Introduction

There is broad agreement among social analysts that capitalism changed in significant ways starting around 1980. However, there is disagreement about how to characterize those changes, what the key features of capitalism have been in recent decades, and what name to apply to the contemporary form of capitalism. In our view, the concept of “global neoliberalism” best captures the contemporary social reality.

In Europe liberalism has long referred to a stance that advocates limited government intervention in the economy. States were generally less active in seeking to manage capitalist economies before the Great Depression of the 1930s than they were after World War II. This does not mean that capitalist states followed a consistently laissez-faire approach in the past. Chang (2002) has shown that states actively promoted industrialization in every major developed capitalist country during its period of early development. In late developers such as Germany and Japan, the state was even more active than in the earliest cases. However, once industrialization was completed, in most developed capitalist countries the state played a relatively limited role in the economy prior to the Great Depression.

Following the Great Depression and World War II, new national social structures of accumulation (SSAs) emerged in the capitalist world in which the state actively regulated the macroeconomy as well as key economic sectors, nationalized some industries in many countries, and provided a set of social programs that is often summed up as the “welfare state.

Since the 1994 publication of our volume, Social Structures of Accumulation: The Political Economy of Growth and Crisis (Kotz et al. 1994), social structure of accumulation (SSA) theory has continued to inspire a substantial outpouring of articles and books in a variety of disciplines. The purpose of this new volume is to provide a definitive account of the state of SSA theory and its applications today, 30 years after SSA theory first emerged, and well over a decade since our previous volume was published. SSA theory seeks to explain, among other things, why long periods of relative economic stability alternate with long periods of economic crisis. For this reason, it is well suited to help understand the factors underlying the financial and economic crisis of global capitalism that broke out in 2007–08.

SSA theory was developed in the 1970s and early 1980s by David Gordon, Richard Edwards, and Michael Reich (1982) as a way of relating apparent long cycles of growth and stagnation in capitalist history to periods of change in the institutional structure of capitalism. Contrary to the sunny picture of conventional equilibrium economics, capitalist history appeared to be punctuated by periodic crises of unusual depth and length. And contrary to some conventional Marxian expectations, capitalism had not fallen into a permanent state of depression or stagnation. Subsequent to the crisis periods, capitalist economies experienced prolonged periods of relatively vigorous and stable growth and accumulation.

Introduction

Social structure of accumulation (SSA) theory is one of the most important theoretical innovations in heterodox economics. It makes sense of much of economic history. It links theoretical analysis with concrete institutional investigation. It provides a basis for understanding the evolution of capitalism over time, as well as institutional differences among capitalist systems in different countries. Not the least, SSA theory provides a basis for explaining the periodic severe economic crises that have arisen in capitalist history.

However, we believe that SSA theory has encountered difficulties in seeking to explain the economic reality of the past several decades. By most accounts, the postwar (post-World War II) SSA in the United States broke up in the late 1960s and early 1970s. After a decade of crisis and struggle, a new institutional structure was created, initially in the United States and the United Kingdom, which undermined government regulation and promoted capital mobility.

This model, which soon became dominant globally, is commonly referred to as neoliberalism. In the United States, neoliberalism has meant increased income inequality, deregulation of industrial and financial markets, increased influence of financial markets over corporate decision-making, fiscal policy emphasizing tax cuts for the wealthy and cutbacks in social programs, monetary policy that puts a greater emphasis on reducing inflation than unemployment, and relatively sluggish economic growth.

How can we understand neoliberalism in the context of SSA theory? Did a new SSA emerge in the neoliberal era?

Introduction

More than 150 years ago, in The Communist Manifesto, Marx and Engels observed that capitalism has a powerful tendency to destroy pre-capitalist relations and institutions:

Since those words were written, the continuing history of capitalism has borne them out. The vigorous accumulation process that capitalism gives rise to has continued to erode non-capitalist institutions. Feudal and semi-feudal relations throughout the world have, over time, dissolved under the pressure of capitalist penetration. Relations of independent commodity production, while not entirely eliminated, have been gradually reduced and increasingly marginalized.

However, capitalism has not eliminated all pre-existing non-capitalist institutions. In certain instances it reshaped them to suit its needs while retaining them as non-capitalist in form. Three examples that have been essential to capitalist reproduction are states, families and educational institutions. Such institutions are able to play a role in the reproduction of capitalism, not in spite of their internally non-capitalist form, but because of it, as will be explained below.

The tendency of capitalism to erode non-capitalist institutions potentially clashes with the need for non-capitalist institutions to be maintained in their supportive role in capitalist reproduction. A social system made up entirely of institutions that operate on capitalist principles and embody capitalist relations would not be viable.