In 1848 Karl Marx predicted capitalism's demise. In 1989 Francis Fukuyama assured his readers that liberal democratic capitalism represented the end of history. In 2007 there may be reasons to suspect capitalism will evolve in ways we can at best only partially imagine. In 1960 most politically savvy Americans could hardly have foreseen G W Bush. Even many Republicans accepted a "mixed economy," with a safety net and "fine tuning" deficits and monetary policy to assure equity and stable growth.
Liberals and conservatives have different takes on the fate of this dream. Conservatives argue that market manipulations undermine automatic and beneficent market balances and that safety nets encourage moral sloth and thereby exacerbate social problems. Ronald Reagan saved US capitalism by cutting taxes and deregulating the economy. Liberals reply that Reagan tax cuts and deregulation left growing economic inequality.
Both sides can make plausible arguments. Inequality did increase, but even working class Americans reaped modest gains in disposable incomes. Nonetheless, working and middle class wage gains in the last thirty years have lagged behind the gains made during the thirty years after WWII, when unions, an improving safety net, and government transportation and Cold War R and D spending triggered productivity gains and economic justice.
Nonetheless, the Post World War II consensus was not a golden age. The consensus tacitly accepted many traditional racial and gender boundaries. In addition, its version of worker rights stopped both at the water's edge and outside the company boardroom. Viewing their corporation's short- term profits as the route to increasing wages, union leaders often supported US government repression of social democratic unions abroad, Union leaders also viewed themselves as junior partners, entitled to a share in the growing pie but enjoying little role in planning the jobs and products that increase productivity. As workers in the sixties began to demand both wage gains and satisfying work, corporations sent jobs as well as product abroad. Productivity gains slowed and inflation escalated. A newly emerging OPEC demanded high oil prices. Racial tensions mounted as African American workers felt left out of post WWII prosperity. Whites whose jobs were becoming more insecure received from their unions and their political friends little help beyond the counsel for more concessionary bargaining with management.
Thus the Reagan Revolution represented the culmination and even intensification of several intersecting tensions. Blaming affirmative action and "welfare queens" for the troubles of working class whites, it both fed upon and intensified longstanding racial animosities and a sense of victimhood among working class citizens. Vietnam's legacy and OPEC provided ammunition to view the US as victim, with the Iran hostage crisis becoming the most visually compelling encapsulation of this story. These intersecting narratives of victimhood fed on each other and were skillfully mobilized by the Great Communicator in support of military spending, self-reliant "manhood," and the restoration of "morning in America."
George W Bush has subtly but tellingly extended the Reagan revolution. Tax reductions for the wealthy continue, but government, rather than being hollowed out, has been outsourced to private corporations. Naomi Klein nicely summarizes this transformation in The Shock Doctrine: The Rise of Disaster Capitalism: " the security failures of 9/11 reaffirmed in Bush [his] deepest ideological (and self-interested) beliefs - that only private firms possessed the...innovation to meet the new security challenge. Although...the White House was on the verge of spending huge amounts of taxpayer money to launch a new deal, it would be exclusively with corporate America... The deal would take the form of contracts, many offered secretively, with no competition and scarcely any oversight, to a sprawling network of industries."
Klein overplays the impact of 9/11 deaths. Just as under Reagan, divergent underlying currents allowed Bush to turn this event into a surprisingly potent and motivating symbol. These currents included: 1) the growing role among some marginalized working class citizens of some fundamentalist theologies that divide the world neatly into good versus evil 2) increasing concerns about global cultural change, and 3) continuing anxieties about changing gender and economic roles for white working class males.
Nonetheless, 9/11, like the hostage crisis, was a visually powerful catalyst that speeded and intensified a sense of implacable, foreign-induced hostility to a virtuous core. The rhetoric surrounding the event and the visceral fears evoked by its constant replays have been used both to insulate government, to marginalize opponents of the system, to attract and flatter stressed middle and working class citizens who derive no economic benefit from the new capitalism. The only "facts" allowed into this closed universe are ones its leaders are willing to countenance.
In Bush's capitalism, the presumed beauties of market competition are used as an argument against unions and social security. The most powerful business interests, however, receive secretive and generally noncompetitive access to and control of vital public functions, from logistics in Iraq to military and foreign intelligence.
Unlike even Reagan's capitalism, however, as Paul Krugman recently points out, Bush's agenda "has produced essentially no gains for ordinary American workers.... America has never before experienced a disconnect between overall economic performance and the fortunes of workers as complete as that of the last four years." This capitalism is also sustained in part by a military adventure with cascading failures that dwarf Vietnam, by tenuous resource flows and environmental supports, and by religious currents that even among fundamentalists of various stripes are beginning to reveal surprising fissures.
US capitalism may head down some frighteningly authoritarian road, but I am skeptical of any predictions issued with an air of certainty. Capitalist transformation might well be viewed through oceanographers' concept of "rogue waves." Periodically mariners report that vast walls of water appearing seemingly from nowhere sink huge ships. Such reports, once taken as legend, are now regarded as quite credible. Oceanographers have identified conditions that can predispose to their occurrence. Usual ocean swells encounter complex fields of random eddies, currents following curved paths. The ocean swell's energy can then be concentrated and focused, but the frequency and intensity of such effects can neither be explained nor predicted by normal additive linear models.
Bush II's capitalism emerged as surprisingly intense and focused responses to complex, resonating undercurrents of racial, economic, gender, and global anxieties. Perhaps a dialogue between less dogmatic versions of social democracy and progressive and/or more skeptical capitalists might become a catalyst for a new capitalism that would respond constructively to gaps, risks, and tensions in the current order. A new capitalism might seek empowerment of workers in their workplaces as nongovernmental strategies to improve the long- term fortunes of both labor and capital. Manufacturers and workers might come to recognize that energy conservation and more efficient transit options could both create quality jobs here and improve US competitiveness. Both might come to acknowledge the importance of more free time as a reward for productivity gains in an era of resource challenge. Most importantly, they might also strive to become more attentive to emerging rights claims and injustices both domestic and international that even the best combination of markets and open democracies may leave or even generate in a world of flux and becoming. Achieving more democratic and less arrogant capitalisms may be tough and can hardly be assured, but the need for such transformations grows by the day.