The Problem

Historical Background

The rise of big business

The advent of capitalism over two hundred years ago sparked accelerating social change and a once unimaginable outpouring of products for human use and enjoyment. In this new economic system natural resources became private property, farmers and craftsmen became wage workers, advancing science was applied to the technology of production, and fossil fuels released potent new sources of energy.

Eventually the institution of for-profit shareholder corporations allowed capital investors to pool resources and build gigantic businesses that sought to dominate markets and control the government. Businesses often sacrificed the interests of consumers and workers to the continual search for profits, with police and military violence used to suppress opposition at home and abroad.

The rise of big government

However, social disruption and intolerable working conditions inspired mass movements to democratize political institutions and socialize economic ones. In the United States at the beginning of the twentieth century, some politicians began to make efforts to regulate business and break up monopolistic trusts.

The U.S. government had already swollen in size with a military buildup to protect business interests in other countries. During the Great Depression of the 1930s it grew further as a variety of business regulations and social welfare programs were adopted to provide workers and other citizens with new protections, including the legal recognition of labor unions.

Big business and big government established a working compromise that preserved capitalism within a framework of regulation and a financial “safety-net” for the mass public. After World War II the U.S. prospered under this system and the benefits of mass production were more widely shared. The next two decades were “Golden Years” of both business prosperity and rising wages.

The big shift

By the 1970s the system was under strain. High government spending to support both military operations and social programs fed inflation.  The economic recovery of Europe and Japan increased international competition and eroded business profits. Oil producing nations combined to raise prices, further feeding inflation. Advances in transportation and communications fostered a global economy in which businesses could escape national regulations and taxes by moving operations abroad.

As a response, “neo-liberal” political forces in both the Republican and Democratic Parties began to dismantle the elements of the social compromise in order to free U.S. capitalism from regulations and cut tax rates on business and the wealthy. In the meantime wages have stagnated, economic inequality has grown, and citizens have felt increasingly powerless over the direction the nation has been heading.

The Current Situation

Since the 1990s political debate has revolved around how far to go in dismantling the social compromise. In general, the Republicans have favored radical dismantling while the Democrats have favored dismantling at a slower pace or only up to a certain point.

In the 2016 Presidential election voters were so disenchanted with “establishment” Democratic and Republican candidates that huge numbers turned to “anti-establishment” candidates Donald Trump and Bernie Sanders. Both called for a return to the past, Trump to economic nationalism and Sanders to defending and extending the social compromise of the “Golden Years.”

However, none of these various policy agendas fully take into account new circumstances of our current situation:

  • Capitalism has extended so far across the planet that new resources and markets are becoming increasingly hard to find.
  • Environmental degradation, particularly the threat of climate change, demands severe limits on the continued use of fossil fuels as a source of energy.
  • The automation of work is reaching the point where it threatens to displace human labor on a massive scale.
  • The accessibility of the technology of violence is outrunning the ability of dominant nation states to contain its use.

Because our current situation is so different, we need to go beyond the previous social compromise and address the fundamental nature of institutions which make profit-seeking their overriding goal. We need new institutions and a culture that prioritize caring for the planet and each other, and a policy program that does not simply call for a return to a past which cannot be recovered.

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