History Professor Debunks The Biggest Capitalism Myths on Reddit

There was no golden age.

The majority must suffer for the few to profit.

Larger and larger wealth disparities,

deregulation of the economy so the government

isn't watching the businessmen anymore,

tuition rises, student debt.

What's late-stage capitalism?

That's a very good question.

I'm Eli Cook, historian of capitalism.

Let's go down the rabbit hole

and look at late-stage capitalism.

Okay, let's get right to it.

On the NoStupidQuestion subreddit,

YardPuzzleheaded263 asked, What's late-stage capitalism?

Late-stage capitalism is actually more of an internet meme

than some kind of academic term.

I like to think of it as the moment

that capitalism jumped the shark.

Some examples that I've come across

that people have used in the internet,

people who go to GoFundMe to buy their medicine

like insulin, people paying $37 for raw water.

A lot of times when I think of late-stage capitalism,

I think of a question that people often ask,

Who asked for this?

Do we even want this stuff?

It looks like things are getting a little spicy

in the comment section.

One Redditor, vitringur, says that the whole use

of the term is a Marxist mythology about the evolution

of capitalism before it turns into socialism.

Like with so many other pseudo-scientists,

it's always right around the corner

and has been for 100 years.

Late capitalism is definitely a term

that Marxists have used, not necessarily to refer

to the end of capitalism, but trying to explain

where did Marx go wrong?

Why hasn't capitalism ended yet?

And a lot of times, late capitalism was used as an idea

of kind of very consumerist form of capitalism

where people kind of aren't being exploited

in the most outrageous ways,

but they're kind of happy little robots.

And so in many ways, the way that the term late capitalism

has been used is very different from late-stage capitalism.

But I think there's an important point to be said here

that anybody who uses the term late-stage capitalism

is assuming that there are stages.

I do agree that there are a lot of people who use that term

who are hoping that maybe, just maybe,

this is the last stage and not just the late stage.

Here's a good question from the LateStageCapitalism

subreddit from AmdMasterRace,

When did the golden age of capitalism

turn to late stage capitalism?

This term golden age of capitalism

is a term you often hear in the United States.

It's usually referring to the post-war years

from the 1940s to around the mid-1970s

when really there was a feeling

that capitalism was working for almost everyone.

This is an era when inequality dropped, wages were rising,

people were moving into the middle class.

There was also a feeling that even with one job,

you could buy a house and create a good life for you

and for your family.

There was this moment people look back at now

and nostalgically say,

This was the golden age of capitalism.

So when did this turn happen?

I think here it's actually pretty clear.

Some people call it the neoliberal turn.

Other people talk about deindustrialization, globalization,

financialization, but something happened in the late 1970s

and the 1980s, which really changed the American economy.

This is where you really see Wall Street

and big banks taking fuller control of the economy.

This is where you begin to see larger

and larger wealth disparities.

This is where you see the deregulation of the economy

so the government isn't watching

kind of the businessmen anymore.

This is when you start seeing tuition rises, student debt.

This is where you see things getting more expensive.

After World War II, America dominated the world,

but by the 1980s, Japanese, German manufacturers,

they were competing with America.

It wasn't so easy anymore for Americans

just to churn out all those cars

that the world and American consumers were going to buy.

So a lot of people do think that there used to be

a golden age of capitalism,

but let's look at some more controversial takes.

Knfrmity says, There was no golden age.

The majority must suffer for the few to profit.

In America, it looked okay for a while

if you were white labor aristocracy or petit bourgeoisie.

This is actually an important point.

When you talk about kind of the golden age of capitalism

and you imagine people with job securities

and great pensions, a lot of times

we're talking about white men in factories.

For African Americans, for other minorities, for women,

this might not have been a golden age at all.

A lot of times when people talk about the golden age

of capitalism, they're talking about suburbia.

The American dream where even working class people

could get a subsidized mortgage,

usually through the government backing small banks.

Wall Street was not involved.

It was about moving to the middle class.

It was about newer opportunities for their kids.

So for many people, that really was the golden age.

When people look at The Simpsons,

back then when the show just came out,

people didn't think it was weird

that here's this working class Homer Simpson

who can afford to live in a pretty nice house

in the middle of a nice little town on one salary.

A lot of people feel that American dream is over.

So let's scroll down a little for a few more perspectives.

Here's A-Matter-Of-Time saying, Sometime in the 1980s,

when Reagan was president, was the first time

that more money was made from dealing in financial products

than making actual tangible items in a factory.

This comment reminds me of the show The Wire.

They were just deindustrializing the ports in Baltimore

and there's kind of a white working class

Frank Sobotka who says...

We used to make shit in this country, build [beeps].

Now we just put our hand in the next guy's pocket.

