Intensified competition tells a similar story. While competition may destroy particular businesses, its net effect on capital is to concentrate it and strengthen it as a class. But the impact on the workers is quite different: even if some workers gain, it weakens the main weapon workers have — their solidarity — and so weakens them as a class.

Furthermore, as labor markets were liberalized to mirror “market valuations” and social programs were eroded, inequalities increased not just between the rich and the rest, but also within the working class. This aggravated internal resentments and further divided workers. Workers doing relatively well resented paying taxes on their hard-earned income to support those on welfare, while welfare recipients and the unemployed were bitter about unions who ignored their plight.

The ironic outcome of these forms of survival was that they contributed to reproducing the very neoliberal zeitgeist of individualism that has so damaged working class lives. As Mimmo Porcaro has distressingly observed, “the more class position determines people’s lives, the less people think of themselves as members of a class.” With picket lines and street protests fading in relevance, cultures of solidarity and collective capacities to struggle also atrophied. Neoliberal restructuring reintroduced and aggravated the pressures of working-class life, leading American autoworker Gregg Shotwell to declare : “We are all temps. We are all disenfranchised. We are immigrants in the land where we were born.” That restructuring also broke up communities where class identities had developed across generations, dispersing workers to distant corners of their country and to foreign lands.

What followed had an impact on working people far beyond individual living standards. The frustrations of austerity didn’t generally lead to radicalization, but only increased pressures on working-class families to maintain as much consumption as they could. Absent collective solutions, they found other ways to support themselves, with profound implications for undermining the development of the working class as an oppositional class. Family members extended their hours of work, students also became full-time workers, and young couples moved in with their families to save for a mortgage or accumulate a buffer against an uncertain future. Tax cuts were seen as the equivalent of a wage increase even when they inevitably led to cuts in the social wage, and rising stock markets were cheered because stock values determine future pension levels. Looming environmental threats were overridden by the pressures of more immediate problems. Debt dependence increased and homes became assets for future security.

The assault on the labor movement is generally associated with the conservatism of Reagan and Thatcher. But it is worth noting that it was Jimmy Carter, a Democrat, who initiated deregulation in the airline and trucking industries and tapped Paul Volcker to run the Federal Reserve. And in Britain, it was Labour Prime Minister James Callaghan who opened the door to Thatcherism by essentially declaring that Keynesianism was dead. It wasn’t the subsequent set of policies, summarized as neoliberalism, that created working-class weakness. Rather, those policies exposed the already existing limits of the labor movement and increased the confidence of elites in further exploiting the movement’s long-standing weaknesses.

Through the unique circumstances of the 1950s and 1960s, workers made gains despite these limits, and many of those gains were even passed on to the broader population. But the militancy of workers in the late 1960s contributed to a squeeze on corporations’ profits and to inflation, which in turn led to an economic crisis. Unions, unable and unwilling to extend their struggles beyond narrow economic militancy to address control over prices, investment, and capital flows, left themselves vulnerable to the state’s aggressive counterattack. As Eric Hobsbawm observed of British unions, “when the labor movement became narrowed down to nothing but a pressure-group or a sectional movement of industrial workers, as in 1970s Britain, it lost both the capacity to be the potential center of a general people’s mobilization and the general hope of the future.”

Absent a vision that encompasses the entire working class, and absent the goal of developing workers’ capacity to democratize the economy and society, unions turned into instrumental organizations. That is, they saw their internal functioning as a pragmatic exchange between active leaders and passive members. The leaders provided services and benefits, the rank-and-file paid dues. Such organizations are especially vulnerable to top-down deal-making and bureaucratization.

Unions evolved to address workers’ concerns and, through their emphasis on solidarity, provide an antidote to capitalism’s pressure for working-class fragmentation, dependence, and short-termism. Yet unions are, at their core, not class organizations but sectional organizations. They represent specific groups of workers united by their employer and specific group demands, not the interests of the working class as a whole. There were, of course, moments early in their formation when this particularism spilled over into broader class demands and the mobilization of entire communities. But the very success of unions gave them their own institutional base and reinforced their sectionalism.

