Progressive capitalism is an economic framework that seeks to recalibrate the roles of the market, state, and civil society to enhance societal well-being. This approach advocates for a new social contract that leverages market forces and entrepreneurship while addressing issues such as market dominance, inequality, and the consequences of globalization. Progressive capitalism emphasizes the need for government investment in technology, education, healthcare, and green infrastructure, alongside implementing public options for essential services.
Distinct from socialism, which calls for extensive government control over production, and neoliberal capitalism with minimal state coordination, progressive capitalism supports market economies with effective regulatory frameworks. It aims to correct market abuses and ensure that economic growth and opportunities are widely distributed. By focusing on reforms within the capitalist system, it seeks the benefit of market-driven economic growth balanced with fairness and sustainability. Critics argue that its incremental reforms may not address deeper systemic issues within capitalism.
Historically, progressive capitalism has been associated with periods of significant economic growth and reduced inequality, such as the New Deal and the Golden Age of capitalism in the mid-20th century. It contrasts sharply with neoliberal free market capitalism, which tends to reject such interventions in favor of self-regulating markets with more narrowly distributed results. In recent years, the superior results of progressive capitalism have been promoted by figures like New KeynesianNobel-winning economist Joseph Stiglitz and U.S. Congress members such as Ro Khanna.
Definition
As defined by economist Joseph Stiglitz, progressive capitalism is a form of capitalism that advocates for a new social contract that rebalances the roles of the market, the state, and civil society, leveraging market forces and entrepreneurship to enhance societal wellbeing. It involves rewriting economic rules to address issues like market dominance, ensuring globalization benefits all citizens, and implementing government investments in technology, education, and green infrastructure, alongside public options for essential services.[1] Stiglitz has also described progressive capitalism as "a better balance of government, markets, and civil society".[2]
Progressive capitalism is often presented as an economic approach that is in the middle between socialism and neoliberal market fundamentalism. Stiglitz has stated that progressive capitalism responds to the debate between capitalism and socialism by emphasizing reforms within the capitalist system. It contrasts with traditional socialism, which historically advocated for extensive government control of the means of production, a concept even in Europe with less support today.[3] According to economist Mark Cooper, free market fundamentalism emerges as the key opponent to progressive capitalism. While progressive capitalism advocates for policies to correct market abuses and achieve socially beneficial outcomes, free market fundamentalism rejects such interventions, arguing that markets will self-correct and that regulation and antitrust enforcement only hinder business. Proponents of free market fundamentalism believe minimal government interference will lead to overall public benefit, despite the potential for worsening existing problems. Stiglitz argues that market fundamentalists wrongly label progressive capitalism as socialism, whereas it is distinctly neither socialism nor market socialism.[4]
History
Mark Cooper categorizes US economic periods into two main models: free market fundamentalism and progressive capitalism. Free market fundamentalism includes the Gilded Age (1869-1886), the Post-WWI Roar (1917-1932), and Neoliberalism (1980-2008). Progressive capitalism encompasses the New Deal (1933-1946) and the Golden Age (1947-1970), with transitional periods including the Progressive Era (1887-1916), the Crisis (1970-1979), and the Obama administration (2009-2015).[4]
Using econometric analysis, progressive capitalism has been shown to outperform neoliberalism across key economic indicators. During the progressive capitalism era (1933-1972), GDP growth surged by 2.78%, compared to a modest 1.51% under neoliberalism (1980-2008). Productivity growth also favored progressive capitalism, showing an increase of 2.60% versus 0.84% for neoliberalism. Private investment levels were higher under progressive capitalism at 1.66%, while neoliberalism saw only 0.29%. Unemployment rates improved more under progressive capitalism, decreasing by 2.62%, compared to a reduction of 1.08% under neoliberalism.[4]
Overview
Progressive capitalism principles include recognizing excessive corporate power as oppressive, viewing government as a check on private excess, understanding diverse methods for distributing economic benefits, valuing secure and well-paid workers as capitalism's consumers, and rejecting a trade-off between fairness and economic growth, with reduced inequality potentially fostering greater prosperity.[5] A central tenet of progressive capitalism is its focus on enhancing overall well-being, going beyond GDP metrics to ensure that the benefits of societal progress are widely and fairly distributed among all citizens.[6]
