essay on capitalism in the usa

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Capitalism In America – The History Of Our Economic System

Understanding Economy is Essential

The United States of America has a unique economic system. It’s called Capitalism, and it’s been around for more than 200 years. It was first brought to North America by European settlers, who started trading in the 1620s.

That’s when Europeans imported their new ideas about how society works: from their countries. They came to our country, which at that time included everything from Florida to New York. And they began to put those ideas into practice on this land.

In his book “A Capitalist Manifesto,” economics professor Richard Wolff says three basic rules: competition, private ownership, and free exchange under Capitalism. According to these principles, businesses must compete against each other to sell their goods and services to consumers.

This means that all producers get paid according to their efficiency. No producer gets special favors or tax breaks.

But while Capitalism is known for treating everyone equally, it does have a history of inequality.

Why is the USA a capitalist country?

The US was founded by capitalists who believed that free enterprise creates wealth. They felt that private ownership of land, capital, and labor should be respected. And they thought that competition among companies should be encouraged.

These beliefs have shaped our economic system. Today, we still believe that these ideas will lead to prosperity.

But there are critics of Capitalism. Some say that Capitalism leads to inequality because only rich people own big companies. Others argue that Capitalism doesn’t work because it encourages Greediness.

How does Capitalism work in the United States?

Let’s take a look at how capitalism functions in the United States. First, there are corporations. A corporation is a company owned by shareholders. Shareholders pay money to buy stock in the corporation. That gives them a share of the profits once the business makes money. When a corporation creates a profit, it returns some of that back to the shareholders.

Corporations exist to make a profit. But unlike individual workers, corporations aren’t taxed individually.

Instead, governments collect taxes based on the total amount of income a corporation earns. This allows corporations to deduct the costs of producing goods and services from their taxable income.

So, when a company sells something for $100, it keeps $80 after paying its employees, rent, utilities, advertising, etc. Then, it produces a tax rate of 30 percent on that remaining $80. Finally, the company turns over the rest, $20, to the government. That’s why, even though corporations are often referred to as greedy, they don’t make any more money than individuals who run small businesses.

Next, let’s discuss markets. Markets are where buyers and sellers meet. They allow businesses to find out what customers want and need. If a call has too few suppliers, prices go up. If there are too many suppliers, prices drop. Markets also create incentives for people to produce things better or cheaper.

For example, if I wanted to buy a new car, I might search online to see what cars other people bought recently. If I noticed that my neighbor had bought a particular model, I would be motivated to ask them about his experience with it. Maybe they could tell me about problems they encountered. Or perhaps they could recommend another brand. This kind of exchange helps consumers decide what they want.

It also allows producers to figure out how to improve their products. So, markets work well when there are enough participants.

Finally, let’s talk about the government. Governments provide infrastructure like roads, bridges, tunnels, airports, water treatment plants, power grids, etc. They can also enforce contracts, protect property rights, and regulated industries. Governments also provide police forces, armies, and fire departments.

These institutions help ensure that markets function pretty.

Why Is Capitalism So Important?

Capitalism is one of the most integral parts of modern life—but how exactly did we get here? Today, we can shop online, work flexible hours, and live comfortably without growing much food ourselves. We’re able to provide jobs and opportunities for others because of companies like Walmart and Apple, both of whom were founded long before the Civil Rights Movement.

How did Capitalism become such an essential part of everyday life?

The short answer is that Capitalism gave us freedom. It allowed people to pursue their dreams and goals. Capitalism also created a lot of wealth, which led to prosperity and opportunity for many. And it provided the foundation for economic growth. And now, with the rise of social media, smartphones, and the internet, we have access to information, news, and products faster than ever. Today, Capitalism is viewed as a negative term, but it isn’t anything terrible if you think about it. It’s just a way of organizing production and distribution. Why not call it “production-and-distribution” instead.

How does Capitalism benefit society?

Capitalism benefits everyone. Because it allows people to choose what jobs they want, it gives them control over their lives.

It also lets them earn more money. This means they can spend more money on goods and services.

That makes us all more prosperous.

And finally, Capitalism provides an incentive for innovation. When people invent something new, others may use it. This means that everyone gets to enjoy those innovations.

So, while Capitalism isn’t perfect, it’s still pretty great.

What Are Some Problems With Capitalism?

First, some people say that Capitalism causes inequality. But this is only true in certain circumstances.

Let’s look at two examples:

1) A company hires someone skilled at writing code. The person earns $100 per hour. The company then pays its employees based on the number of hours worked. After working 40 hours, the employee earns $4,000. Now, suppose the same company hired someone else who was less skilled at coding.

They reached $10 per hour. The company paid its employees based on the amount of time spent working. After 40 hours, the employee made $400.In this scenario, the first coder got paid more than twice as much as the second coder. Why? Because the company valued the skills of the first coder more than the second coder. To be considered qualified, applicants must have a bachelor’s degree or higher.

2) Suppose a company offers a job paying $50,000 per year. However, 100 people are applying for the position. Only ten people will be selected. Now, suppose the company offered the same job paying $40,000 per year. Again, only ten people would be chosen. But, this time, the qualifications required to apply were a high school diploma or GED.

Which situation sounds better?

Inequality occurs when the rich get richer, and the poor get poorer. But, under Capitalism, the wealthy don’t always make more money than the poor. For instance, let’s look at the example above where the company pays its employees based on hours worked. If the company had paid its employees based on productivity rather than hours worked, the salaries of the two coders would have been equal.

Thus, Capitalism comes with its Pros and Cons now it comes to the people whether they want to follow it or not. When considering the opportunities that we get through Capitalism, most people don’t open up. Some go with the flow and intake what is required. To understand the country’s economy, one must thoroughly know the nook and corners of Capitalism.

