In an industrialized world, an economic system can only last so long as each generation improves its lot (in aggregate) as compared to the one that came before. This can be thought of as its primary mandate. Absent such continuous improvement, people will naturally become dissatisfied and begin to plan the implementation of a new system, either electorally (if that route is available) or via protest and/or violence (if not). An economic system may survive one generation of declining quality of life (maybe more in extreme circumstances such as a World War), but in the accumulation of too many successive generations of decline, change is inevitable.
A real example of this phenomenon took place during the late 20th Century. Authoritarian-style central planning began failing to fulfill its mandate of increasing quality of life in the aggregate over multiple generations. This directly led to the protests of 1989 and the end of the Second World economic model in 1991.
The First World model of neoliberal global capitalism, on the other hand, kept chugging along, fulfilling its mandate. In recent years, however, it has become apparent that the First World model has also begun to fail its mandate, at least in already developed nations. In the United States, for example, younger generations are increasingly less economically secure than their parents. This has led to numerous disastrous effects, from delayed marriage, to falling birthrates, to an explosion in suicides, and now even to a declining overall life expectancy¹.
It stands to reason, then, that the neoliberal global capitalist system is likely to fall, and society will begin to move toward a post-capitalist system.
Before delving into the topic of post-capitalism, it’s first important to establish that our current era is not imperfectly capitalist as many claim, but rather indicative of the natural and inevitable arc of capitalism².
It is true that the existence of private property and market mechanisms do not in themselves make an economic system “capitalist.” Certain varieties of market socialism (not to be confused with social democracy³), for example, incorporate both private property and market mechanisms while explicitly rejecting capitalism³ ⁴. An economic system is more properly distinguished as capitalist by the level of control the market mechanism is given over the daily lives of those living under the system.
It is plainly clear that markets have as much control, if not more, over our daily lives than throughout most of history. The jobs to which we report each day have responsibilities and wages set by a market. The house we sleep in is priced by a market. The food and consumer goods we buy are priced by a market. Those basic principles have been the case in the US for some time, however the restrictions on these markets have decreased over time. Previously, Americans competed in a market comprised of only other Americans, or at times against citizens of other nations with similar labor standards and levels of development. That’s no longer the case, as US workers now compete with workers in the developing world, including those working in deplorable conditions. Market forces have also expanded into areas of life which were previously immune. The price controls and market regulation that characterized most of the 20th Century have evaporated.
The main objection, then, to my characterization of our era as not being imperfect in its capitalism likely turns on whether such markets are “free.” Many would argue that government influence in markets (or the existence of governments at all) makes our markets clearly unfree and therefore not capitalistic.
I don’t find this argument persuasive. Markets, by nature, are an ouroboros. Markets by nature devour themselves. It is an inevitable trajectory: a market will result in the most efficient players outliving their competitors. This creates a market with a small number of players, who will quickly realize it is in their best interest to collude in oligopoly, which is essentially the end of an open market. Often these remaining players will use government to enforce such oligopoly, but even in the total absence of government this phenomenon would still occur (covered later in this piece).
During the Late 19th and Early 20th Centuries (often held up as an example of a more perfectly capitalistic era), the US experienced rapid industrialization. Solely for the sake of argument, let’s accept as true all assertions that this era was a massive net positive for the country due to rising incomes, living standards, and life expectancy, essentially choosing to view the era as more of a Belle Époque than a Gilded Age. Even accepting the “Belle” view as true, however, it’s also unarguably true that the era eventually resulted in oligopoly (the famous “trusts”). This bred popular resentment, which led to the Progressive Era and its resulting government intervention to break the oligopolies, at least for a time. Had this pattern continued, we may have had an endless cycle of free market growth, followed by oligopoly, followed by trust busting, followed by a return to the beginning of the cycle.
By the time the New Deal came around, however, our oligopolists had smartened up. Rather than allowing themselves to be broken into pieces, the nation’s largest businesses preemptively embraced the new government regulations that would become the New Deal. The National Recovery Administration, for example, was controlled by large players that used its regulatory codes to stifle their competitors. Even after the NRA was ruled unconstitutional, large players tended to cooperate with President Roosevelt in creation of further New Deal welfare state programs.
This cooperation was key, and the resulting welfare state and regulatory programs that spread worldwide became commonly known as “social democracy.” Social democracy is often referred to as a “lite” form of socialism, or a third way between socialism and capitalism, but these definitions are very wrong.