It's true.

The financialization of the economy,

kind of a turn away from building [beeps] in factories

did not help most Americans.

The jobs in factories were usually really good jobs.

They had job security, they were unionized,

people had good pensions,

and they could really live a middle class lifestyle.

When those factories closed down,

most people found themselves working in service industries.

The biggest employer in kind of the golden age

was General Motors and it was General Electric.

These were companies that almost

all the workers were unionized.

Even if you went into the bathroom,

the person cleaning the bathroom was part of the union.

And on the other hand, today,

biggest private employer is Walmart.

Some people today in late stage capitalism at Walmart

get paid so little money that they have to use food stamps.

And where do they take those food stamps

to buy all their stuff?

Walmart, because all the other small groceries closed.

Late-stage capitalism, here we are.

Now, a lot of this financialization

is just about deregulation.

Once the rules changed and Wall Street

could start doing whatever it wanted.

But a lot of this is connected to the deindustrialization.

There used to be a lot of corporation in America

who actually wanted their workers to have a good wage.

But what happens in financialization

is you get these kind of corporate raters types, okay?

It's mergers and acquisitions.

If you've seen Pretty Women,

this is what Richard Gere used to do.

Well, I don't sell the whole company.

I break it up into pieces and then I sell that off.

It's worth more than the whole.

So it's sort of like stealing cars

and selling them for the parts, right?

And maybe the perfect example of how these corporations

have changed is the ratio to how much the CEO makes

to the average worker.

In the 1960s and early 1970s, the golden age of capitalism,

the ratio of salary between the average worker

and the CEO was about 1 in 20.

That's a fair amount, now it's 1 in 300.

Now, all corporations care about

is maximizing the price of their shares.

They bring in CEOs and they say,

From now on, your compensation isn't going to be in wages.

It's going to be in stock options,

which means you also have an incentive

to really just only care about raising stock prices.

And what do we get in the 1980s, for instance?

We get a situation where if suddenly there is a recession,

the first thing you do, not the last thing,

the first thing you do is just fire lots of workers.

They call it downsizing and hundreds of thousands

of Americans lost jobs in good industrial factories

and those jobs never ever came back

and those people lost their middle class lifestyle forever.

Here's a good one, over at the subreddit NeutralPolitics,

What are the effects that a large wealth disparity

has on a society?

When you begin to have large wealth disparities,

you begin to have people who don't trust

the institutions anymore.

A lot of this has to do with feeling,

you know, the system is rigged.

Sometimes you can funnel that energy into positive places,

but sometimes it can go to very dark places.

You'll find someone to blame,

and oftentimes, unfortunately, these energies don't go

to blaming the actual people who created these inequalities.

Another issue that happens because of inequality

is social mobility.

Think of life as like this ladder

where you're trying to climb up.

If the rungs between each step on the ladder

get bigger and bigger and bigger,

then you don't have social mobility anymore.

The chances today to kind of move up the ladder

has diminished dramatically in the last 30 or 40 years.

There's even a graph called the Great Gatsby curve

that charts the level of inequality in a society

and the level of social mobility.

And you see that these things correlate almost perfectly.

The higher the inequality, the less the chance that

that smart kid from a poor background

is ever going to be able to make it big in America.

Other problems that you get with high inequality

is just that it's inefficient.

High inequality is bad for the economy.

People like John Maynard Keynes,

the economist who like to talk about the importance

of consumers and their purchasing power,

he would say that, you know, high inequality

creates a situation where a lot of money

gets stuck with the rich people.

And the problem is the rich people don't spend that money.

The money isn't moving through the economy.

We're not getting demand.

And therefore, you kind of get a stagnant economy

with less innovation, with less technology changes,

and all because the average Joe doesn't have enough money

to buy all the products that he could be buying.

Now, inequality is always bad,

but it is really bad in a capitalist society

where you have to buy even your basic needs

through the market.

If you don't have enough money,

that means you don't have healthcare.

It means you can't afford to go to college.

This isn't just about, you know,

people having less than others.

This is also just about people not having the opportunity

to reach their potential.

And finally, there's the question of basic justice.

Even people who are billionaires,

they didn't make all that money on their own.

Marx would call this exploitation,

the idea that most of us are not, in the end,

receiving in return what we contribute to the economy.

And here on the AskReddit subreddit, yellowrainbird asked,

Has late-stage capitalism happened before in history?

And if so, what was the outcome?

I think this is a great point

because I think there's a lot we can learn from history.

If you look back, for instance, the 1920s,

a lot of the things that people were talking about

or even earlier to the Gilded Age

were the same problems we're dealing with today,

an economy dominated by huge corporations,

the government not looking out for people,

corrupt politicians who are in the pocket

of the richest billionaires.