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Ages of American capitalism: a history of the United States

A leading economic historian traces the evolution of American capitalism from the colonial era to the present—and argues that we’ve reached a turning point that will define the era ahead.

Today, in the midst of a new economic crisis and severe political discord, the nature of capitalism in United States is at a crossroads. Since the market crash and Great Recession of 2008, historian Jonathan Levy has been teaching a course to help his students understand everything that had happened to reach that disaster and the current state of the economy, but in doing so he discovered something more fundamental about American history. Now, in an ambitious single-volume history of the United States, he reveals how, from the beginning of U.S. history to the present, capitalism in America has evolved through four distinct ages and how the country’s economic evolution is inseparable from the nature of American life itself.

The Age of Commerce spans the colonial era through the outbreak of the Civil War, a period of history in which economic growth and output largely depended on enslaved labor and was limited by what could be drawn from the land and where it could be traded. The Age of Capital traces the impact of the first major leap in economic development following the Civil War: the industrial revolution, when capitalists set capital down in factories to produce commercial goods, fueled by labor moving into cities. But investments in the new industrial economy led to great volatility, most dramatically with the onset of the Great Depression in 1929. The Depression immediately sparked the Age of Control, when the government took on a more active role in the economy, first trying to jump-start it and then funding military production during World War II. Skepticism of government intervention in the Cold War combined with recession and stagflation in the 1970s led to a crisis of industrial capitalism and the withdrawal of political will for regulation. In the Age of Chaos that followed, the combination of deregulation and the growth of the finance industry created a booming economy for some but also striking inequalities and a lack of oversight that led directly to the crash of 2008.

In Ages of American Capitalism, Jonathan Levy proves that, contrary to political dogma, capitalism in the United States has never been just one thing. Instead, it has morphed throughout the country’s history—and it’s likely changing again right now.

Levy, Jonathan

Random House

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Capitalism Has Become An Ideology In Today's America. Here's How It Happened

Rund Abdelfatah

Ramtin Arablouei

Capitalism: What Is It?

A demonstrator holds a sign reading "I love capitalism" during a protest against California's stay-at-home order in 2020. Capitalism started as an economic system; it has become an ideology in the modern United States. Robyn Beck/AFP via Getty Images hide caption

A demonstrator holds a sign reading "I love capitalism" during a protest against California's stay-at-home order in 2020. Capitalism started as an economic system; it has become an ideology in the modern United States.

The Throughline team has been thinking about capitalism a lot these days. It's hard not to when so many people are struggling just to get by.

Capitalism is an economic system, but it's also so much more than that. It's become a sort of ideology, this all-encompassing force that rules over our lives and our minds. It might seem like it's an inevitable force, but really, it's a construction project that took hundreds of years and no part of it is natural or just left to chance.

So here's what we did. First, we wanted to look at what makes American capitalism distinct, if it is even distinct ? Is it uniquely individual, uniquely efficient, uniquely cutthroat? Like, these are all the things that we've been thinking about a lot.

A young girl interacts with an employee maintaining one of tanks at New Jersey SEA LIFE Aquarium inside the American Dream mall in East Rutherford. Michael Loccisano/Getty Images hide caption

A young girl interacts with an employee maintaining one of tanks at New Jersey SEA LIFE Aquarium inside the American Dream mall in East Rutherford.

And so we brought together three REALLY DIFFERENT experts who come at these questions from REALLY DIFFERENT points of view.

Bryan Caplan's an economist and adjunct scholar at the Cato Institute, Vivek Chibber studies Marxist theory and historical sociology, and Kristen Ghodsee is an expert in what happened after the fall of communism in Russia and Eastern Europe.

And we had a conversational round of analysis that led us from colonial times, through waves of innovation and American development to the American Dream Mall in New Jersey.

We compared the happiness index in countries to see crazy things like how much happier people in Denmark report that they are, compared to Americans.

But that's not all. We wanted to dive deeper into the dominance of Capitalism in the 20th century American mindset .

What's the role of government in society? What do we mean when we talk about individual responsibility? What makes us free? 'Neoliberalism' might feel like a term that's hard to define and understand. But it's the dominant socio-economic ideology of both major American political parties — Republican and Democrats — no matter how much partisan rhetoric might be geared towards absolute division.

And this ideology, this belief in free markets, deregulation, and privatization can be traced back — pretty directly — to a group of men meeting in the Swiss Alps.

On April 10, 1947, a group of 39 economists, historians and sociologists gathered in a conference room of a posh ski resort at Mont Pelerin, Switzerland. Glasses clinked. Cigars burned. A mission statement was written.

And from that meeting, they would start an organization called The Mont Pelerin Society, MPS. The ideas discussed in that room more than 70 years ago would evolve and warp and, this is no exaggeration, come to shape the world we live in. Those ideas have dominated our economic system for decades. In the name of free market fundamentals, the forces behind neoliberalism act like an invisible hand, shaping almost every aspect of our lives.

From the TV advertisements we all grew up watching to the way the internet is understood today.

Capitalism: What Makes Us Free?

That's not all. We're also dropping a third episode on Capitalism this coming Thursday, July 8. For that episode, we explore how religion and capitalism joined forces to change the way we think about our work, our society, and ourselves — the Prosperity Gospel.

To receive it when it drops subscribe here in Apple Podcasts or wherever else you get your pods.

It Came in the First Ships: Capitalism in America

"Capitalism came in the first ships." —Carl N. Degler, Out of Our Past

No nation has been more market-oriented in its origins and subsequent history than the United States of America. The very settling of the country, from the Atlantic to the Pacific and onward to Alaska and Hawaii, was one long entrepreneurial adventure. Even down to the present day, more Americans have probably made fortunes from the appreciation of real estate values than from any other source. But land is only the starting place for the epochal drama of American capitalism. That story, in comparison with the long-term business histories of all other large countries, has been one of intense and incessant competition. Americans have persistently shown themselves willing to follow market forces with relatively little hesitation.