Social democracy is at its core anti-socialist. Its entire purpose is to ward off popular agitation towards socialism by removing some of the “rough edges” experienced by the working class. The key is that the type of welfare state and regulatory programs associated with social democracy in practice very carefully designed to not disrupt the overarching structure of capitalism. They do not result in any sort of social ownership of the means of production (the literal definition of socialism). These programs are rather designed to keep the populace just placated enough to not question the concentration of ownership in a few market participants. They are akin to Dunkin’ Donuts giving out free coffee once a year to build positive feelings toward its brand.
In the modern era, social democratic politics has further sought to stabilize capitalism through use of “woke” culture. By replacing class with race, gender, or sexual preference as the lens through which social relations are viewed, the capitalist system is more easily buttressed. If the populace were to view class as the engine of inequality, it may agitate for structural changes to the economic system. On the other hand, if it views race, gender, or sexual preference as such engine we are called only to change our inner prejudices and feelings (changes which don’t threaten the existing economic order). It is no accident that all major corporations have adopted “wokeness” as part of corporate culture; many Tweeters with roses in their handles have feeds that could have been lifted directly from a diversity statement written by the Goldman Sachs human resources department⁵.
Establishment of social democracy is inherent to the arc of capitalist development and is consistently the favored politics of the biggest winners in the capitalist system⁶. It exists to placate the mass of workers, stabilizing what would otherwise be an unstable system.
This process was laid out over 100 years ago by Hilaire Belloc in The Servile State. The modern social democratic capitalist system in which we live today is almost precisely the titular “servile state” predicted by Belloc. Belloc believed that as capitalism tilted toward oligopoly, the oligopolists would willingly modify their system to create protections for workers, removing the harshest edges of a free market system. In order to get these protections, however, workers would legally be compelled to accept a servile position to the oligopolists. Oligopolists would welcome this system, as it would preserve the concentration of capital in a small number of owners.
Unemployment insurance, group health insurance, paid family leave, and overtime pay are all examples of government programs that create a legally binding distinction between employer and employee. As those benefits are constructed today, in order to receive these legal protections a worker is obligated to accept a servile relationship as an employee. Workers obviously (and rightly) have welcomed these changes, as due to their unequal bargaining power with employers these provisions have greatly improved their quality of life. But, as explained above and despite popular belief, these programs benefit our market oligopolists as well.
To emphasize: the goal of modern social democracy is not to eliminate inequality, it is to expand inequality. Oligopolists understand that by setting a floor underneath the working classes, they are less likely to rabble-rouse, allowing said oligopoly to continue unimpeded without threat of any redistribution of capital from top to bottom.
While smaller proprietors could theoretically continue to exist in a servile state, oligarchic players can use the regulatory regime to make it progressively harder for them to compete over time. Regulatory compliance costs are necessarily more burdensome on smaller players, as they comprise a larger percentage of a smaller overall budget.
As this has played out in real life, the result has been an extreme centralization of economic power over the past three decades.
It’s important to note that this mechanism doesn’t require a “government” (although it will make use of one when available) and would take place even in a hypothetical case of complete anarchism. In the absence of government, as the market eliminates less efficient competition the oligopolists will collude together to form their own regulatory organizations (structured to benefit incumbents), along with their own systems of arbitrating disputes and enforcing judgments. It is in their financial interest to do so, and any failure to do so would be completely irrational. Power abhors a vacuum and will always find a way to be exercised. If a group of private actors have sufficient size, they are a de facto private government, no less able to exercise power than a “public” government today⁷. Further, oligopolists would be just as likely to provide welfare state like benefits to employees without a government mechanism, as nonexistence of government would have no effect on the oligopolists’ desire to stabilize the economic system.
Belloc’s predictions go awry in his belief that if the creation of the servile state weren’t stopped before its full realization, it would become inherently stable and unstoppable. He did not predict how a transition to fiat currency and a debt based economy could destabilize the system.
The move to fiat currency and a debt based economy has caused the financial services industry to become an ever larger portion of the economy. As the financial services industry has grown, it has gained more power over the regulatory regime and has used that power to enact policies to further increase its outsized role in the economy. Beginning in the 1980s and even more earnestly the 1990s, this meant not only deregulating finance, but also pushing policies of globalization.
Implicit in every “free” trade agreement of the fiat system is the US agreeing to send jobs overseas in exchange for the resulting dollar-denominated foreign profits being reinvested back into the US financial system. This is necessary from a balance of payments perspective; absent such reinvestment the value of the dollar would fall, making imports to the US less competitive, and increasing domestic US production. While such a fall in the value of the dollar against other currencies may benefit certain swaths of Americans, it certainly would not benefit the foreign producers and US financial services interests for whom these agreements are designed.