What was much too insufficiently emphasized, however, was that there were also contradictions within the working class. These countered the revolutionary potentials of the class and even came to undermine workers’ defensive capacities. Whatever unity workers had within a particular workplace, they were fragmented across workplaces and, as a class, were stratified by income. Moreover, their daily experiences ably taught them how dependent they were on capital. Employers organized their separate labor power, embodied science in their control over technology, and had all the essential links to finance, suppliers, and markets. And the very conditions of workers, their low wages and uncertain jobs, pressured them to think in terms of immediate improvements, not longer-term change.

The fundamental contradiction of capitalism, Marx and Engels argued, was that as capitalists brought workers together to increase profits they opened the door to workers discovering their own potential. Capitalism created its own gravediggers.

When Marx famously declared that while the philosophers have interpreted the world, the point is to change it, he was asserting that it was not enough to dream of another world nor to understand the dynamics of the present. It was critical above all to address the question of agency in carrying out transformative change. For Marx, that agent was the working class. The gap between workers’ needs and their actual lives — between desire and reality — gave workers an interest in radical change, while their place in production gave them the leverage to act.

Here’s what we need to understand.

In terms of the impact of historical defeats, it’s worth noting that in the wake of the 1848 revolutions Marx’s emphasis on changing the world and not just interpreting it underwent a reversal. Marx was too optimistic about the potential of 1848, and those disappointments led him to return to the importance of understanding the world as a condition for changing it. This search for a historical materialist understanding dominated the rest of his life. In light of our own defeats, it is likewise crucial for us to learn more deeply about the nature of the world we confront. The following observations are meant to further such a process of reflection and discussion.

1. Neoliberalism is just capitalism getting its groove back. It’s the postwar Golden Age that’s the aberration and there’s no going back.

As an ideology, neoliberalism fits the no-alternative moment so well because its drive to universalize market dependence tends to depoliticize social life and its outcomes. “The market made us do it” becomes a national excuse and the capitalism-with-a-human-face of the postwar era is replaced by a capitalism with no face at all. Adolph Reed has said that neoliberalism is “only capitalism that has effectively freed itself from working-class opposition.” The great value of Reed’s succinct characterization is that it takes us beyond discourse, ideology, and even sets of policies to appreciating neoliberalism in terms of a radical shift in the balance of social forces.

Neoliberalism’s origins can then be understood not as a sudden turn to meanness by capitalist elites, but as the response of these elites to a crisis they could not ignore. The capitalist answer to the crisis of the 1970s, when the exhaustion of the postwar boom combined with the militancy of workers to squeeze profits, was more capitalism. Capitalist states, led by the US, moved decisively to what Greg Albo has termed “a new form of social rule,” a “class project” of drastically restructuring social relations and social institutions to the end of supporting capital accumulation and reviving profits.

It is tempting to contrast neoliberalism with the postwar welfare state and look for a return to the past. But this nostalgia reflects a profound lowering of expectations. Whatever was positive about the welfare state (and much was indeed very significant), it also had a questionable record on the role of women, class inequality, hidden poverty, and colonialism. In any case, attempts to go back to the postwar welfare state would provoke the same contradictions that spawned the eventual attack on its achievements. And of course, going back in time would mean a very radical unraveling of the dramatic shifts that have since taken place in globalization, finance, and the role of states. This is all very clear to capitalist elites. Though capital was previously interested in a temporary compromise with labor, this is now the furthest thing from its mind, and there is no social base for a new “social contract.”

Further, a closer look at the welfare state reveals crucial continuities between that period and neoliberalism. It was during the postwar Golden Age that the building blocks of neoliberalism first emerged: the commitment to freer trade, the explosion of multinational corporations (MNCs), the rapid advance of finance to support MNCs but also alongside the growth of working-class mortgages and pensions. And it was during this period that productivism (prioritizing production in exchange for increased private consumption) marginalized more radical views of democratic control over production and concerns with social equality. That defeat, and the narrowing of perspectives and capacities it entailed, left the labor movement especially vulnerable to future neoliberal attacks.

The point is that confronting neoliberalism involves more than ethical counterarguments or an easy return to a more tolerable past. It means having a distinct alternative vision and developing the corresponding social power to challenge not just a philosophy, but the core structures of “really existing capitalism.”