In the early years, Americans' ravenous appetite for land was born of European deprivation confronting New World opportunity. Demand, which had been pent up for centuries, suddenly encountered plentiful supply. The settlers' hunger for more and more territory thrust them relentlessly westward, where they could establish farms and ranches that they themselves could own. This was the American Dream in its earliest form, and for the people living the dream, it had an aura of double-edged incredulity. There was disbelief not only at their own good fortune, but also at the backbreaking work required to capitalize on it.

From the colonial period through the early national years, and on into the nineteenth century, everything seemed up for grabs in the new country. Vast, apparently unlimited tracts of land were given away by the government or sold at irresistibly low prices. To get the best land, neither the first colonists nor the pioneers pressing across the frontier had much compunction about dispossessing Native Americans or each other. Sometimes they resorted to outright murder. The movement west constituted a great epic, but in its details was not a pretty story.

Land was available in prodigal abundance in early American history, but it is only one of the classic economic "factors of production." The others are labor, capital, and entrepreneurship. As the earlier chapters of this book have shown, modern capitalism fuses these four factors into operational systems for the conduct of economic life, most notably through the ingenious device of the business corporation.

There are several million corporations in the United States today, and a handful existed at the nation's official birth in 1776. The device became integral to the American economy only in the middle nineteenth century, but it was actually present at the creation 250 years earlier. In 1607, the settlers at Jamestown arrived under the charter of the Virginia Company of London. Puritans founded Boston in 1630 under the auspices of another English corporation, the Massachusetts Bay Company.

The proprietors of the Virginia Company soon were interested primarily in revenues from tobacco. Those of the Massachusetts Bay Company cared less about profit than about setting up what their leader John Winthrop called a "City upon a Hill." They wanted to demonstrate for all humanity the virtues of clean Christian living. If some of the Puritan merchants among them became moderately wealthy, then that might be a sign of God's grace, so long as customers were not cheated or overcharged. The line between virtuous profit and damnable avarice was blurry then, as it remains today. But the Puritans had an unmistakably capitalist turn of mind.

So did William Penn and his community of Friends. Persecuted in England for their religious beliefs, they acquired in 1681 a royal grant of land in America, and proceeded to develop their new colony on both religious and commercial principles. The Quaker merchants of Pennsylvania become prosperous international traders. Like the Puritan merchants of New England, they used their familial and religious connections to form a tight network of trustworthy relationships stretching over long distances. This kind of system for making credible business commitments is one of the essential conditions of strong economic development. In most capitalist economies today, it is embedded in the intricate law of contracts enforced by governments through courts.

Still another English corporation instrumental in populating the New World was the Royal African Company. Chartered in 1672, this company proceeded to take a significant though not dominant part in the slave trade. For the profit of shareholders, it brought to the western hemisphere masses of men and women who had been taken from Africa against their will. Eventually, many thousands of white merchants and seamen on both sides of the Atlantic participated in this commerce, including several hundred from Massachusetts and Rhode Island. The total number of Africans transported to the New World was about 10 million. Their destination was usually Brazil or one of the Caribbean sugar islands, but some 596,000, or about one of every 17, went to areas that became part of the United States.

In 1776, the 13 colonies that made up the original United States declared their independence after almost 170 years of British colonial status. Even at that early date, the new country's population of 2.5 million included plentiful examples of capitalism's many faces. Then as now, capitalism could serve despicable ends, noble ones, or some mixture of the two.

In between the oppressed slaves on the one hand and free yeoman farmers and entrepreneurs on the other stood a large number of whites who had come to America as indentured servants. Between one-half and two-thirds of all white immigrants before the Revolution arrived under these terms. They flocked to America mainly from England, but also from Scotland, Ireland, and Germany. (Germans tended to come in family groups, the others as single adults.) A few were abducted and taken aboard ship by force, but most made the trip voluntarily. They exchanged four to seven years' labor for passage to the New World.

So capitalism did come in the first ships, and in many different forms: legitimate commerce, legal cover for religious freedom, the slave trade, and individuals' exchange of labor for a ticket to America. Yet none of these examples represented modern capitalism. Few had much to do with the First Industrial Revolution, let alone the Second or Third. Each concerned farming, commerce, and trading, not technology and manufacturing. But all contained powerful elements of capitalism, and that proved to be momentous for the nation's future.

Editor's note : Thomas McCraw died inn 2012.

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Columbia Studies in the History of U.S. Capitalism

About the series.

Edited by Devin Fergus, Louis Hyman, Bethany Moreton, and Julia Ott

Capitalism has served as an engine of growth, a source of inequality, and a catalyst for conflict in American history. While remaking our material world, capitalism’s myriad forms have altered—and been shaped by—our most fundamental experiences of race, gender, sexuality, nation, and citizenship. This series takes the full measure of the complexity and significance of capitalism, placing it squarely back at the center of the American experience. By drawing insight and inspiration from a range of disciplines and alloying novel methods of social and cultural analysis with the traditions of labor and business history, our authors take history “from the bottom up” all the way to the top.

Submissions

Those interested in publishing in the series should contact Stephen Wesley with a proposal containing a brief description of the content and focus of the book, a table of contents or chapter outline, literature review and market analysis, and professional information about the author, including previous publications. For more information, please refer to our proposal  submission guidelines .