Further, in a fiat system where currency depreciates (as compared to goods, not necessarily as compared to other weaker currencies), workers are required to save using financial products. In our current system, for most workers this has meant moving savings into publicly traded securities (often in the form of a 401(k)), further growing the role of the financial services industry in our everyday lives.
The Cantillon Effect⁸ and loss of well-paying jobs resulting from this system has created yawning inequality, which has been paired to rising prices in the things most families consider important⁹. The welfare state system struggles to finance additional programs to assist workers in affording these items without printing additional money, which ultimately exacerbates the underlying problem. Hence, while this system in the short term leads to greater wealth for the oligopoly, in the longer term inequality continues to expand, making it ever more difficult to placate the justifiably angry working class and rendering the system inherently unstable.
Absent a hard money system, a market failure at least at the level of 2008, and likely more severe, is inevitable. In 2008, our oligopoly was able to quell popular resentment sufficiently enough and enact measures to keep itself limping along. It is notable, however, that even then it was barely able to do so, as the TARP was initially rejected by Congress. It seems likely that next time popular resentment will be greater, and it’s even possible that international confidence in the dollar (required for TARP-like solutions) will be lower.
Whether it’s the next market failure, or several market failures down the line, eventually the fiat system will break down. So what would a transition to post-capitalism in a sound money environment look like?
Before addressing that question, to remove any doubt that this transition is happening, it’s helpful to note that the transition to post-capitalism is already occurring in parts of the developed world where the fiat-debt-globalization system has centralized economic power and bred popular resentment. One concrete example of this is the European “mainstream” right wing being rapidly being replaced by new political parties which put little to no emphasis on free market orthodoxy, instead prioritizing nationalism or localism to secure the comfort and security of citizens. In the United States, conservative activism has also increasingly taken this flavor. Ex-libertarian and immensely popular television host Tucker Carlson recently summarized this popular energy well:
“Market capitalism is not a religion. Market capitalism is a tool, like a staple gun or a toaster. You’d have to be a fool to worship it. Our system was created by human beings for the benefit of human beings. We do not exist to serve markets. Just the opposite. Any economic system that weakens and destroys families is not worth having. A system like that is the enemy of a healthy society.”
On another occasion, he further elaborated:
“I’m definitely against a system where really the only success stories are like 27 billionaires who hate America, which is where we are now. You have to ask yourself, how is this working if the kid down the street can’t get married? I don’t want to live in that country.”
Increasingly larger proportions of Americans don’t want to live in that country either.
Returning to the question at hand, what comes next? Authoritarian central planning along the lines of the USSR is unlikely, as revolutions for such systems have historically only ever occurred in nations lagging in industrialization, and even in those circumstances the model ultimately failed.
One possibility is that the US goes “all in” on the servile state concept. The fiat system would collapse, the economy would be definancialized, and most businesses would fail in the resulting Depression-like event, but the few that remain would essentially fuse with government to provide essential services. Imagine a future where Amazon and a few other corporations deliver most services to citizens and are the nation’s largest employers. The government (what little remains) would outsource most of its functions to that small group of companies, effectively as subcontractors. Said businesses would gain quasi-governmental status. Starting a new business would become nearly impossible, and most Americans would be employed by the same handful of employers. Regardless of whether this is the ultimate answer in the US, as of today it certainly seems to represent the future of China.
The other, “non-servile,” possibility is that the next generation is likely to be one of “line drawing” with respect to markets. There are various methods by which this could take place, of which I will discuss two.
One method of line drawing would be socializing portions of the economy while leaving others subject to market forces. This would be a “mixed economy,” but very different from the way that term is used today. Typically the term “mixed economy” today is meant to refer to social democracy, a system that is structurally fully capitalist while implementing certain welfare programs which allow a floor under the standard of living. While these programs are sometimes referred to as “socialist,” and in practice in Europe are often implemented by formerly socialist parties that retain the word “socialist” in their names, they do not in fact involve any sort of substantial change with regard to control over the means of production.
The “mixed economy” discussed here would be substantially different from social democracy. Rather than welfare state “tax and spend” solutions, it would involve structural change with regard to the means of production, but without abolishing all aspects of a market economy or private ownership. Certain areas of the economy might become fully socialized at the government level (private utility monopolies, for example, might be brought under direct government control) whereas others would be quasi-socialized outside of direct government control (privately owned corporations may continue to exist, but once an enterprise were to reach a certain size it might be legally required to reserve a percentage of directorships for employees). Notably, such a system does not require financing through monetary expansion as as has been the case in most social democratic systems.
