced as "invaders," and generally scapegoated to distract attention from plentiful signs of internal decay. Today, the anxiety about and demonization of immigrants and all manner of foreigners "cheating" the United States, economically and politically, are likewise signs of decline. The United States' remarkable economic growth across its history "solved" its labor problems by a combination of rising wages for workers already here plus massive immigration of lower-wage workers. A rising capitalism needed and could accommodate both parts of that solution. Today's U.S. capitalism can accommodate neither.

The United States' recent wars in Afghanistan and Iraq were neither necessary nor successful in military terms. They did enable massive government spending and justified rising "defense" outlays in federal budgets. The Soviet Union as a great enemy had gone. A limitless, global war on "terrorism" provided an interim foreign danger until today's pivot toward a new Cold War with China could settle in as a prime justification. But whatever global protection the U.S. military provides to today's global and vulnerable supply chains, huge military spending also helped cause neglect of infrastructure maintenance. That has now become urgent. The old guns versus butter problem typically attends economic system declines.

As the U.S. government tries desperately to manage the mushrooming costs of its foreign and domestic programs, it resorts to a modern version of the ancients' "debasing of the coinage." The Federal Reserve System monetizes deficits in fast-growing magnitudes. Given unemployment, constricted wages, and excessive personal debt levels, the money creation does not flow into real investment but rather into stock markets. Inflation there has thus been real, fueling ever-deepening wealth inequality. We get promises that money creation will never shift its focus onto goods and services, thereby provoking classic inflation. We get assurances that the Fed will register and control such an inflation if it threatens. Those promises and assurances aim to help prevent what those in charge know are terrifying possibilities.

The January 6 assault on the Capitol made a shocked nation more aware of how deep its social divisions have become and how its social cohesion has disintegrated. Those who attacked the Capitol reacted to the decline of capitalism by desperate resistance: to an election result, to political liberalism, to multiculturalism, to secularism, and so on. Like Trump, they tried to reverse capitalism's decline. Because their ideology precludes them from recognizing that decline, they reason otherwise. They blame and therefore seek to dismantle the government. Yet, the U.S. government, via the two-party oligopoly in U.S. politics, has single-mindedly supported U.S. capitalism. The parties differ partly and only on how best to do that. As decline proceeds, despite the parties' efforts to stop it, building frustration eventually boils over. Efforts become extreme and thereby worsen rather than solve the problem. Trump's Cabinet members often devoted themselves to destroying their respective departments. The January 6 attackers sought to destroy as well. Such self-destruction is a sign of advanced system decline.

Throwing money now at the long-neglected U.S. infrastructure runs a risk of failure parallel to what happened to U.S. foreign aid and many U.S. military adventures. The U.S. federal spending involved always goes either to private corporations for contracted goods and services or else it goes to governments, foreign or domestic, local, regional or national. The recipient governments likewise use them for contracts with private corporations. Large private corporations will, for example, carry out most of the work of U.S. infrastructure repair and updating.

The contracted corporations will in turn use the money paid to them just as they use all their revenues from all their other contracts. Some of the money will go to employees' wages and salaries, but much of it will go to all the other "normal costs of doing business." These include high salaries for middle management and luxurious pay packages for upper management, machines for automation, relocating facilities from higher-wage areas to lower-wage areas to enhance profits, dividend increases for shareholders, interest on and repayment of corporate loans, and fees paid to outside consultants (hired to help plan corporate growth, overseas investments, and defeating union drives). In short, federal spending will flow into corporate hands who will then reproduce the very system that neglected infrastructure and deepened income and wealth inequalities over recent decades.

The system's decline is reproduced because its leaders cannot see the internal production structure of U.S. capitalism as a central problem, let alone change it. U.S. factories, offices, and stores are nearly all divided into a dominant minority of owners and boards of directors versus a dominated majority of employees. That structure is deeply undemocratic. Employers are not accountable to employees. They use their position to enrich themselves relative to employees, increasingly so over the last half-century. The minority's unstable investment decisions (driven by irreducible uncertainty and what John Maynard Keynes called "animal spirits") impose recurring, costly business cycles on society. The tensions and antagonisms between employers and employees upset and undermine physical and mental health and the vaunted "efficiency" of the system at every turn.