2. Don’t single out finance. “Productive” capitalism is every bit a part of the problem as the “speculative,” rentier kind.

Among activists, only “financialization” trumps neoliberalism as a term of abuse. As free-floating abstract capital, finance is popularly seen as speculative, parasitic, and at odds with “real” production. Much of this is true enough, but it’s worth asking why, if finance is so especially counterproductive and has done so much damage — especially during the latest crisis — have other capitalists not joined attacks on finance? Why has there been no split within capital?

The answer is only partially that many of those other capitalists have also been financialized. More important is the fact that even where this is not the case, capitalists outside of finance have come to understand that finance is an essential part of their own success. Finance has not only provided business and the consumers they need with low interest rates; it also stands at the center of neoliberal restructuring. Finance reallocates capital to where it is most profitable, enforces the closure of plants the market deems inefficient, facilitates mergers, and through venture capital supports the development of new high-tech companies.

Especially important, though derivatives have added to the systematic risk of capitalism as a whole, the markets they are part of have served as mechanisms for companies to cope with the international uncertainties of exchange rates, interest rates, and global political developments. Without the capacity for such hedging — just as without cheap transportation — the scale of current globalization would not be possible. Finally, financial markets have played a crucial imperial function. Finance brings global savings to the US and thereby further enables the US state’s role in overseeing global capitalism.

The point is obviously not to defend finance, but rather to emphasize that it is not something separate from capitalism. The irrationalities of finance are the irrationalities of capitalism. That capitalism has made such an ultimately antisocial institution so essential to its functioning is part of what makes capitalism such an objectionable social system.

The contradiction that finance embodies is not its dysfunctionality within capitalism, but rather that along with the essential services it provides to capitalism comes extreme volatility. While there is a general concern to reduce that volatility, it is muted by a concern on the part of state and corporate elites to not go so far that any regulation might undercut what finance brings to capitalism.

3. Globalization isn’t Pandora’s Box. And it doesn’t mean it’s now “too late” to use politics to get our hands around capital’s neck.

Globalization is the third leg of the powerful triad that includes neoliberalism and financialization. It is crucial to understand that globalization begins at home. Unless the conditions for free trade and the free flow of finance are established within each state, there can be no globalization. From this perspective, the rise of neoliberalism was very much about establishing the domestic conditions for allowing global accumulation to flourish. At the same time, the focus on neoliberalism channeled the risk of divisions among capitalist states into a common attack on the working classes within each state. What therefore distinguished the neoliberal solution to the crisis of the 1970s from the Great Depression of the 1930s was that the internationalization of capitalism was interrupted in the earlier period, while in the later one it was accelerated. This was true again in the latest crisis, with the continuation of neoliberalism closely linked to the continuation of free trade and the quick shelving of any temptation to impose serious controls on capital flows.

Like neoliberalism, globalization is not inevitable, but is a conscious “class project.” Though capitalism is characterized by powerful tendencies to, as the Communist Manifesto put it, “nestle everywhere, settle everywhere, establish connections everywhere,” the notion of a seamless global capitalism, far from being inevitable, actually seemed impossible through the first half of the twentieth century. Global capitalism was divided into rival spheres of influence and capitalist internationalism was stymied by two world wars and the protectionism of the Great Depression. The eventual revival of globalization was not a spontaneous development but dependent on the role of states, and above all the role of the US state.

4. Despite what we’re told, individual nation states play a bigger role in the expansion of global capital than ever before.

States are often viewed as the victims of globalization, their autonomy limited by international pressures. Or a contradiction is posed between the global terrain of economic activity and the national terrain of the state, with multinational corporations seen as having “escaped” the state. But as Leo Panitch has emphasized, rather than being the victims of globalization, states are more generally its authors. States have mobilized the public to accept global rules and established the institutional frameworks that make globalization possible.

As part of the making of global capitalism, states have been “internationalized”: they have come to take responsibility, within their own jurisdiction, for supporting the accumulation of all capitalists, foreign as well as domestic. And so far from becoming less dependent on the state, corporations have come to depend on many states.