Meet the Series Editors

Devin Fergus is Arvarh E. Strickland Distinguished Professor of History and Black Studies at University of Missouri. His research focuses on the historical mechanisms driving contemporary inequality. His first book, Liberalism, Black Power, and the Making of American Politics, 1965-1980 (Georgia, 2009) was named a Choice Outstanding Academic Book. Fergus is finishing his second book, Land of the Fee , which examines the rise of consumer finance fees and its impact on the wealth gap in America since the 1970s. Fergus is also guest editor of “Banking without Borders: Culture and Credit in the New Financial World” for Kalfou, a journal published by Temple University Press. This special issue examines the impact four decades of financial deregulation have had on race, gender, immigration, culture, and class. He received his Ph.D. in American history from Columbia University.

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The Evolution of American Capitalism

Although the American economic system has undergone significant change since colonial times, there are identifiable threads running through the centuries-long narrative. Chief among these are the themes of "liquidity" and state action – both of which can either be a blessing or a curse.

• Jonathan Levy, Ages of American Capitalism: A History of the United States , Random House, 2021.

CAMBRIDGE – Jonathan Levy, a historian at the University of Chicago, is a leader in the burgeoning movement to place capitalism at the core of the American experience. His major new work provides a framework for reading American history over 400 years and a set of themes for explicating its conflicts and crises. Ages of American Capitalism is an outstanding work of scholarship and storytelling.

The “new history of capitalism” has been motivated in good part by the 2008 global financial crisis. The crisis demonstrated the impact that financial events could have on the real economy, thereby exploding the prevailing macroeconomic doctrine that treated such events as literally inconceivable. Levy is one of a number of generally younger historians whose work is available to enrich the ongoing construction of a macroeconomics that integrates the behavior of financial markets and institutions.

The new history he delivers is different in kind from much that has gone before. It roots the “maps and chaps” of conventional historical narratives in the muck of economic life and the fantastic visions of financiers. It is a history constantly informed by what is happening in markets for goods, services, labor, and – especially – financial assets, but with the structure and movements of markets always understood to be shaped by political forces.

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The southern gap

In the american south, an oligarchy of planters enriched itself through slavery. pervasive underdevelopment is their legacy.

by Keri Leigh Merritt   + BIO

In 1938, near the end of the Great Depression, the US president Franklin Delano Roosevelt commissioned a ‘Report on the Economic Conditions of the South’, examining the ‘economic unbalance in the nation’ due to the region’s dire poverty. In a speech following the report , Roosevelt deemed the South ‘the nation’s No 1 economic problem’, declaring that its vast levels of inequality had led to persistent underdevelopment.

Although controversial, Roosevelt’s comments were historically accurate. The president’s well-read and highly educated young southern advisors had convinced him that the South’s political problems were partially a result of ‘economic colonialism’ – namely, that the South was used as an extractive economy for the rest of the nation, leaving the region both impoverished and underdeveloped. Plantation slavery had made the planters rich, but it left the South poor.

Unlike the industrialising North and, eventually, the developing and urbanising West, the high stratification and concentrated wealth of the 19th-century South laid the foundations for its 20th-century problems. The region’s richest white people profited wildly from various forms of unfree labour, from slavery and penal servitude to child indenture and debt peonage; they also invested very little in roads, schools, utilities and other forms of infrastructure and development. The combination of great wealth and extreme maldistribution has left people in the South impoverished, underpaid, underserved and undereducated, with the shortest lifespans in all of the United States. Southerners, both Black and white, are less educated and less healthy than other Americans. They are more violent and more likely to die young.

N ow, 86 years after Roosevelt’s report, the South has returned to historically high levels of economic inequality, lagging behind the rest of the US by every measurable standard. The plight of the South is a direct result of its long history of brutal labour exploitation and its elites’ refusal to invest in their communities. They have kept the South in dire poverty, stifled creativity and innovation, and have all but prevented workers from attaining any kind of real power.

With the rapid industrialisation spurred by the Second World War, the South made great economic strides, but never quite caught up with the prosperity of the rest of the US. While the South’s gross domestic product has remained around 90 per cent of the US rate for dozens of years, deindustrialisation of the 1990s devastated rural areas. Since then, hospitals and medical clinics have closed in record numbers, and deaths of despair (those from alcohol, drugs or suicide) have skyrocketed, as has substance abuse. Southerners in general are isolated and lonely, and wealth and power are heavily concentrated: there are a few thousand incredibly wealthy families – almost all of them the direct descendants of the Confederacy’s wealthiest slaveholders – a smaller-than-average middle class, and masses of poor people, working class or not. The South, with few worker protections, prevents its working classes from earning a living wage. It’s virtually impossible to exist on the meagre income of a single, low-wage, 40-hour-a-week job, especially since the US has no social healthcare benefits.

The American South is typically defined as the states of the former Confederacy, stretching north to the Mason-Dixon line separating Maryland from Pennsylvania, and west to Texas and Oklahoma. Today, one-fifth of the South’s counties are marred with the ‘persistent poverty’ designation , meaning they have had poverty rates above 20 per cent for more than 30 years. Four-fifths of all persistently poor counties in the nation are in the states of the former Confederacy. The data is clear that most Southern states continue to be impoverished and politically backwards. Whether measured in terms of development, health or happiness, the region is bad at everything good, and good at everything bad.

The South was portrayed as anti-capitalist: enslavers had to be dragged into modernity against their wills

The recent popularity in liberal circles of the New History of Capitalism (NHC) to explain the region’s exceptionalism has slowed in recent years. The NHC emerged in the 2000s and 2010s, as one historian wrote , by claiming ‘slavery as integral, rather than oppositional, to capitalism.’ It seems likely that during the post-Cold War triumph of capitalism, a subset of historians began trying to tie much of the past to the term – with the most extreme instance being the insistence that slavery was the key to American capitalism. While the NHC scholars rarely define terms like ‘capitalism’, the problems with their theories are more than academic. Unfortunately, presenting enslavers as cunning, profit-driven businessmen not only obscures important features about the past, it also downplays immense regional differences in economic development.

