In the history of modern capitalism (1770-present), there have thus far been
seven regimes, with an eighth to come in the future. Each regime has lasted 40 years - an orthodox Biblical generation, that is. And each regime has ended and given way to its successor via a process of regime change - in some aspects organic and natural, in other aspects wrenching and violent - but with the one constant that each old order is in fact comprehensively and irrevocably displaced and supplanted by each new one.
Pursuant to this, there have been six capitalist regime changes - one every four decades - that have taken place to date.
1810: From Revolution (1770-1810) to Industrialization (1810-1850)
The first capitalist regime, Revolution (1770-1810), gave way to the second, Industrialization (1810-1850), at around the height of the Napoleonic era (1799-1815). This shift witnessed the coming of age of the modern middle class, or
bourgeois per Marxist lingo, across a Western European civilization still politically dominated by either monarchy or landed aristocracy - to include the lower-ranking gentry of Great Britain and the southern plantation lords of the United States.
It was the upstart middle class which dominated the new processes of repeatable production in the primitive manufacture of textiles and other basic goods, which soon expanded greatly upon the introduction of the steam locomotive for mechanical transportation and the subsequent development of advanced iron working for early railroad systems, as well as the new metal and concrete urban infrastructure of the commercial-industrial boom towns they linked together. The industrial revolution thus ushered in not just a new era, but truly a new epoch of civilized human activity: the species transitioned from principally agricultural, or primary industry, to manufacturing, or secondary industry.
While the influence of the hereditary classes remained, it was steadily eroded as they themselves increasingly had to keep up with the exploits of a new, far more dynamic group within their midst, with a much greater penchant for harnessing at scale the new forces of technology and marketization. Unlike in earlier eras of large guilds in the main European cities, the new
bourgeois merchant caste now had direct access to the lucrative mass labor of uneducated peasants that had formerly been the effective property of the landed nobility - essentially sealing the latter's terminal decline and eventual extinction as a distinct sociopolitical agent across the entire expanse of Europe.
1850: From Industrialization (1810-1850) to Modernization (1850-1890)
Industrialization gave way to the third capitalist regime, Modernization (1850-1890), when the old sociopolitical structures of hereditary land ownership were finally swept away on the European continent around the midpoint of the 19th century by the maturation of the first stage of the bourgeois-industrial mode of production.
Whereas in Great Britain and especially America (with its vast Western territories open for brand-new settlement and cultivation) the new merchant caste was already an integral part of the political sphere, in continental Europe it still relied heavily on collusion with archaic aristocratic and clerical institutions inherited from a bygone era of agrarian feudalism. The imbalance and tension this caused, between bourgeois and aristocracy alike, with the masses of menial labor toiling for their profit finally erupted in the Revolution of 1848.
Thus, all subsequent generations of Western (and eventually non-Western) industrialized nations would each have to grapple with the same fundamental question that has persisted to the very present day: how to maximize the mobility of the working class, or
proletariat, into the dynamic middle one, the
bourgeois - and what polices and institutions would best facilitate this systemic societal transition by consistently expanding both the political franchise and the economic welfare.
1890: From Modernization (1850-1890) to Progressivism (1890-1930)
The regime of Modernization enjoyed phenomenal success in Western Europe and America owing to the continual evolution and dynamism of free markets and liberal representative government - to the degrees that were afforded each particular nation - which would underpin an unprecedented acceleration and explosion of scientific and technological advancement in the second half of the 19th century. By 1890, with the closing of the American frontier and the onset of deeper European colonial forays into Asia and Africa, Western civilization had thus attained an all-time peak of dominance of any single civilization over the others in the entire recorded history of humanity.
About this same time, however, it became clear that the inherent nature of the
bourgeois mode of industrial society required a special dedicated discipline of distributive management, not only to correct the vast imbalances of wealth and well-being that seemed to inevitably accumulate from unbound commercial and technological activity, but also to proactively improve and optimize the socioeconomic makeup and equation as a whole. While in theory
laissez-faire, or "hands-off", was an ideal mode of dealing with the market's natural operations, in practice there was steadily shrinking pretense that the profit motive alone could simply be assumed to produce the best or even essentially neutral moral and social results.