The underlying confusion here lies in understanding states and markets as opposites when they are in fact mutually embedded partners. Markets cannot exist without states, not only to institute physical infrastructures but enforce property rights, establish a framework for contracts, manage class relations, and address the contradictions and crises that markets inexorably bring. The liberalization of financial markets in the US, for example, led to a dramatic increase in regulatory capacities to facilitate that liberalization and its added complexities. Corporations, focused on their own competitiveness and profits, can miss the forest for the trees, and so depend on states to address, mediate, and even shape larger capitalist interests. And capitalist states, of course, depend on markets to provide the jobs and tax revenues that allow them to reproduce and legitimate themselves.

This confusion about the relationship between states and markets also brings the misperception that neoliberal globalization leads to “weak” states. But what has occurred is that neoliberal globalization has restructured rather than weakened states. It is, for example, clearly absurd to speak of the US state as weak given its aggressive military, its omnipresent intrusion into private lives, and the Federal Reserve’s role in underwriting the financial system.

The US state also has a ubiquitous role in shaping labor markets, affecting the investment climate, encouraging the research capacity of American industry, opening up trade opportunities, and so on. If there has been a loss of autonomy, it has not been that of states, but of popular input as states have increasingly distanced legislative bodies from key administrative decisions, the most prominent examples being monetary policy and trade negotiations.

5. The American Empire isn’t fading. In fact, elites around the world continue to look to the United States to lead the way for the global ruling class.

The American empire is a unique kind of empire. Coming out of World War I, the US was already the world’s dominant economic power and its largest financial creditor. Yet like other states, it concerned itself primarily with its own interests and did not take on the responsibility for trying to keep global capitalism on track. That changed through the experiences of the Depression and World War II. The American state came to see that an unstable international environment, vulnerable to nationalisms that restricted economic spaces, threatened American capitalism not only abroad but at home as well.

The success of American capitalism was consequently seen as dependent on the successful spread of capitalism internationally. Especially important beyond the question of interests, the American state and American capital had, by war’s end, developed the administrative and economic capacities to support the making, deepening, and, during times of international crisis, the reproduction of global capitalism.

What is special about the American empire is the extent to which it is a specifically capitalist empire, an informal empire. The British empire set some precedents in this regard, but the American empire took it to new levels. Unlike earlier empires, it generally operated through sovereign states rather than direct colonies, and primarily through markets rather than direct rule — even if its military might was never far away. This provided the American state with some anti-imperialist credibility after the end of World War II, when it supported the replacement of colonies with sovereign states. And though US support for the dispersion of capitalism implied new competitors, its mode of operation through sovereign states and markets led to many of the competitors being integrated into the larger project of global capitalism.

This new kind of empire led to a fading of inter-imperial rivalry. Whatever tensions might occasionally erupt among capitalist states, they do not revolve around a direct challenge to American leadership. The shared assumption is that the reproduction of America’s “indispensable” role is in the collective interests of all states. The structural integration of other states was evidenced as some of them actively sought inclusion in the American-led order — what Geir Lundestad labelled “empire by invitation.” In other cases, like Germany and China, there was certainly criticism of the US. But this was centered not on challenging the imperial status of the American state, but holding on the American state accountable to its imperial responsibilities.

Of course this dependence on other states and the vagaries of markets inevitably threw up crises. The American state could not always prevent them (to be the leading capitalist state is not to be omnipotent) and as this limit came to be accepted, “failure prevention” gave way to the more practical project of “failure containment.” The reoccurrence of such crises, especially the recent financial crisis that first exploded inside the United States, has supported more general suggestions of American decline. By some metrics, it is certainly true that the country is not as quantitatively dominant as it was, for example, after World War II. But this is too economistic a measure. What is more significant is that in terms of the commanding heights of the global economy, the material base for the American empire persists. And in terms of the crucial importance of managing crises, the world has looked primarily to the American state to save the financial system and prevent protectionism from resurfacing.

6. Fearmongering about environmental or economic collapse isn’t going to magically turn people into socialists. We have to build large, democratic organizations that can eventually reckon directly with state power.