A different method of “line drawing” would be to continue the current role of markets while limiting the size of the players. This system would be similar to distributism as first proposed by Pope Leo XIII in Rerum Novarum, and expounded upon most famously by Hilaire Belloc and GK Chesterton (as well as by Pope Pius XI in Quadragesimo Anno). The idea would be a system where property is fully privatized and the state’s role is limited to refereeing the size of the market players. The Popes did not offer concrete solutions as to how this would be practically accomplished, and Belloc and Chesterton’s specific solutions look fairly dated in terms of applicability to the modern technological economy. In the modern world, vigorous enforcement of existing US anti-trust law would be an obvious (if imperfect) first line solution. One may also hope that in a sound money system, absent the massive privilege of the Cantillon Effect, the average size of firms may trend downward (at least somewhat) on its own. Legal policy favoring localism would likely be another key factor in any distributist solution.
It would be a mistake to assume that either of these methods of “line drawing” would be implemented as absolutes. More likely, both methods would come into play. For better or worse, politics revolves around debate and conflict, so it’s not too far a stretch to imagine a future US two party system based upon one party favoring the mixed socialization concept, while the other favors a distributist point of view, each acting as a check on the other.
 A Twitter thread with further detail and links: https://twitter.com/vandrewattycpa/status/1195430326606147584?s=20
 To give this essay a fair hearing, I ask any reader who self-identifies strongly with capitalism to at least be open to the idea that capitalism is a system that served a valuable purpose in the development of the world (and perhaps was necessary for such development), but whose time may have come.
 Do not confuse market socialism with social democracy, as so many do today. This confusion is not helped by the fact that most European political parties which have “socialist” in their names have long since transitioned away from socialism to fully embracing social democracy, and most young Americans going on about “socialism” on Twitter are in fact social democrats. Socialism and social democracy are in fact radically different concepts (which is important regardless of whether supports one, both, or neither).
 Aside from market socialism, distributism is an ideology from the 19th and early 20th Centuries that has as one of its core tenets protection of private property and allocates resources through a market mechanism while explicitly rejecting both capitalism and socialism.
 In an amazing coincidence, a day after I drafted that sentence Goldman Sachs indeed launched a “pronoun initiative”: https://twitter.com/vandrewattycpa/status/1198254012316950529?s=20. For those not familiar with political Twitter, the presence of a rose emoji in a Twitter handle is meant to signify that the Tweeter considers himself or herself a “socialist.” More often than not, however, despite self-identifying as a “socialist,” the Tweeter is in practice much closer to supporting woke social democracy than actual socialism.
 If you are hesitant to believe that the biggest successes of the capitalist system are enthusiastic proponents of social democracy, I suggest researching data on the voting patterns of the very wealthiest people in the US since 2008. Or perhaps better, look at their patterns of political donations over the last decade. Elizabeth Warren, arguably the most social democratic of the 2020 presidential candidates, has received donations from more than 30 billionaires despite proposing a direct wealth tax applicable only to billionaires. When analyzing the politics of the “rich,” it’s important to distinguish the wealthiest and most powerful in the capitalist system from your local successful small businessman. While your local new car dealership owner or plastic surgeon may not support social democratic politics, the nation’s CEOs typically do. See also the chart below.
 To quote Belloc: “Some generations ago a man challenged to tell you why he forswore his manhood in any particular regard would have answered you that it was because he feared punishment at the hands of the law; to-day he will tell you that it is because he fears unemployment.” In the case of the US, at the hands of the law we receive certain protections from the Constitution and more specifically the Bill of Rights. We will have no such protections from private governments.
 Definition of the Cantillon Effect: “In case of a monetary expansion, the ones who profit from it are the ones who are close to the money. ‘Close to the money’ in this case means everyone who can access the money right at the beginning, i.e. big companies, banks, etc. They get loans and make investments. Prices then start to rise even though the rest of the population has not received any of the new money yet. This part of the population usually is not the one with too much money. Nonetheless, they have to pay the higher prices even though they have not profited from the increase in money at all. And they will never profit from it in the same way as the ones who received the money first. The result is a redistribution from the poor to the rich.” https://www.austriancenter.com/cantillon-effect-populism/
 While we are told that inflation in the developed world is very low, this is a case of goosed statistics. In the case of items like housing, real (non-junk) food, and education, prices have risen drastically. This is hidden in CPI statistics by drops in prices due to production efficiencies in certain “tech” items. Put another way, you can now afford 5 TVs, but not a house to put them in.