Because the signs of U.S. capitalism's decline are denied or misunderstood, they lead individuals and groups often to resort to frustrated, misguided, and desperate acts. They are blind to the structural problem of an economic system no longer capable of dealing with its contradictions. Thus, the decline accelerates: like a train rushing down a track toward a stone wall. Most of its conductors and passengers either see no signs or else note them but without connecting them to their basic problem: being on a moving train on track to hit a stone wall.

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.

The fake debate about the minimum wage

Capitalism's "conservative" defenders yet again oppose raising the minimum wage. They fought raising it in the past much as they tried to prevent the Fair Labor Standards Act (1938) that first mandated a U.S. minimum wage. The major argument opponents have used is this: setting or raising a minimum wage threatens small employers. They may collapse or else fire employees; either way, jobs are lost. What is conveniently assumed here is a necessary contradiction between minimum wages and small business jobs. That assumption enables opponents to claim that not setting a legal minimum wage, like not raising it, saves jobs. The system thus presents very poorly paid workers with this choice: low wages or no wages.

"Liberals" in the United States have mostly accepted the assumption of that contradiction, the necessity of that final choice. However, they try to demonstrate that the social gains from a higher minimum wage would exceed the social losses from the reduced employment they admit. Their idea, in effect, is that a higher minimum wage would increase demand for goods and services. Any workers fired because of the minimum wage would be rehired elsewhere to meet the rising demand. Countless empirical studies by conservatives and liberals yield, as usual, correspondingly conflicting conclusions.

In the actual history of U.S. capitalism, the minimum wage has been undercut from the outset. In real terms (what the minimum wage can actually buy), its long-term decline began from a peak in 1968. It was last raised in 2009 (to $7.25 per hour) despite a rising consumer price index every year since then. U.S. business interests plus the "conservative" politicians, media, and academics they support have inundated the public with the idea that raising the minimum wage will hurt poorly paid workers (by losing mostly small business jobs) more than help them. This debate over the minimum wage, intensified whenever proposals to raise it gain public attention, has been "won" chiefly by the conservative/business side.

Despite its political effectiveness for conservatives and big business till now, their argument—like the entire debate—is flawed logically. Its underlying, shared assumption is unnecessary and inaccurate. It serves chiefly to undercut the level, purpose, and social effects of the minimum wage in the United States.

Paying a decent living wage to workers by raising the minimum wage need not threaten the viability of small businesses. The latter need not collapse nor fire workers when minimum wages are raised. Indeed, raising the minimum wage can and should be one basis for a mutually beneficial alliance between wage workers and small businesses.

Few dare quarrel with the notion that in the U.S. today, paying the federal minimum wage of $7.25 per hour is an outrage against decency. It is among the very lowest minimum wages of industrialized economies: quite the achievement for one of the "richest countries in the world." So the defense of such an outrage has always begun by focusing attention elsewhere. We are asked to sympathize with the small businesses whose profits and thus viability will be undone if they are required to pay a raised minimum wage. We are asked likewise to sympathize with the plight of minimum wage workers who will become jobless when their employer cannot pay a raised minimum wage. Thus the conclusion beloved by opponents of raising the minimum wage: it lies in the interest of low-paid workers and small businesses to join the opposition to raising the minimum wage.

So many flaws attend such logic that it is not easy to decide where to begin its demolition. We might note that it clearly implies that were we to drop the minimum wage even further, below $7.25 per hour, we might achieve lower unemployment rates. But that is so gross an idea that right-wingers rarely go there. They don't dare.

There is a parallel example we can draw from the history of wage workers when they included children as young as five years old. The parallel logic then held that allowing child labor (with the oppression and abuses it entailed) was doing poor families a favor. Were child labor to be outlawed, capitalism's defenders then insisted, two tragedies would necessarily follow. First, poor families would suffer an income loss because they could no longer sell their children's labor power to capitalist employers for a wage. Second, businesses whose profits depended at least partly on low-wage child labor would collapse and render adults jobless too.

