When the Berlin Wall came down in 1989 and the hammer and sickle fluttered over the Kremlin for the last time a few years later, it was widely supposed that a great victory for the West had been won. Articulated best by a young neoconservative by the name of Francis Fukuyama in 1992, the thesis that emerged to explain the collapse of communism was known as the “End of History” – a theory that ideological disputes over how best to organize human society had finally ended, and Western liberal democracy and market capitalism had triumphed.

As ideas go it wasn’t a bad one, mostly because it seemed to fit the facts at the time. In the global contest for power and influence, the West, epitomized by the United States, ruled supreme. The Soviets, deterred by the most powerful military the world had ever seen, cowered behind the Iron Curtain as capitalism, protected by American military might, rebuilt and transformed the world. In the space of 40 years, the West had not only rebuilt from the ashes of World War II, but had so outpaced its competitors that technological marvels and standards of living that were commonplace for Western consumers were unheard of in the rest of the world. Frightened by our military might, bedazzled by our supermarkets and enchanted with our freedoms, the walls in Berlin and elsewhere came tumbling down.

The solution to our problems, such as remained, was therefore clear – more of what had won the Cold War was what was needed. Abroad, more American intervention was prescribed, especially in those benighted areas of the world where backward peoples still resisted the Gospel of Democratic Capitalism. At home, the last domestic shibboleths of the failed ideology that had just been defeated would be dug up, root and branch, and cast into the dustbin of history alongside Marx and Engels. When it came to muscular, no-holds-barred capitalism, the order of the day was damn the cruise missiles, full speed ahead!

But a funny thing happened on the way to the globalized forum. The new white-man’s burden turned into a disaster along dusty roads in Iraq and Afghanistan as “liberated” peoples rejected their new conquerors, who, unlike Saddam, could not even keep the lights on. Like evangelists in a whorehouse, naïve believers in the New World Order bombed country after country only to find the residents of these places less than enamored with their supposed liberators. Puzzled and exhausted, our armies began to retreat. Most humiliatingly, the Arab Spring was kicked off despite our help, not because of it.

If the international component of Cold War triumphalism ended in bitter tears, then what of the domestic component? Here, too, it is clear that our foray into unfettered capitalism has not built the New Jerusalem, just a bunch of foreclosed homes and stately mansions in Caribbean tax havens. Indeed, inequality – that old bugaboo organizer of the proletariat – has reared its head in ways not seen since seen the Gilded Age. The rich have grown immensely richer and average people have seen their jobs shipped overseas, retirement savings gutted, homes devalued or lost, job security evaporate and debt of all sorts soar. What was once a sure thing and which helped win the Cold War – access and entry into the great American middle class that was premised upon widely shared economic prosperity – evaporated. In the space of a generation, American social mobility became worse than that of Europe. Today, an American child’s future is more dependent upon parental income than is a child born in Europe. A country that was founded to escape the class system of the Old World has recreated it.

So what happened? How did things go so badly, so quickly? How did ideological arguments that seemed so right turn out, in the end, to be so wrong? As it turns out, Marx and Engels may have the last laugh after all.

Consider, for instance, the fact that the American post-war political economy that built the middle class and won the Cold War wasn’t a pure form of anything, let alone capitalism. Riddled throughout the American marketplace were a series of regulations and redistributions that attempted rebalance market results away from their “natural” outcomes to more socially acceptable ones. Programs like Social Security, Medicare, Medicaid, Food Stamps and Pell Grants provided a safety net and a helping hand to the elderly, the poor and the young. Infrastructure projects, like the interstate highway system or rural electrification, tied together the nation, brought light to the darkness and made markets more efficient. Regulations, like Glass-Steagall, helped protect Main Street’s savings from Wall Street’s casino culture.

In short, the American economy was, and still barely remains, a mixed economy with a significant government sector that responsibly, more or less, balanced out capitalism run amok. Though E Pluribus Unum may have been our motto, the reality was from each according to their ability and to each according to their need. Year after year the federal government used regulations and fiscal policy to rebalance the economy so that richer states like New York and California kept poor states like Mississippi and Alabama afloat.

It wasn’t perfect, but it worked. Every sector of American society had their income grow by nearly 2 percent a year, with the least off doing the best. Coupled with the civil rights movement, this was powerful evidence that democratic government and regulated, rebalanced market capitalism could produce the goods in terms of freedom and prosperity that authoritarian socialism simply could not. It was this example that, more than anything else, won the Cold War.

But, this postwar utopia did not build itself. It emerged after bitter conflict and much trial and error over decades as we learned what worked and what didn’t. It required workers beaten down by company goons to learn to compromise. It took capitalists with foresight, mindful that revolution was an actual possibility given the reality of communism elsewhere in the world, to realize that continually shafting workers for an extra nickel of profit was self-defeating. Financiers realized that without a real economy that built things and employed people their holdings would never be safe. In other words, it took compromise – a synthesis of ideas from contending ideologies and interests that made everyone better off. The American mixed economy was, like Marx’s theory of history, Hegelian.

Bereft of a competing ideology that forced it to be on its best behavior, however, capitalism, like all monopolists, became corrupt, exploitative and arrogant. In a radical departure from what came before and driven mostly by ideological fanatics who would have given Stalin’s yes-men a run for their money, American conservatives took the self-congratulatory lesson that it was not a pragmatic mix of capitalism and socialism that won the Cold War, but capitalism alone. The rest is the End of History, from Berlin to Baghdad, Bagram and bailouts in 20 years. Marx would chuckle if he were still around today. Those silly Americans, what did they expect? Surely, they didn’t think they were an exception from the lessons of history?