Thinking back over the NHC trends, it is important to note how other scholars, both past and present, have presented the problems of the region, and discuss issues that may have been obscured by a heavy emphasis on business and ‘slavery’s capitalism’. As the economic historian Gavin Wright has pointed out , the NHC’s central claim, echoed in The New York Times ’ Pulitzer Prize-winning ‘1619 Project’ – that slavery was essential for American economic growth – ignored decades of accepted historiographical work on capitalism and slavery. It also contradicted nearly everything economists have argued regarding slavery’s impact on the South’s (under)development.

Beginning in the 1960s, many historians classified the South, from the days of slavery until the Second World War, as distinctively precapitalist in significant ways. They saw the region as having a type of ‘merchant’ or ‘agrarian’ capitalism, and never considered the states of the Old Confederacy as shrewdly ‘capitalist’ (the term itself without any modifiers). Primarily due to the absence of a free labour society, but also because of the lack of infrastructure and development within the region – a place with few cities, little industrialisation, and few social services – the South was often portrayed as distinctly anti-capitalist: enslavers had to be dragged into modernity against their wills.

After the Second World War industrialisation boom ushered the South into a more fully capitalist society, it essentially became a colonial economy to the North, as it courted investment and corporations from the capital-rich Northeastern US. Existing in a dependency-type of relationship, it was never really the South – or southern labour, no matter how unfree or brutalised – driving the US economy.

Finally, contrary to the position that American slavery represents the key or essence of capitalism, the most recent scholarship regarding economic analysis of slavery argues that the institution was not economically efficient. All these points highlight the need for studies on growth, and more importantly, on underdevelopment. Slavery made the planters very rich, but it made the South very poor. In the 19th century, capitalism, even industrial capitalism, did not bring the South to the developmental standards of the rest of the nation. The question remains: why is that so?

I f we turn from looking at planters to studying labour, we see that elite capture of the state is bad for democracy and worse for development. It also helps us distinguish between growth and development, highlighting the unevenness of both in different areas of the US. The US is a large country and awareness of the difference between growth and development can help us see that perhaps it makes more sense to compare the American South with places in the Global South rather than the American North or West.

To begin with, southern militias proved an effective imperial military tool during the brutal process of Indian Removal, which lasted into the 20th century. The white colonialist push westward robbed Native Americans of the greatest wealth the region has: land. That land eventually became the richest white people’s main source of power, owned by the few and guarded like a religion. Elite white southerners were obsessed with intermarriage and have kept their fortunes intact for generations. While they hoarded riches and resources for themselves, they neglected to invest in the communities in which they lived. With few improvements in technology and development, the South’s dependence on slavery enriched enslavers and their descendants, but it left the rest of the region, both people and resources, deeply and cyclically impoverished.

Americans think of the US as having been at a crossroads in 1860, between slavery and freedom, but that impasse was more than just political and ideological: it was also economic. While the North had made fantastic gains over the previous decades by investing in its people, from education to infrastructure, the South lagged far behind. The wealthy enslavers refused to invest in the poor and middling-class whites surrounding them, finding no compelling reason to put money into communities they would move away from as soon as the western spread of slavery beckoned. In terms of development, whether infrastructure, education, healthcare or wealth distribution, the South remained woefully underdeveloped in comparison with the rest of the country.

The Deep South instead functioned more like an oligarchy or aristocracy

With one-third of the nation’s population in 1860, the South was responsible for only 10 per cent of US manufacturing output, and possessed only 10 per cent of the nation’s manufacturing labour force and 11 per cent of its manufacturing capital. Its transportation system, best described as like a ‘conveyor-belt’, transported goods effectively but did little for people. The northern and even western US had been investing in building schools and providing free public education, but the cotton South left its people to fend for themselves: education was reserved for the rich. The North built hospitals, asylums and places for the invalid and indigent; the South built jails and prisons.

Far from a democratic region, the Deep South instead functioned more like an oligarchy or aristocracy. As W E B Du Bois wrote in 1935: ‘Even among the 2 million slaveholders, an oligarchy of 8,000 really ruled the South.’ The wealthiest slaveholders wielded immense and pervasive power as lawmakers, law-enforcers, judges and even jury members. They dominated the region’s politics and devised multiple ways to disenfranchise their poorer fellow countrymen. The oligarchic structure of the 19th-century South meant that the men who controlled government also controlled everything else in society, from rental properties and bank loans to arrest warrants and vigilante violence.

In fact, the enormous cost of the South’s implementation of its various forms of unfree labour still haven’t been adequately calculated. The ubiquitous, police-state-like criminal justice system, complete with slave patrols and night riders, the overseers and slave-drivers and catchers and other middlemen who had to be hired to keep people working – none of that has truly been accounted for yet. Recently, the economists Richard Hornbeck and Trevon Logan challenged decades of accepted scholarship concerning the cost-effectiveness of slavery, arguing that slavery was inefficient when ‘including costs incurred by enslaved people themselves’. Under this view, emancipation produced major economic gains.

The first years of Reconstruction brought immense changes to the South: a free labour economy threatened to change the entire social order as Black politicians courted poor white voters for a cross-racial, class-based coalition. For the first time, the region experienced democratic elections, open to all men, Black and white. The new state legislators established a system of public education. They began funding public works and infrastructure. They started developing the region.

Despite these transformations, former slaveholding families remained rich – and powerful – because they held a near-monopoly of the only real capital left in the war-torn South: land. The leaders of the Confederate insurrection were never held accountable for treason, and the same few wealthy white families who ruled the slave South remained entrenched in power even after the war. Their enduring place at the top of Southern society helped give rise to the ‘continuity thesis’, in which some scholars argue that, despite the Civil War and Reconstruction, little changed in the US South. In many rural areas, even today, their heirs still lord over their little locales. The South’s ruling elite eventually regained complete control of the region, disenfranchising the masses, terrorising the leaders and the intellectuals and the brave, and undergirding this shadow world of unfreedoms with the ever-present threat of violence.