It is important to note that after sustained political agitation, child labor was in fact outlawed. The logic of its defenders was rejected and rarely resurfaced afterward even in right-wing and "conservative" literature. Former capitalist employers of children found other means (paying adults more, improving productivity, economizing on other inputs, and so on) to profit and grow. As we know, U.S. capitalism over the last century prospered without child labor. And where U.S. capitalists relocated abroad to employ children, opposition there has replicated what happened in the United States, albeit slowly. What happened to child labor can and likely will happen as well to abysmally low minimum wages.

How then might a civilized society raise its minimum wage to provide a decent livelihood to workers and protect its small businesses? The solution is straightforward. Offset the extra labor costs for small businesses from a higher minimum wage by providing them with some combination of the following: a new and significant share of government orders, tax breaks, and government subsidies. Such supports now overwhelmingly favor big business and thereby facilitate its many efforts to destroy and replace small businesses. Those supports should be reapportioned with special consideration/targeting for small businesses. To be eligible, small businesses would need to show how raising the minimum wage increased their total wage bill. In this way, society can concretely support small business and a decent minimum wage as twin, shared social values.

In effect, this proposal changes the terrain of the minimum wage debate. It brings into stark relief that raising the minimum wage leaves open the question of which part of the employer class will bear the burden of compensating for that in the short run. An effective political coalition of low-wage workers and small businesses could require big business to pay by losing some of its government business, paying higher taxes, or obtaining lower subsidies—all to compensate small businesses for a raised minimum wage. For decades, an alternative political coalition—of big and small business—blocked or delayed minimum wage increases. Nothing requires this latter coalition to always or, indeed, ever prevail over a competing coalition of labor and small business that seeks a higher minimum wage for one plus greater state supports for the other. Likewise, nothing warrants continuing the current debate over raising the minimum wage as if only small business would always have to absorb its possible costs.

The debate over the minimum wage has been lopsided for a very long time. Uncritical media coverage of the debate has allowed big business to evade its proper share of paying to sustain a viable small business sector. Meanwhile, workers and small businesses pay taxes that favor big business. Most Americans want a thriving small business sector. Most also increasingly criticize big business: "antitrust" remains part of government regulation as well as a part of popular ideologies. We can and should correct the old debate now to enable a different political coalition to shape minimum wages in a different way from the past.

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.

The centers of global capitalism are migrating away from the US, Europe and Japan

Modern capitalism began in England in the 17th century and spread eventually throughout the world. Its particular evolution produced a global economy organized around centers and a periphery (colonized economically and often politically as well). In those centers—chiefly Western Europe, North America, and Japan—capitalism concentrated its accumulating assets. Factories, offices, stores, distribution centers, and transport networks built fast-growing cities. Supporting institutions of government, schools and universities, and hospitals likewise grew into the centers of urban capitalism especially in the 19th and most of the 20th century.

However, new centers of capitalism have emerged and grown especially quickly over the last half-century. China, India, and Brazil are leading examples where jobs, real wages, consumption, profits, and investments are growing. Their size and global impact not only make them the new centers of capitalism but also require attaching the adjective "old" to capitalism's earlier set of centers.

The blunt truth of modern economic development is this: capitalism is leaving its old centers and relocating to its new centers. About this leaving we can and should borrow the phrase: this changes everything.

U.S. capitalism achieved global dominance during the 20th century after two world wars plus anti-colonial movements destroyed the European empires that might have contested for such dominance. Impressive as it was, U.S. capitalism's dominance did not last long. With no little irony, it was the big capitalists of the old centers whose profit motives led them to leave and help create new centers. The latter's much lower wages and fast-growing mass consumer markets drew them. Many of the biggest capitalist corporations relocated (or expanded) from the old to the new centers. As those corporations that moved early profited mightily, competitive pressures accelerated other corporations' decisions to follow their example. Capitalism's relocation of its centers continues.