If we take the formidable power and resiliency of capitalism seriously, then politics must revolve around developing a social force capable of matching what we confront. There is a danger, however, that in the attempt to overcome passivity and fatalism, the difficulty of replacing capitalism will be understated, with corresponding negative effects on our politics. Three such tendencies are worth noting: crisis-mongering as a mechanism for overcoming popular passivity; ignoring the question of taking state power; and styles of mobilization that reject building the institutional capacities that might realize change.

Continuously declaring that a decisive crisis is around the corner may generate attention, but as an organizing tactic it is counterproductive. An economic crisis may scare people and bring out their most conservative instincts. It may lower expectations and make people long for the pre-crisis period (no matter how much they had previously criticized it), desperately hoping to just fix, not transform or even significantly modify capitalism. We cannot depend on crises to do our political work for us. If we think that capitalism is a system that blocks human progress then the challenge is to convince people that capitalism is the problem even when it is working at its best.

A related tendency is that of environmental catastrophism. To be sure, the climate crisis must be decisively confronted. But declarations that the end of the planet is only decades away if capitalism isn’t radically changed now may just reinforce a sense that we are doomed and can’t really do anything about it. Or, given the lack of options, it might even encourage people to jump aboard illusory market-based “solutions” that are presented as more immediate, more practical, and less risky.

It would seem much more useful, in terms of building the capacity to address the environmental crisis, to frame the issue of the environment as linked to a broader struggle that includes the redistribution of income and wealth to more equitably share the costs of environmental restraint; a cultural shift in the balance between individual consumption of goods and collective services; the development of public spaces and desperately needed infrastructural renewal (including mass transit); and the conversion of potentially productive facilities rejected by the market to the production of socially useful and environmentally necessary products and services. Such a framing would also tie the environmental crisis to the obvious need to place democratic planning on the agenda and go so far as to start talking about making private banks into public utilities so that we have access to the financial resources to carry out the above initiatives.

Similarly, the disinterest in and even hostility to acknowledging that politics must ultimately reckon with state power prevents us from confronting power where it is most concentrated and tends to train our focus on protesting capitalism, not replacing it. The issue is not taking over a capitalist state and administering it as best we can (a perspective that justifiably raises skepticism) but of transforming state institutions in the deepest democratic sense. That is, imagining and struggling for a state whose main function, at national, regional and municipal levels, would be to support and develop our collective capacities to democratize the economy and all aspects of our lives.

The oppositional movements that have emerged most recently are not homogeneous, but they seem to share important attitudes in their style of politics and the relationship they see between mobilizing and organizing. There is certainly a great deal to praise in these movements. They have brought new generations into politics, shown that creative and audacious actions can touch a popular nerve, dared to place class politics (even if in crude form) on the public agenda, and raised valid criticisms about the politics of the various iterations of the Old Left. But if these promising seeds for a new politics are seen as being that politics, and if new social media are treated as a solution to organizing rather than a useful communication tool, then we are at a dead end.

As Alfredo Saad-Filho has noted, the glorification within these movements of spontaneity and fragmentation seems uncomfortably close to mirroring neoliberalism’s own drive to freer markets, individualism, and a workforce that has no stability or roots. What underlies such politics seems to be a notion that radical change will evolve out of the accumulation of protests, and so little attention is paid to developing a deeper analysis of events, the strategies needed to respond to changing circumstances, or political programs that can bring some coherence to the radicalizing project and do effective outreach. Occupy’s refusal to put forth a program was at first a stroke of tactical genius because it implied that the problem was not a specific issue but the system as a whole. But in terms of longer-term movement building, this refusal soon became a severe liability.

This style of mobilization leaves little enthusiasm for coping with stable organizational structures. The movement can bring people out, but it cannot organize them into a movement that builds and sustains an expanding collective power. Absent such structures, democracy is reduced to forms of dialogue, not shared agreements. Strategic discussions are marginalized. The consolidation of gains and drawing lessons from failures are at best secondary considerations.

Horizontalism blocks decisive collective action, and permanent protest replaces the politics of transformative change. The challenge of how to develop and spread the collective confidence and capacities to strategize, share knowledge widely, build alternative political institutions, and act is marginalized.

7. There are many oppressions that shouldn’t be ignored. But class exploitation conditions them all.

The making of the working class is inseparable from the historical interaction of race, gender, ethnicity, and class. The working class in the concrete always includes multiple differences and identities. But left politics has, unfortunately, often been destructively polarized in terms of identity versus class.

