John Buell

Many Faces of Modern Capitalism

In the course of her epic battles against unionized coal miners in Britain, Margaret Thatcher (a.k.a. the Iron Lady) argued "there is no alternative" to rolling back unions, shrinking government and shredding safety nets. Thatcher did contribute to an emerging market-oriented economics not only in Britain but also in the United States and other developed and developing nations. Her prophecy, nonetheless, was misleading. Capitalism may be inevitable, but it has taken widely divergent forms. US capitalism 2007 relies on but is hardly restricted to market mechanisms. In addition, it has failed to deliver benefits promised the middle and working class electorate that once at least tentatively endorsed it.

Ronald Reagan argued that cutting taxes stimulates entrepreneurial initiative and benefits everyone. Reagan's tax cuts did deliver some benefits. Though inequality increased, even working-class Americans reaped modest gains in disposable incomes. Nonetheless, productivity increases lagged behind the gains made during the 30 years after World War II, when unions, an improving safety net, government transportation projects and Cold-War-related research-and-development spending triggered sharp productivity gains and greater economic equality. That social consensus, however, still accepted many traditional racial exclusions, failed to address emerging globalization, and neglected festering concerns about the quality of work and social life. Its breakup opened space for Reagan.

Bush's conservative economics have not even achieved Reagan's limited gains. Paul Krugman points out that this capitalism has produced "essentially no gains for ordinary American workers. … As far as I can tell, 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."

George W. Bush has subtly altered American capitalism. Tax reductions for the wealthy have grown, 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, a straight-up transfer of hundreds of billions of public dollars … into private hands. The deal would take the form of contracts, many offered secretively, with no competition and scarcely any oversight, to a sprawling network of industries."

In Bush's capitalism, market competition can and should hold the small businessman's feet to the fire. Its presumed beauties can be used as an argument against unions and social security. The wealthiest and most powerful business interests, however, demand guaranteed success. Many public functions, from logistics in Iraq to military and foreign intelligence, are being contracted out to private companies, often based upon connections rather than open bidding.

Klein overplays the impact of 9/11 deaths. Equally destructive events like Katrina or the life-threatening malfeasance of federal leaders in response to Katrina and 9/11 evoked less cultural angst. The collapse of the World Trade Tower took on intense symbolic significance because of several interrelated factors: the growing role of Manichean theologies, which divide the world between light and dark and good and evil people, with no room for shades of gray; a US society that has always seen itself as a city upon a hill; increasing concerns about global cultural change; and anxieties about changing gender and economic roles for white working-class citizens.

Nonethless, Klein is on to something. 9/11 was a catalyst to advance a changing form of capitalism. I would call this whole mixture virtuous crony/catastrophe capitalism, but I invite catchier terms. A rhetoric of implacable, foreign-induced hostility to a virtuous core is used both to insulate government's economic transactions, 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, and to generate new demands for private provision of public services. The only "facts" allowed into this closed universe are ones its leaders are willing to countenance.

That system has, however, become breathtakingly volatile -- and less productive. It is also sustained in part by an increasingly tenuous military adventure and by religious currents that even among fundamentalists of various stripes are beginning to reveal surprising fissures.

I reject both the Iron Lady's and vulgar Marxists' iron laws about the future of capitalism, but one may hope and work for beneficent transformations. Perhaps a dialogue between less dogmatic versions of social democracy and progressive and/or more skeptical capitalists might be fruitful. Liberals and social democrats can't return to the New Deal but perhaps to a democratic capitalism more attentive to emerging rights and injustices that even publicly designed safety nets may leave or even generate. Capitalists, scientists--and even their public regulators-- might also contemplate the possibility that science and technology cannot fully predict and control natural and social worlds that may contain stubborn elements of opacity and recalcitrance. Achieving more democratic and less arrogant capitalisms may be tough, but the need for such transformations grows by the day.

John Buell ( is co-author of Liars, Cheaters, Evil Doers: Demonization and the End of Civil Debate in American Politics.

From The Progressive Populist, October 15, 2007

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