T he Southern elite may have, eventually, emerged from Reconstruction back on top of the South, but the region no longer dominated US politics. The US South remained overwhelmingly agricultural well into the 20th century and long after the rest of the country had become more urban. From the vital perspective of social and labour relations, the South’s transition to capitalism must be considered as late by US standards. In the 1940s and ’50s, historians began arguing that the type of capitalism in the South throughout the early 20th century was merchant capitalism (also known as mercantile, or agrarian capitalism), not industrial capitalism. Merchant capitalism is considered the earliest phase in the transition to capitalism; it is more about moving goods to market, and is characterised by the lack of industrialisation, wage labour and commercial finance. A modified version of the merchant capitalism model would be championed several decades later by Eugene Genovese whose southern ‘in but not of’ capitalism theory, replete with semi-feudalistic social relations, appeared in the 1960s and generated great interest and debate, and eventually, in the early 2000s, came under sustained attack by some US historians who emerged following the end of the Cold War.

These scholars, who eventually came to be grouped under the designation ‘the New History of Capitalism’, never truly engaged with the consequences of the fact that the slave South, in a strict sense, cannot be considered capitalist because the enslaved are unfree, forced labourers who cannot sell their labour power. Even if we sidestep the slavery-as-labour issue, vital to Marxist assessments of capitalist society, we must acknowledge that impoverished southern whites also had little to no control over their respective labour power. The power of enslaved labour consistently reduced the demand for workers, lowered their wages, and rendered their bargaining power weak to worthless. Labourers in the South, regardless of race, worked within a world ruled by degrees of freedom. Never a stark dichotomy, freedom emerged from a give-and-take process of political contestation and negotiation with the planter aristocracy. Slavery was simply one form – albeit the harshest – of a range of unfreedom, lasting well into the 20th century.

But these merchant capitalist labour market features were not simply rooted in the racism of southern white culture. Instead, elite white southerners ensured a calculated and well-codified social order, complete with exploitative labour practices, debt peonage, and continuing forms of unfree labour made possible by the burgeoning criminal justice system. To maintain power and thus control of the region, at times the elite chose to forgo higher profits in the short term so that they could keep their labour force under tighter control in the long term. This was certainly the case with industrialisation during slavery, when enslavers could have turned a much higher profit by industrialising but chose not to; they did not want to disturb the fragile hierarchy.

South Carolina – the birthplace of the Confederacy – has the lowest union membership, at 2 per cent

Compared with the rest of the US, with only a brief interruption during early Reconstruction, the South’s lack of labour power, infrastructure and internal development extended well into the 20th century. Between the violence the Ku Klux Klan and other white supremacists, and the lack of opportunities for poor and working-class southerners, by the mid-1870s former slaveholders and their descendants were back in complete control of the South. Due to the absence of land reform, reparations and the failure to punish Confederate leaders or confiscate Confederate property, the labour lords of the antebellum period merely became the landlords of the postbellum period. Their primary source of wealth changed, but they remained in power, controlling everything in the South and reverting to their old ways of undertaxing, underfunding and underdeveloping.

Given these facts, before the popularity of ‘the New History of Capitalism’ 20 years ago, many historians viewed the transition from slavery to capitalism as a long process because, even after emancipation, unfree labour continued to dominate a significant portion of the labour market. Some argued that forms of unfree labour persisted in the South as late as the 1920s and ’30s, and others claimed they lasted until the Second World War. Even when technically free, African American workers generally lacked the labour power necessary to be deemed a proletariat, able to effectively negotiate on a labour market. Due to predatory sharecropping contracts and debt peonage, an extremely punitive criminal justice system, and the added layer of domestic terrorism from white supremacists, the poorest people in the South, both Black and white, still worked in a society in which labour was not entirely free, that is, able to be brought to a labour market.

The South’s shadowland of unfree labour rested entirely on an undemocratic government, also meant to control labour. In the 1880s and ’90s, when Farmers’ Alliances and Populism began mounting a serious political challenge to planter domination, every southern state passed laws limiting the vote. While primarily aimed at disenfranchising Black people, the laws also disenfranchised poor white people, further concentrating each state’s political power in the hands of white elites in plantation districts. It was an effective strategy: in 1880 there were 160,000 union members in the US, and fewer than 6 per cent of them lived in the South. Today, while a record low of just 10 per cent of Americans are union members, the South’s numbers are roughly half of that, with states like South Carolina – the birthplace of the Confederacy – having the lowest union membership in the nation, just over a measly 2 per cent.

During the last third of the 19th century, the value of output rose and capital investment in the US increased tenfold. Meanwhile, most of the Deep South (outside of a few large cities like Atlanta and New Orleans) remained ‘capital starved’ and ‘technologically laggard’, as the region’s elite continued to baulk at infrastructure or other kinds of developmental investment. To secure funding, the states of the former Confederacy needed to court investment from outside the region – first the North and West, later Europe and Asia. Originally, southern politicians chased northern capital by offering them generous tax breaks and other financial incentives. Without a strong tax base or an effective bureaucracy, the region suffered further because most profits were routed out of the South back to northern owners and investors. Taken together, these things meant that, well into the 20th century, the South remained overwhelmingly rural, without a strong system of infrastructure and no good plan for development. In 1900, the country was 40 per cent urban versus the South’s 18 per cent, and 25 per cent of the US labour force was involved in manufacturing versus the South’s 10 per cent. Something had to drastically change.