Progressivism, the fourth capitalist regime (1890-1930), was thus born as a quasi-ideological system of administrative-managerial science and application, enabling primarily corporations and businesses at first, but steadily followed by non-commercial entities, both private (such as labor unions) and governmental (such as state and local councils or associations), to better care for the interests of their clients, stakeholders, and participants. While regulation of disproportionately powerful corporations by government was introduced for the first time, this was but a means to an end: that of ensuring fair and healthy market competition unencumbered by abusive rent-collecting monopolies or cartels. However difficult it could prove, consensual collaboration and compromise, both between and within the ever expanding and diversifying public and private sectors, were seen as the hallmarks of a dynamically functioning and responsive
laissez-faire polity - with the minimal amount of refereeing by the invasive state authority seen as the optimal one.
1930: From Progressivism (1890-1930) to Keynes (1930-1970)
The Progressive regime liberated the mass potential of the capitalist marketplace to reach even greater heights: by the onset of the First World War (1914), it had already produced incipient if highly rudimentary social safety nets in the most advanced industrial states, which had by then established highly sophisticated transport and communications networks that linked large geographic areas into ever more tightly and instantaneously integrated markets. It had also increased efficiency and productivity at scale in traditional heavy industries, i.e. metals and mining, to the extent that more attention and innovation could be brought to bear on the newer, lighter manufacturing ones: hence the urban consumer product revolution took off and effected a rapid rise in living standards, even for normal wage earners who were still a generation or two away from home ownership.
Tellingly, the First World War not only did not derail this whole process, it arguably even accelerated it - by catapulting the well-insulated United States to a position of economic primacy over its erstwhile transatlantic master. However, new strains developed under the veneer of ever headier good times in the latter Progressive era, i.e. the "roaring twenties": the new consumerist economy was fueled by an unprecedented explosion of mass credit and attendant financial speculation, notably in the stock market. The financial and corporate managerial elite were largely unprepared to absorb such a rapid influx of middle class participation in their previously privileged domain, just as the middle class itself came under additional pressure from the continued ascent of the working class and the early pangs of industrial automation.
All this came to a head in the great Wall Street crash of 1929 and its aftermath. Initially, there was little to suggest that the downturn was anything more than a routine if more drastic change of the business cycle; governments on both sides of the Atlantic accordingly tweaked and augmented their Progressive-era regulatory regimes in an attempt to stir recovery in investment and production, mostly by incentivizing banks to lend and factories to run. But it soon became clear that a more fundamental problem was at hand: the interests of private firms, owners, and investors simply didn't match up anymore with the new public imperative to divide up the economic pie much more evenly, as opposed to merely expand their own proceeds from its growth. The private sector did its best to reignite the economic engine, but the challenge at hand was now too great for it to shoulder on its own. Unfortunately, responding largely to popular sentiment and impatience, governments then made the precarious situation even worse by heavier-handed interventions in the market, which froze a portion of its normal operations altogether - sending recession into depression.
Within a few years from the stock market crash, then, the surge of sociopolitical extremism unleashed by sudden hard times - both from radical socialist and communist movements aligned with the Soviet Union and also from the right-wing reactionary backlash of fascism in central and eastern Europe - spurred Western democratic governments to unprecedented new measures to play an active role in their market economies. The era of
laissez-faire was seemingly at an end, as rigorous wage and price controls were introduced for the first time at a broad systemic level via policies like those of the New Deal. The great economist John Maynard Keynes - whose studies since the Great War had demonstrated the necessity and hence legitimacy of direct government participation in the marketplace - now became the standard-bearer for a brave new world of merged public-private collaboration to centrally administer the industrial capitalist system, via targeting of its outputs, as never before. The fifth capitalist regime, Keynes (1930-1970), now took shape.