Stiglitz delineates four key priorities of progressive capitalism. Firstly, it involves restoring equilibrium among markets, the state, and civil society to tackle issues like economic stagnation, rising inequality, and environmental degradation through government regulation and investment. Secondly, recognizing the pivotal role of scientific inquiry and social cooperation in wealth generation, emphasizing the need for markets governed by the rule of law and democratic oversight. Thirdly, addressing the problem of concentrated market power, which contributes to inequality and stifles economic growth, by curbing the dominance of large corporations. Finally, progressive capitalism seeks to sever the nexus between economic and political influence, advocating for reforms to reduce the sway of money in politics and mitigate wealth inequality, ultimately fostering a fairer and more prosperous society.[7]
Progressive capitalism aims to enhance America's prosperity by facilitating the expansion of individual opportunity instead of nurturing perpetual reliance on an excessively intrusive government.[5] Aligned with progressive capitalism are societal aims such as prioritizing education from K-12 to adapt to the evolving economy, ensuring relief from college and student debt, and offering comprehensive support for families, including access to healthcare. It also involves implementing a fairer tax system, strengthening the social safety net, combating workplace discrimination, addressing housing segregation and affordability, revitalizing national infrastructure, and fostering economic growth in stagnant communities where relocation is challenging.[5]
Stiglitz has emphasized that progressive capitalism is not "anti-market," Progressive capitalism embraces markets while recognizing the necessity of diverse institutions including government, civil society, and non-profit entities like universities. It emphasizes that a thriving economy requires a balanced approach, integrating these various elements effectively.[8] Progressive capitalism underscores the importance of corporations, small businesses, and profit-making firms, while also advocating for a robust array of institutions, particularly government involvement in regulation and investment.[6] The framework advocates for regulation and antitrust measures to ensure competition, countering neoliberal claims that such policies are unnecessary. Evidence shows that under progressive capitalism, the financial sector operates more efficiently and competitively, addressing market power issues and outperforming neoliberalism in reducing market abuses and enhancing performance.[4]
The Brandeis-Stiglitz model of progressive capitalism posits that capitalism thrives when it equally supports capital—through profit linked to investment—and labor—through productivity linked to wages. Evidence of this effectiveness includes high economic growth, low unemployment, and reduced inequality. This success is achieved by balancing benefits between capital and labor and implementing socially determined redistribution of surplus to address market-produced inequalities. A strong entrepreneurial state plays a vital role by supporting capital with high-risk projects, infrastructure, and creating new markets, and aiding labor through education, skill training, childcare and housing.[4]
Progressive capitalism reimagines the social contract between voters, elected officials, workers, and corporations, aiming to address disparities. Stiglitz advocates for expanding public options in critical areas currently dominated by private entities or lacking sufficient provision. He highlights the missed opportunity of not including a public option in Obamacare, which could have increased choices and competition, ultimately lowering costs. By implementing such measures across sectors like retirement and mortgages, he envisions restoring a middle-class standard of living for most Americans.[9]
In the Brandeis-Stiglitz model of progressive capitalism, the banking and finance sectors are crucial. Brandeis and Stiglitz criticize the harmful effects of finance capital when banks exceed their roles, such as by engaging in management or complex tasks beyond assessing and holding loans, leading to conflicts of interest and inefficiencies. This model also seeks to address contemporary challenges in the digital communications sector by applying foundational principles similar to those that guided the success of the second industrial revolution in America. It advocates for creating regulatory frameworks and guidance that foster competition and innovation within decentralized markets while furthering the broadly applied economic, social, and political views of society. It emphasizes the need for adaptable and expert-driven policy implementation to reflect the dynamic nature of the economy and calls for democratic and participatory political processes to support evolving economic structures.[4]
Progressive capitalism is currently being popularized by American congress member Ro Khanna,[10][11][12] who believes free enterprise rewards hard work and innovation and is not just for the privileged and connected few.[13][14] Progressive capitalists believe that a partnership among the private business sector, federal government and research universities fuels growth and that strategic investments will increase both the demand and supply of well-paying jobs in the 21st century. The partnership generates new technology and builds the launch pads for new and growing businesses.