The U.S.'s economic footprint in world trade and capital flows has been giving way steadily to other countries' rising footprints. The global dominance of the U.S. dollar confronts increasing transactions using other currencies. Trump's wholesale attacks on China via trade wars, tariff impositions, and persecutions of individual Chinese corporations and executives did not stop or change China's economic development. Neither did the hostile denunciations of China's policies on Hong Kong, its Uighur minority, intellectual property, and so on. Across 2020, China's economy grew 2.3 percent while that of the United States fell by 3.5 percent. China's record on containing COVID-19 proved far superior to that of the United States. In short, no end, let alone reversal, of the relative decline of the United States vis-à-vis China occurred.

The aspects and implications of such relocating capitalist centers touch almost every aspect of our lives. The costs and debts plaguing U.S. higher education contrast sharply with the huge expansion of Chinese higher education. Even starker has been the contrast between China's preparedness and containment of COVID-19 and that of, say, the U.S. and the UK. Of course, in terms of public health, India and Brazil show that even new centers of capitalism can experience severe difficulties when their governments fail to mobilize both private and public resources to achieve prioritized social goals (like defeating a virus or maximizing sustained economic growth).

Old and new centers of capitalism deserve the same key noun—capitalism—because both organize their enterprises/workplaces in the same dichotomous way. A minority are employers while a majority are employees. The minority decide exclusively what the product will be, what technology will be used, where production will occur, and how net revenues will be distributed (to whom and for what). While old and new centers of capitalism usually display different mixtures of private and state enterprises, it is noteworthy that both types of enterprises in both centers are organized in the same employer/employee dichotomy that defines capitalism.

Declining capitalisms' problems differ from those of rising capitalisms. In the United States, Western Europe, and even Japan, many capitalist corporations pursue defensive strategies (relocating elsewhere, merging, or shrinking). Cost-saving automation is often the more attractive profit-raising strategy than output expansion. Thus, communities agonize over "runaway shops" and joblessness cutting tax revenue: must they reduce public services or impose rising government debt burdens? Real wages stagnate. The jobless move or emigrate looking for work and disrupting their and their families' lives. Inequality soars as the top 5 percent (major shareholders, top executives) get most of the profits from relocating capitalism to low-wage countries and from automation. The other 95 percent struggle to minimize the costs and burdens on them from capitalism's relocating centers and other profit-driven strategies.

In contrast, China, India, and Brazil have the problems of fast-growing capitalism, rather like the problems that beset 19th and early 20th-century capitalism in its old centers. Resistance, unions, and socialist movements arise from workers streaming into cities and industrial jobs and adopting correspondingly new ways of thinking and being. Crowding, environmental pollution, and inadequate housing and sanitation trouble the new centers more or less. Ruthless competition produces horrific working conditions as does internationally mobile capital seeking quick profits. Business cycle instability and deeply embedded tendencies to ever-greater income and wealth inequality provoke social criticisms. The latter are often borrowed and adapted from the labor, socialist, and communist movements that grew in capitalism's old centers.

On the one hand, the movement of capitalism from old to new centers plunges the old into a long-term decline evident in decaying industries and cities. Politics shifts away from prioritizing growth, adjudicating internal conflicts in ways that reproduce growing capitalism, and shaping the world into a distinctive center-periphery pattern. Instead, policies shift toward maintaining the global status quo against the many forces eroding it. For many politicians that shift of focus degenerates into scapegoating amid cascading social divisions and decay.

On the other hand, capitalism finds profitable new territory in its new centers. Growth there offsets a decline in the old centers. The global 1 percent get richer because they draw increased wealth from both the old and new centers. What happened inside capitalist countries—movements, say, from old Rust Belt centers to new high-tech centers—has been transposed onto the world as a whole.

The great social question is whether the different problems of capitalism in both its old and new centers will cumulatively undermine the system or provide it with a further lease on life. Perhaps growing conflict between old and new centers—expressed, for example, in the struggle between the United States and China—will follow the ancient path from economic to military conflict. Then the great social question will go unanswered and global capitalism would have fulfilled one prophecy of its critics: that its internal contradictions will prove self-destructive.

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.

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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