David Coates

Postings to Mark the Publication of ‘Flawed Capitalism’ (1) The Four Central theses of Flawed Capitalism



To better grasp the nature of our contemporary condition, David Coates’s Flawed Capitalism offers the following four central theses – placing contemporary politics in the space between dominant social and economic settlements and arguing the case for the creation of a new settlement, more progressive and socially just than either of its predecessor settlements.


Post-war US and UK economies have experienced two long periods of sustained growth, each associated with a particular social settlement. The first – triggered by New Dealers in the US and by the Attlee governments in the UK – gave us 25 years of economic growth, full employment and rising living standards, on the basis of a social compact between private businesses and organized labour that allowed profits and wages to rise together. That social settlement ended in the stagflation of the 1970s. The second post-war social settlement – the one triggered by Margaret Thatcher’s Conservatives in the United Kingdom and by Ronald Reagan’s Republicans in the United States – was not so balanced. Instead, it was a settlement predicated on the defeat of organized labour and the parallel creation of high levels of income inequality, with generalized living standards rising for later baby-boomers only on the basis of high and ultimately insecure levels of personal debt. That second settlement – the Reagan-Thatcher one – did not simply fall. It crashed in the financial crisis of 2008: and attempts to revive it by conservative politicians in both countries have simply given us a second lost decade that now matches the 1970s in severity and despair.


Politics in both the US and the UK are currently abnormal because the times in which we live are also not normal. Understanding the Trump phenomenon in the US, and even the Brexit vote in the UK, requires therefore that we first understand the abnormal conditions helping to generate both. A second central argument developed within Flawed Capitalism is that the current rise of right-wing populism in the advanced industrial world must be seen a product (and the Trump and Brexit votes as examples) of what Antonio Gramsci long ago called “morbid symptoms” – symptoms of madness generated in the interregnum between social settlements. If that formulation is right, ending those morbid symptoms will first require the creation of a new social settlement which alone can bring the interregnum to a close; and to succeed in that closure, any new social settlement will necessarily have to be more progressive one than the settlement it replaces, since it was its predecessor’s reactionary character that was the ultimate cause of its collapse.


Recent attempts to revive the neoliberal social settlement – by Tory-led governments in the UK, and by ultra-conservative Republicans in the US Congress and now White House – have had similarly appalling social consequences in both economies. These consequences include: intensified pressure on the living standards of working families, and the associated rise in levels of personal indebtedness; persistent and deepening poverty for the low paid, the unemployed, and those reliant on welfare benefits; the persistent failure to ease and improve the balance families need to strike between work and home; intensified racism and hostility to immigration; and the emergence of at least two “lost” generations on each side of the Atlantic – a working class one trapped in areas of declining industrial employment, and a more middle-class millennial one facing (among other things) mountains of student debt, rising housing costs and the burden of heavy transport and childcare expenses.



The way forward to a new social settlement is both clear and urgent. The way forward is clear – we need to see the rapid creation of a social settlement based on greater income equality, on a fairer gender balance and greater flexibility in hours and organization of employment, and on a new compact between a progressive state and a revitalized private sector, the two working together to rise productivity by harnessing the full set of talents currently lying dormant in a labour force increasingly alienated by wage, employment and family pressures. The need is also urgent: for without such a settlement, the material and social deprivations sustaining right-wing populism can only grow. The British Labour Party – in its Corbyn-led form – offers a route to that new settlement if its progressive policy trajectory can be maintained; and the Democrats will find themselves with a similar opportunity in Washington DC in 2020 if the Sanders wing of the party can come to prevail. So, the future is all to play for. We live in interesting times; but with the times come both opportunity and responsibility. An opportunity now exists to call into existence a new and more progressive social settlement. It is an opportunity that this generation of progressives must not waste.  They can only waste it by failing to recognize it, and by failing to act. Flawed Capitalism has been written to help prevent that wastage.


David Coates, Flawed Capitalism: The Anglo-American Condition and Its Resolution, is published in the UK by Agenda Publishing: Available May 15, 2018.

David Coates holds the Worrell Chair in Anglo-American Studies at Wake Forest University. He is the author of Answering Back: Liberal Responses to Conservative Arguments, New York: Continuum Books, 2010.

He writes here in a personal capacity.

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