Application
Certain aspects of progressive capitalism rely on collaborations between the public and private sectors, while others require direct government investment.[15] The economic framework involves a heightened level of government spending on technology, education, and infrastructure.[16] Joseph Stiglitz asserts that the progressive capitalism agenda is highly feasible and essential to enact. He argues that the alternatives put forth by nationalists and neoliberals would only exacerbate existing issues such as stagnation, inequality, environmental degradation, and political discord, potentially resulting in undesirable outcomes. Stiglitz contends that the concept of progressive capitalism is not contradictory but rather offers a practical and dynamic alternative to failed ideologies like free-market neoliberalism.[17] Measures within the framework of progressive capitalism include addressing the challenges of affordability and accessibility in healthcare, by exploring innovative solutions beyond current approaches or single-payer systems, such as including public options that maintain choice while expanding coverage. For childcare, targeted measures like expanding tax credits and implementing universal paid leave can alleviate burdens and encourage family well-being. Education initiatives, including universal pre-K, affordable skilled trades and college education options, are crucial for fostering opportunity and addressing inequality. Infrastructure revitalization is urgent, requiring significant public investment to boost economic growth and create jobs. Climate change demands comprehensive action, including revitalizing the existing pollution clean-up tax, a carbon tax, and investments in renewable energy, while tax reform must prioritize fairness and sustainability through measures like progressive taxation and pre-distribution reforms.[15]
Progressive capitalism entails deploying antitrust law to combat the dominance of large corporations, scrutinizing mergers and acquisitions, and potentially breaking up unchecked corporate giants like Amazon and Facebook to ensure fair competition in the market. Richard North Patterson suggests that this approach would address the acquisition practices of tech giants like Amazon, Facebook, Google, Apple, and Microsoft, which have collectively acquired 436 companies and startups over the past decade without significant regulatory oversight.[15] Progressive capitalism also necessitates pre-tax reforms. There are constraints, both political and economic, on the extent to which income can be redistributed through taxation and government spending alone. Emphasizing pre-distribution, a fundamental aspect of progressive capitalism, entails reshaping economic incentives and income structures prior to taxation. Proposed measures include granting corporations a charter of corporate citizenship, allowing employee board representation, and requiring executives to hold shares for a specified period.[15]
Another crucial element of progressive capitalism is preventing special interests from corrupting democracy. Richard North Patterson has suggested that the framework would involve strengthening the Federal Election Commission (FEC), shutting down individual super PACs, and implementing measures such as comprehensive disclosure of campaign funding sources and a public campaign-finance matching system. Steps should be taken to sever the connection between corporate lobbyists and public officials, including restrictions on stock ownership and lobbying careers and increased transparency in lobbying activities. Progressive capitalism recognizes that economic and political health are intertwined, and unchecked dominance of large private institutions can narrow opportunities, stifle competition, and undermine representative governance. By addressing these issues, progressive capitalism aims to preserve the integrity of the political and economic system and minimize the rise of extremism and authoritarianism.[15]
Given the existential challenge of climate change, in the scope of progressive capitalism, public initiatives and regulations must prioritize the development of a sustainable economy. A crucial aspect of ensuring widespread access to a middle-class lifestyle will be the establishment of government-backed alternatives, such as public options for mortgages, retirement plans, and healthcare.[16]Progressive capitalism advocates for addressing market failures, particularly when imperfect and asymmetric information leads to exploitation by profit-maximizers, as demonstrated by the 2008 recession. Joseph Stiglitz proposes a public mortgageoption that offers standard 30-year mortgages for taxpayers of five years, based on assessments of repayment ability and property value. This option would provide flexibility, including reduced payments to avoid foreclosures during personal income drops, and utilize government efficiencies in data collection and social insuranceto lower homeownership costs.[18][19]
Criticism
Economist Max B. Sawicky critiques Joseph Stiglitz’s progressive capitalism for its focus on incremental reforms rather than addressing fundamental market issues. While Stiglitz's proposals, like enhanced Social Security and public mortgage options, aim to improve existing systems and reduce exploitation, Sawicky argues they do not confront the deeper structural problems of capitalism. He suggests that Stiglitz’s approach remains within social-democratic reform and overlooks the potential for more radical solutions, such as social ownership and comprehensive economic planning, which he believes could more effectively address systemic issues and leverage public sector capabilities.[20]
The World Socialist Web Site criticizes the concept of "progressive capitalism," arguing it as a deceptive framework propagated by figures like Joseph Stiglitz, who contend that it can mitigate inequality and enhance societal well-being through government interventions like taxation and regulation. The WSWS dismisses this as a false narrative, asserting that such reforms are incapable of addressing the inherent contradictions and exploitative nature of capitalism. They argue that historical and economic realities demonstrate capitalism's dependence on profit accumulation at the expense of working-class interests, despite temporary reforms. The WSWS advocates for a socialist revolution as the only viable solution to fundamentally transform society and empower the working class against entrenched financial oligarchies.[21]
Corporatocracy is an economic, political and judicial system controlled by business corporations or corporate interests.
In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any other external authority. Proponents of the free market as a normative ideal contrast it with a regulated market, in which a government intervenes in supply and demand by means of various methods such as taxes or regulations. In an idealized free market economy, prices for goods and services are set solely by the bids and offers of the participants.
A market economy is an economic system in which the decisions regarding investment, production, and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.