F ollowing the Great Depression, which hit the rural, already-impoverished South harder than it did the rest of the nation, the New Deal influx of money, federal programmes, jobs and infrastructure helped bring the region fully into the 20th century. Perhaps most importantly, in the 1930s Roosevelt’s New Deal finally broke up the power stranglehold by the big land (plantation) owners. The South was finally able to evolve from an agricultural labour market that had pre-capitalist characteristics, shifting to a much larger industrial workforce during the Second World War. Some $4 billion in federal spending poured into the region, funding military facilities and forever ending the isolated labour market. Since 1940, the South has outperformed the rest of the US in income, job and construction growth, finally reaching about 90 per cent of national per-capita income norms. It has also remained critically behind in multiple important infrastructural and development measurements, from education and transit to poverty levels and healthcare.

Without question, the Second World War changed the South for the better. War industry jobs pulled workers from rural areas, forcing southern farms to finally mechanise. This mechanisation meant the destruction of sharecropping and tenant farming, as well as debt peonage. Workers in the South would finally be paid in wages – in cold, hard cash. And that fact was incredibly freeing.

Outside of extractive industries, the type of industry that came to dominate the South was reliant on intensive, low-wage labour, a striking difference with the rest of the US. ‘A low-wage region in a high-wage country,’ the South industrialised in a way that preserved and reinforced the class and racial status quo, even when corporations were owned by men from outside the region. Instead of being an agent of radical change, southern industrialisation preserved the region’s legacies of low taxes for the wealthy, heavy-handed labour control, and little in the way of governmental oversight or regulation.

Development is, quite simply, an essential part of restorative justice

Even as the South experienced a period of relative prosperity from the Second World War to the 1990s, with development at its peak, it never quite caught up to the rest of the nation. While there were myriad reasons for this remaining gap, historians have attempted to explain them with a type of regional dependency theory. Referring to the old Confederacy as a ‘colonial economy’, they argued that northern-owned corporations controlled southern money and power, extracting resources and exploiting cheap labour, siphoning both profits and tax dollars away from the impoverished region – all while maintaining racist practices. Adding insult to injury was that the southern economy became the domain of men from outside the South, men with no stake in the local communities their decisions ultimately affected (indeed, often devastated).

Whether or not the South was truly a colonial economy, framing it as such highlighted that the region remained impoverished, infrastructurally stunted, and underdeveloped. Even the golden era of the sunbelt South came to a bitter end by the close of the 20th century. Rural developmental problems began as far back as the 1980s, as local banks began shuttering and hospitals closed. Things worsened in the 1990s, as the economic growth the South enjoyed for decades came crashing to a halt when federal trade deals eviscerated manufacturing. The racial tolerance and progress made possible by labour unions and working-class solidarity began to erode; deindustrialisation profoundly changed the region. Never having invested much in public services, state governments continued to slash budgets through the 2000s. This not only stalled new development, it also let much of the states’ infrastructure, education and healthcare plans fall deeply into trouble, perhaps disrepair.

To address the continuing developmental gap in the poorest areas of the US, the country’s staggering levels of inequality must be addressed. Using policy to redistribute property, the South – and the nation – may finally be brought up to the standards of the rest of the developed world. From universal healthcare and a thriving public education sector to functional public transportation and reliable infrastructure, development is, quite simply, an essential part of restorative justice. With deeply progressive taxation coupled with democratic reforms, the right to organise and collectively bargain may be preserved; the right to retire fully funded; the historically racist criminal justice system switched to a Nordic model. Even the poorest rural Americans could lead lives with dignity due to governmental programmes such as a universal basic income (which would immediately lift more than 43 million people out of poverty) and a federal jobs guarantee – a concept derivative of the best aspects of the New Deal.

Today, more than a lifetime after Roosevelt’s declaration of the South as the ‘the nation’s No 1 economic problem’, nothing has changed. The South remains poor, underdeveloped, and lags behind the rest of the country by every measurable standard. It is a moral blight on the nation’s conscience, and far past time to truly lift the region out of poverty, and into the 21st century.

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History Grade 11 - Topic 2 Essay Questions

Essay Question:

To what extent did Roosevelt’s New Deal succeed in mitigating the negative effects of the Great Depression in USA in the 1930’s?  Present an argument in support of your answer using relevant historical evidence. [1]

Introduction:

On 29 October 1929 (also known as “Black Tuesday”), the United States (US) stock market crashed which initiated the Great Depression. [2]   After winning the US elections and taking office in 1933, President Franklin D. Roosevelt sought to bring economic relief to the US during the 1930’s by implementing a series of reforms and restructures in what he called the ‘New Deal’. [3]   Although the ‘New Deal’ succeeded somewhat in relieving economic situations on a macro-level, the “New Deal”, in the long run, is considered a failure as it did not ultimately succeed in what it was set out to do, which was to recover the economy from its “depressed state”. [4]   This statement will be discussed by analyzing the two phases of the “New Deal”, as well as discussing the effects of some of the relief, recovery and reform programs implemented.

The First Hundred Days

When analyzing the legacy of the “New Deal”, it is important to understand that there were two phases of the deal, namely the “First New Deal” and the “Second New Deal”.  The First New Deal consisted mainly of the first three months of Roosevelt’s presidency and is referred to as the “hundred days”. [5]   Within the first hundred days, various relief programs such as the “Federal Emergency Relief Administration” (FRA), the “Civilian Conservation Corps” and the “Agricultural Adjustment Act” were implemented in order to create employment opportunities for Americans as well as providing some extent of economic relief for struggling citizens. [6]

Another significant program that was implemented during the hundred days, was the “National Industrial Recovery Act” (NIRA).  This recovery act allowed working Americans to unionize and in a sense bargain for better working conditions, as well as wages. [7]   Roosevelt felt that a significant part of the recovery process will come from decreasing competition through using set prices, wages and commodities. [8]   Mixed reviews came from the implementation of these recovery acts, as many felt that corporate heads were being disadvantaged by the state, and in some instance some corporations felt as though their competition became the US government itself. [9]   However, on the larger part, many felt that the hundred days and the “First New Deal” was relatively successful as it was marked by a decrease in unemployment and the stabilization of US banks.

