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The famous Doomsday Clock — it’s a key visual motif in the Watchmen graphic novel and television miniseries — was created by Manhattan Project scientists as a metaphor to suggest how close mankind might be to global catastrophe, originally atomic war. And over the subsequent seven decades, it seems like we’ve typically been pretty close to disaster. The clock was set at seven minutes to midnight in 1947, and it’s averaged between five and six for more than 20 years. Midnight always looms.
Similarly, so does the end of capitalism. It’s always quite late, apparently. The sun is always setting. German economist Werner Sombart coined the phrase in the early 20th century, and European socialists popularized it during the Great Depression when it probably seemed about 30 seconds to midnight for capitalism. But things were darkest before the dawn. Capitalism survived, flourished, and spread across the globe. And even small doses generated near wondrous improvement.
Yet we remain stuck and suffering in late capitalism, according to progressives and socialists. And unlike with the Doomsday Clock, the end only approaches, never recedes. Here’s a handy definition from Annie Lowrey in The Atlantic: “‘Late capitalism,’ in its current usage, is a catchall phrase for the indignities and absurdities of our contemporary economy, with its yawning inequality and super-powered corporations and shrinking middle class.” So Jeff Bezos and that $375 “eco-friendly” silver straw from Tiffany’s, basically.
Still, a curious time to be resurrecting “late capitalism” versus, say, 2009, when economies were crashing, unemployment was soaring, and the entire global financial system was near collapse. An informative economic update from my AEI colleague Michael Strain in his Bloomberg column:
Only 35 U.S. workers out of every 1,000 are looking for jobs but unable to find them — the unemployment rate is lower than it has been in a half-century. The rate at which people in their prime working years hold jobs is higher than it has been in over a decade. (I noted in November that it had finally fully recovered from the Great Recession, despite much concern that it never would.) In 2009, there were over six unemployed workers for every job opening. Today, there are more job openings than there are unemployed workers.
Are the theorists of late-stage capitalism right to be extremely concerned about income inequality? The level of inequality is high, but this is an odd decade to bemoan its rise. According to the nonpartisan Congressional Budget Office, between 1979 and 2006 the rich-poor gap in income after taxes and government transfer payments increased by 27 percent. But from the beginning of the Great Recession, when criticism of capitalism became much more common, to 2016 (the last year data are available), inequality actually decreased by 7 percent. Or consider the ratio of weekly earnings between high- and low-wage workers. Between 2007 and 2019, this measure of the wage gap grew by only 1 percent.
What comes after late capitalism? Maybe it’s whatever they have in China right now. Call it state capitalism or predatory capitalism or socialism with Chinese characteristics. It’s a model that gives the state a strong leading role in managing the private sector. And the combo of China’s rise and ambitious future plans has so impressed some in the West that they are proposing their own version called “industrial policy.”
But the Chinese model should spur caution rather than spark aspiration. As The Economist recently noted: “There is evidence that China’s heavy-handed intervention is becoming increasingly ineffective. Total factor productivity growth in China in recent years has been a third of what it was before the 2008 global financial crisis. Productivity has also slowed in other countries, but the World Bank, in a recent book about Chinese innovation, notes that China’s slowdown has been unusually sharp.”
Maybe the Beijing planners haven’t figured out a sustainable successor to market capitalism. Maybe things here are better than you think. Maybe it’s time to push back the hands on the doomsday clock of capitalism. Maybe it’s not so late after all.