1970: From Keynes (1930-1970) to Friedman (1970-2010)
Not coincidentally, the most popularly referenced innovation of the Keynesian era - that of establishing the government sector as a de facto "buyer of last resort" for industries which otherwise found private sector demand alone insufficient to sustain a recovery of sales, or "pump-priming" - came into its own during the single greatest public economic endeavor possible, a Second World War considerably larger than the First. But in fact, the Keynesian system was a more ambitiously comprehensive one of long-term demand-side management: the lasting achievement of the New Deal, for one, was the enshrinement of government's role in providing a basic income and welfare cushion for unemployed and retired workers - with the express purpose, of course, of firming up the floor on demand for basic consumer goods.
Because the Second World War was succeeded in short order by the Cold War, the structural composition of public-sector, notably military and defense-related, demand within Western economies remained elevated throughout the first postwar generation. Critically, this meant that it was government spending - so maligned by free-market ideologues both then and now - that fueled research and development of the nascent computer processing and communications revolutions in the 1950s and 60s. The US-Soviet strategic (nuclear) arms and space races ensured the highest national priority for industrial integration to enable and facilitate a large national defense force and support infrastructure.
Even so, private industry and innovation continued to flourish independent of the public sector's significant role: pro-business policies, where implemented, enabled the US economy to shed some of the more stifling aspects of the New Deal era so far as growth and investment were concerned. The net effect of this synergistic combination of high public demand with high private investment was what could easily be thought of as the zenith of American industrial might: the quarter-century between the end of World War II and the Apollo moon landing.
Indeed, whilst later supply-side fundamentalists would much malign the lower GDP growth rates of the 1950s, these criticisms see only one side of the coin: the quality as opposed to quantity of growth was high, more concentrated as it was in secondary industry (manufacturing and construction) than it would be in the latter 20th century (when tertiary industry, i.e. services, became predominant); and thus enabling well-paying jobs as well as moderately priced consumer-durable goods (cars and housing) that underpinned the liftoff of the postwar "American Dream." Labor unions were at their strongest at any point in US history; wage-suppressing immigration into the country remained strictly limited; moreover, Washington's fiscal condition was at its all-time peak and its dominance of the global financial system unparalleled via the gold-backed dollar per the late-World War Two Bretton Woods monetary agreement. All of this meant the best fruits of the 1930s New Deal were only truly harvested for the American worker and family two decades later.
Of course, not all was well - and this became increasingly apparent as the 1960s progressed. With the birth of the military-industrial complex came a new form of rent-seeking corporate power that could largely be blamed for the unsuccessful long US involvement in the Vietnam War. America's NATO allies in Western Europe, having been rebuilt by the Marshall Plan, were finding it difficult to phase out their postwar provisional supports. While the American economy continued to boom with the growth of the services sector and new innovation, the strain of an existential global ideological struggle with communism would finally prove too much for the Keynesian regime: by the late 60s, the US fiscal deficit had ballooned largely owing to the faltering Vietnam conflict, and the Bretton Woods gold-greenback standard began breaking down (it finally was abandoned by Nixon in 1971). Despite the triumph of the moon landing (1969), America had bumped up against a solid wall which demanded a new paradigm shift to move forward. This would come in the form of the supply-side revolution and the new, sixth capitalist regime it would usher in: Friedman (1970-2010).
2010: From Friedman (1970-2010) to Chimerica (2010-present)
The supply-side revolution of the 1970s and 80s is the foundation upon which all economic discourse up to the very present has been built; even today, with the so-called "neoliberal" consensus arguably standing on its last legs, it continues to frame debate and discussion of economic issues in the democratic West between incumbent and insurgent modes of thought and analysis. The immediate impetus for the Friedman regime, however - after the dominant economist of the late 20th century, Milton Friedman - was the struggle to find new footing as the great postwar boom finally petered out at the start of the 70s, to be replaced by the infamous "stagflation" era all the way up to the early 80s.
In hindsight, it was clearly the emergence of a new postcolonial equilibrium, no longer dominated by the West, which brought this shift about: with the rise of Communist China as a second superpower and indeed rival to the Soviet Union in the socialist sphere, for the first time in the modern era the vast continent of Asia - traditionally home to most of the world's population - enjoyed essential parity in its dealings with nations of European extraction. Both NATO and Eastern Bloc states, on either side of the Atlantic, now found they weren't the only game in town - the Asia-Pacific was not only a new rival center of political power, but also of economic dynamism and competitiveness. Those corporations and governments in the Euro-Atlantic zone which grasped this new reality adapted quickly and reaped the benefits; those that lagged found they were soon in unprecedented danger of being commoditized and marginalized by their own elite and ruling class, in a new global economy with multinational supply chains of ever expanding scale and scope.