Joseph Eugene Stiglitz is an American New Keynesian economist, a public policy analyst, political activist, and a full professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is a former senior vice president and chief economist of the World Bank. He is also a former member and chairman of the US Council of Economic Advisers. He is known for his support for the Georgist public finance theory and for his critical view of the management of globalization, of laissez-faire economists, and of international institutions such as the International Monetary Fund and the World Bank.
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The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Monetary Fund (IMF), World Bank and United States Department of the Treasury. The term was first used in 1989 by English economist John Williamson. The prescriptions encompassed free-market promoting policies such as trade liberalization, privatization and finance liberalization. They also entailed fiscal and monetary policies intended to minimize fiscal deficits and minimize inflation.
In economics, shock therapy is a group of policies intended to be implemented simultaneously in order to liberalize the economy, including liberalization of all prices, privatization, trade liberalization, and stabilization via tight monetary policies and fiscal policies. In the case of post-Communist states, it was implemented in order to transition from a command economy to a market economy.
Economic inequality is an umbrella term for a) income inequality or distribution of income, b) wealth inequality or distribution of wealth, and c) consumption inequality. Each of these can be measured between two or more nations, within a single nation, or between and within sub-populations.
Eco-capitalism, also known as environmental capitalism or (sometimes) green capitalism, is the view that capital exists in nature as "natural capital" on which all wealth depends. Therefore, governments should use market-based policy-instruments to resolve environmental problems.
Globalization and Its Discontents is a book published in 2002 by the 2001 Nobel laureate Joseph E. Stiglitz. The title is a reference to Freud's Civilization and Its Discontents.
Market fundamentalism, also known as free-market fundamentalism, is a term applied to a strong belief in the ability of unregulated laissez-faire or free-market capitalist policies to solve most economic and social problems. It is often used as pejorative by critics of said beliefs.
Economic progressivism or fiscalprogressivism is a political and economic philosophy incorporating the socioeconomic principles of social democrats and political progressives. These views are often rooted in the concept of social justice and have the goal of improving the human condition through government regulation, social protections and the maintenance of public goods. It is not to be confused with the more general idea of progress in relation to economic growth.
Income inequality has fluctuated considerably in the United States since measurements began around 1915, moving in an arc between peaks in the 1920s and 2000s, with a 30-year period of relatively lower inequality between 1950 and 1980.
Socialism of the 21st century is an interpretation of socialist principles first advocated by German sociologist and political analyst Heinz Dieterich and taken up by a number of Latin American leaders. Dieterich argued in 1996 that both free-market industrial capitalism and 20th-century socialism have failed to solve urgent problems of humanity such as poverty, hunger, exploitation of labour, economic oppression, sexism, racism, the destruction of natural resources and the absence of true democracy. Socialism of the 21st century has democratic socialist elements, but it also resembles Marxist revisionism.
Social democracy is a political, social, and economic philosophy within socialism that supports political and economic democracy and a gradualist, reformist and democratic approach towards achieving socialism. In practice, social democracy takes the form of socially managed welfare capitalism, and emphasizes economic interventionism, partial public ownership, a robust welfare state, policies promoting social equality, and a more equitable distribution of income.
Redistribution of income and wealth is the transfer of income and wealth from some individuals to others through a social mechanism such as taxation, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law. The term typically refers to redistribution on an economy-wide basis rather than between selected individuals.
Centre-left politics is the range of left-wing political ideologies that lean closer to the political centre and broadly conform with progressivism. Ideologies of the centre-left include social democracy, social liberalism, and green politics. Ideas commonly supported by the centre-left include welfare capitalism, social justice, liberal internationalism, green capitalism, and multiculturalism. Economically, the centre-left supports a mixed economy in a democratic capitalist system, often including economic interventionism, progressive taxation, and the right to unionize. Centre-left politics are contrasted with far-left politics that reject capitalism or advocate revolution, or support more extreme positions like anarchism, state atheism, eco-terrorism or communism.
Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics is a 2012 book by barrister Daniel Stedman Jones, in which the author traces the intellectual development and political rise of neoliberalism in the United States and the United Kingdom. Originally a PhD thesis, the author adapted it into a book.
↑ Cooper, Mark (30 March 2015). "Content Author". TPRC 43: The 43rd Research Conference on Communication, Information and Internet Policy. 43 (TPRC 43): Download. Retrieved 20 April 2019.
↑ Stiglitz, Joseph E. (30 May 2019). "After Neoliberalism". Project Syndicate. Retrieved 10 February 2024.
↑ Stiglitz, Joseph E. (2019). People, power, and profits: progressive capitalism for an age of discontent. London: Allen Lane. p.186. ISBN978-0-241-39923-1.
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