Identity politics emerged in the 1970s, in part out of the failures of the Left to speak to and integrate specific oppressions into class politics (those of women and African Americans in particular). That this paralleled the rise of neoliberalism was no coincidence in that neoliberalism was made possible by the more general weakness of unions and the left. But while identity politics often added to and strengthened working-class politics, it also included a dangerous tendency to push the salience of class aside.

It was bitterly ironic that at the very moment the state mounted a comprehensive attack on working-class power, identity politics was parsing the working class into ever more fragmented subgroups. Though identities obviously matter very much, they cannot combine into a new politics because their essence is their separateness. Something else is needed to bring them together in a broader, more integrated, and more coherent politics, something beyond the particularistic concerns of both identities and unions. That “something” is class.

This might be clarified by an example taken from the work of Walter Benn Michaels. As a factual matter, the insecurity that, say, African-Americans confront is much higher than that of whites whether the measure is income, wealth, education, or access to health care. This fact can be used to mobilize African-Americans as a particularly oppressed group, but that tactic also risks limiting the problem politically to the roughly 10 percent of the US population that is African-American. Such a tactical focus is, at best, likely to create only limited reform or lead to affirmative action gains that benefit only the subset of the black population best prepared to “win” in the marketplace.

The alternative is to define racially coded inequality as part of a more general class inequality and mobilize the class as a whole around universal single-payer health care, free quality education, jobs with living wages, and liveable public pensions. Only the latter approach would seem to hold out the potential to build political capacity for substantive reform and such reforms would, given the nature of existing inequalities, disproportionately support the African-American working class.

The challenge of class politics is how to bring differences together in ways that generate full respect and equality within the class — from pay equity and fighting workplace discrimination to reproductive rights, socializing family burdens like childcare, and establishing equal status for immigrants — so as to address the larger questions of full equality within society. It is in that sense that class trumps, without underplaying, issues of identity.

8. We need to buy ourselves some time.

The question of greater control over time is a condition for a sustainable new political movement, and it raises a specific set of demands around which to mobilize. Neoliberal restructuring of labor markets, and the response of longer paid hours per family so as to maintain mortgage payments and consumption, have dramatically increased time pressures on the working class. Absent time to read, think, appreciate art, meet, and act, it is difficult to imagine building a movement that can take on social change in a sustained way.

A successful institutionalized movement might generate excitement among both existing and new activists and so serve to bring formerly passive time (recuperating from frustrated lives) into politically active time. This might help, but it doesn’t resolve the problem of finding the individual time adequate to commit to political engagement on a scale that is essential. Any solution will have to include deep cultural changes and a radical redistribution of income.

It is, for example, difficult to imagine a solution if continuous growth in private consumption remains a goal. If, on the other hand, we take more of social productivity in terms of collective services paid for out of general taxation, time pressures could be reduced in three ways. First, services like socialized childcare and eldercare or better public transit could save a measure of personal time. Second, if the rising output per capita isn’t all channelled into more consumer goods, it can go to fewer hours of necessary work — also addressing some environmental pressures. Third, this shift to collective benefits is inherently more egalitarian because the taxes that pay for them are generally based on income, while the benefits tend to be based on need.

That improved equality, reinforced by raising the wages of the lowest paid, can reduce pressures on lower-waged workers to run between two or three time-consuming jobs and concentrate on a single one. In this regard, the issue is not just the number of hours worked but the ability to control when the hours are worked. A particular area of conflict is that between the flexibility demanded by employers and the control sought by workers, part of a more general problem of work overload that exhausts us and affects how we use our “free” time.

9. The best way to help the rest of the world is to first get our own house in order.

Social justice is by its nature universal — all Left actions must include an internationalist sensibility. But if we cannot even build unity across workplaces in the same union, if domestic unions are competing against each other for membership dues rather than building as a class, and if private and public workers are divided within the nation-state, then how can we realistically be effective across the legal, administrative, and cultural distances of international activity? How can we contribute to the transfer of technology to the Global South if we don’t control production? How can we transfer income and wealth more equitably if we don’t control our states? Internationalism is limited by our national capacities.