These are problems that we've dealt with before.

And I want to say, yes, there have been countries

that have gotten past this stage,

including the United States.

If you've heard of Franklin Delano Roosevelt's New Deal,

which came after the Great Depression, in many ways,

the New Deal was a way to get America

out of the extreme capitalism that had been in

in the 1920s.

He taxed the rich, jobs for the working poor,

jobs for the unemployed that the government created,

creating the national park trails

that you walk on today, infrastructure.

So I absolutely think that there's nothing inevitable

about late-stage capitalism.

It doesn't have to be this way.

Things can be different, and in fact, they were.

That said, even the 1920s might not compare

to the levels of inequality and corporate concentration

and just power that these billionaires have today.

We are really in uncharted territory,

and that doesn't make things impossible,

but it does make it very hard.

Speaking of the end of capitalism,

in the Capitalism subreddit, dashdevs asked,

Can the concentration of wealth in just a few hands

lead to the destruction of capitalism?

And actually one of the most popular responses

from TheGreenBehren was that yes, it can,

and it already has.

And I think this is a very important point

because I think in many ways we are reaching a point

where late-stage capitalism is so obscene,

so absurd,

so unequal.

It might be delegitimizing capitalism itself.

This is something that capitalists themselves are aware of,

not all of them, but some of them are smart enough

to know that in the long run,

if they want to play a long game,

maybe they've gotten a little bit too greedy.

Warren Buffett for years has been talking

about how it makes no sense

that his secretary pays a higher percentage

of taxes than he does.

He's saying it's because he understands

that if capitalism loses its legitimacy in the United States

or anywhere else, it might be destroyed.

Let's duck into the GenZ subreddit

and see how the Zoomers are feeling about

capitalism these days.

One Redditor writes, I hate how we're suffering the most

during late-stage capitalism.

Billionaires spending our tax dollars

on either straight [beeps] or funding other businesses,

meanwhile, us regular folk have to use 70% of our money

for groceries, rent, and household items.

Out of every generation,

we're going through the worst of it

due to us becoming adults during this time period.

A lot of capitalism is about accumulating wealth,

and we know that kind of the boomers

got to buy houses when they were cheap

and then they kind of accumulate a lot of wealth.

But, you know, the Gen Zers, oftentimes, they see now

that they have no way that they could ever buy a house.

There's no way that they ever could really

kind of create wealth for themselves.

And it's true that, you know, for many different aspects

of everyday American life, the costs are going higher.

We've been seeing a rise in prices

in almost every sector of the economy.

And I do agree that in many ways,

Gen Z are the biggest losers of this process.

I think what annoys a lot of the Gen Zers the most

is when the boomers tell them, Oh, well, you know,

you just didn't work hard enough.

We pulled ourselves up by our bootstraps.

If you actually look at American history in that period,

you see that it absolutely

wasn't just individuals working hard.

There was so many different social structures in place

to allow these people to thrive.

Very cheap education, subsidized mortgages,

unions that gave you higher wages,

billionaires who paid higher taxes,

corporations that were more regulated,

labor laws that were more in favor of the little guy

and not just the big capitalists.

It feels that even if I work hard, even if I do my best,

even if I do what everyone told me and I get good grades

and I do everything that I'm supposed to do,

I still can't make it because the system is rigged

and it's not working for me anymore.

It's working only for the rich.

And this brings us to the question of how can we maybe

kind of go back to a more golden age?

So in the EffectiveAltruism subreddit, AceDudeyeah asked,

How do we fight reverse late-stage capitalism?

The first thing I want to say is absolutely

things can still turn around.

The one thing that, you know, billionaires

and big corporations want you to believe

is that things are inevitable, that they're natural,

this is just the way they are.

You can't change them.

The first step towards changing things

is believing in that change.

I know it sounds corny, but that's just the truth.

And what changes can you make?

I mean, again, we can just go back to America.

We don't need to look at some socialist utopia.

We can go back to the New Deal.

We can go back to the 1930s.

We can talk about unions at workplaces.

We can talk about voting for politicians

who aren't in the pockets of corporations,

passing major laws that kind of change the structure

of the economy, creating alternative forms of businesses

instead of just corporations.

We need to discipline the capitalists.

Obviously, we probably need to tax them a lot more.

We need public options.

Just get one public option out there

and let people decide if they want that

or if they want the same [beeps] health insurance

that they've been getting.

There have been some dark moments in American history.

You look at the 19th century,

you would never imagine things like weekends

or that there'd be laws against children working in mines

or the fact that you have social security now.

These things didn't just happen.

You have to fight, but you can win

and you can get these things.

Okay.

That's enough Reddit for now.

Until next time.

[gentle music]