Thus, in an atmosphere of irrevocable creeping East-West integration - the era of
détente (1970s) -technological innovation became paramount in the private-sector, consumer-services economy of the West: the old brick-and-mortar industries were now all ripe for offshoring to Asia and nearer Latin America. While principally this was Japan followed by the smaller "tiger" Asian economies of South Korea, Thailand, and the like, inevitably it would eventually incorporate the big one, China herself - primarily through "Sinosphere" intermediaries, i.e. Hong Kong, Taiwan, and the overseas Chinese diaspora of Southeast Asia.
Hence, the geopolitical event at the crux of the transition from the Keynes to the Friedman regimes was the Sino-Soviet rift: its early cracks developing ever since the "de-Stalinization" period of the late 50s, tensions between the communist giants finally broke into open hostility by 1969-70, with a border war and major arms race along their Far Eastern frontier that led Chairman Mao to enter a quasi-alliance with erstwhile nemesis Washington (the Nixon-Kissinger opening, 1971-72). Needless to say, this US-China nexus in the second half of the Cold War sealed the fate of the Soviet Eastern Bloc: initially it cushioned American defeat in Vietnam, but by the early 80s it came to redefine the entire Eurasian strategic equation into one that fundamentally favored the capitalist West over ailing socialist Moscow - whose antics in Central America and Afghanistan, not to mention formidable nuclear arsenal, could scarcely mask a steep internal decline on both its European and Asian flanks, triggered by the collapse of oil prices not quite a decade after the US "petrodollar" became the basis of Washington's post-Bretton Woods financial hegemony.
It unsurprisingly follows that, although the Soviet empire collapsed in 1989-91, the real winner of the Cold War may actually have been China, not the US. If one takes the view that the Friedman regime's seemingly unrestrained pursuit of financial and corporate profits ensured that any attempt to sequester China over "human rights abuses", notably the 1989 Tiananmen massacre, was pure fantasy - indeed, the West had already overlooked immeasurably worse Chinese Communist atrocities to enter a coalition with Beijing against the USSR nearly two decades earlier - then it becomes much harder to continue to profess shock at the speed and manner in which the first two decades of the 21st century have turned decisively against the free world and its so-called "sole superpower" guardian, the US, in favor of an unprecedented new autocratic colossus, the People's Republic of China.
The 2008-09 global financial crisis and its chaotic aftermath, the 2010-11 Eurozone peripheral debt crisis, was thus a watershed already decades in the making: economic and financial power had already been swinging from West to East for quite some time, for the simple fact that the giant multinational banks and corporations headquartered in New York and London had already literally "oriented" their operations towards an industrializing Asia-Pacific and away from a deindustrializing Euro-Atlantic. Where contemporary Western populists might point to China's accession to the WTO in 2001 as a strategic blunder committed by their leaders, the real fix was already in much earlier than even the prior tumult of 1989.
Indeed, as the seventh and current capitalist regime, Chimerica (2010-2050, prospectively), enters its breakout second decade of the 2020s, everything is becoming clearer the more it recedes into the rearview mirror: the sheer collapse over the last decade of the defunct Friedman regime's neoliberal or "Washington consensus", i.e. of unregulated financial profiteering in the name of "free markets", was only the natural process of yet another capitalist regime change - nothing more, nothing less. That prior accord has already in effect been replaced by a neosocialist "Beijing consensus" of central financial and economic planning and execution - one that even the West is begrudgingly beginning to subscribe to.
The trade war between the US and China actually says it all: it is the former which has now lost faith in free trade and unfettered capital markets, whereas the latter rightly sees these as its allies - provided it can still control them just enough.
Regime change is never pleasant for those on the receiving end of the stick. And hence, as it has already so clearly borne out in the Trump-Brexit era, Chimerica's displacement and dissolution of Friedman isn't proving to be any different.