The Second New Deal

In 1935, Roosevelt decided that the New Deal should take a more aggressive approach in the attempt to diminish the Great Depression. [10]   This phase is known as the Second New Deal.  One of the more prominent acts implemented was the “Social Security” Act which provided the elderly and widowed people with some financial support, allowed some unemployment and disability compensation and set a framework or minimum wages and maximum work hours. [11]   Furthermore, the “Works Progress Administration” (WPA) was implemented to provide the unemployed with opportunities in the public sector.  These opportunities included building bridges, schools and roads. [12]   To some extent, the Great Deal built a platform for more financial security and opportunity for the American citizens during the onslaught of the Great Depression with its housing, employment and financial interventions. [13]

Criticism of the New Deal

When analyzing some of the programs and acts implemented by the Great Deal, one also has to mention points of criticism.  One of the more popular points of criticism stems from the “interventionalist” and anti-competitive nature of the New Deal. [14]   Larger companies and the Supreme Court also felt that some of the reform initiatives were unconstitutional and did not go through the right channels to implement reform acts. [15]   However, with this criticism in mind, the main reason why the New Deal was deemed unsuccessful, is simply because it did not achieve what it set out to do.  The American economy and employment rates did not recover enough for the New Deal to have remedied the effects of the Great Depression.  Rather, American entrance into the Second World War stimulated more economic growth than the New Deal. [16]

Therefore, one could say that the New Deal mitigated the effects of the Great Depression to an extent where it improved the employment rate from 25% of 1933 to 17% in 1939. [17]   One could also say that some of the relief and reform acts were deemed successful as some of them, such as the Social Security Act, still remains today. [18]   The New Deal also led to a, albeit short-lived, coalition between “white working people, African Americans and left-wing intellectuals”. [19]   Many also argue that the New Deal built a surface for the future economy of America post-World War Two. [20]   However, with regards to the mitigation of the Great Depression itself, the New Deal ultimately did not succeed in ending the Great Depression and its effects.

This content was originally produced for the SAHO classroom by Sebastian Moronell, Ayabulela Ntwakumba, Simone van der Colff & Thandile Xesi.

[1] National Senior Certificate.: “Grade 11 November 2017 History Paper 1 Exam,” National Senior Certificate, November 2017.

[2] M, Johnston.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[3] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[4] Johnston, M.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[5] Britannica, T. Editors of Encyclopaedia.: “New Deal,” Encyclopedia Britannica [online].  Accessed on 20 March 2021 ( https://www.britannica.com/event/New-Deal ).

[6] Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ).

[7] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[8] Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ).

[9] J. Green.: “The New Deal:  crash Course US History #34,” Crash Course [YouTube Online].  Accessed on 23 March 2021 ( https://www.youtube.com/watch?v=6bMq9Ek6jnA&t=380s ).

[10] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[11] Britannica, T. Editors of Encyclopaedia.: “New Deal,” Encyclopedia Britannica [online].  Accessed on 20 March 2021 ( https://www.britannica.com/event/New-Deal ).

[12] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[13] D.M. Kennedy.: “What the New Deal Did,” Political Science Quarterly, (124), (2), 2009, pp. 265-267.

[14] M, Johnston.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[15] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[16] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[17] Johnston, M.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[18] Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ).

[19] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[20] D.M. Kennedy.: “What the New Deal Did,” Political Science Quarterly, (124), (2), 2009, p. 267.

• Britannica, T. Editors of Encyclopaedia.: “New Deal,” Encyclopedia Britannica [online], January 2021.  Accessed on 20 March 2021 ( https://www.britannica.com/event/New-Deal ).
• Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ). 
• Green, J.: “The New Deal:  Crash Course US History #34,” Crash Course [online].  Accessed on 24 March 2021 ( https://www.youtube.com/watch?v=6bMq9Ek6jnA&t=391s ).
• History.  Editors of History.: “New Deal,” History [online], November 2021.  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).
• Johnston, M.: “The Economic Effects of the New Deal,” Investopedia [online], January 2021.  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).
• Kennedy, D.M.: “What the New Deal Did,” Political Science Quarterly, (124),(2), 2009, pp. 251-268.

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HISTORY Gr. 11 T1 W5: Capitalism in USA 1900-1940

Capitalism in USA 1900-1940

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Capitalism in the US: Criticism and Alternative Essay

There are several systems of government that have been tried over the years and decades. Some of them offer specific benefits while others turn out to be completely unstable for societies and nations. In this essay I consider Wolff’s criticisms of the capitalist system in the US, and the viability of the alternative he proposes in the cooperative model of Mondragon, Spain.

An interesting point that Professor Richard D. Wolff mentions is that previously, times were better and the unions were on the rise. Even though there seems to be more systems of support today, they are not as effective. In the beginning of the 19 th century, the unions were very effective and served people. Then, the government created social security and the benefits were much greater than today. The modern government focuses on relationships between individuals, businesses, countries, and continents in terms of how the resources are being used in order to meet the wants of people. There is a lot of emphasis on the forthcoming of total spending into the economy and its repercussion on the output, whether negative or positive. In the beginning of the 19 th century, there was a labor movement that is described by the organized approach from people to the businesses and governments. The population requested better conditions, and the nation had the support of socialists and communists, as these parties were strong and gave the people needed support through demonstrations and mutual cooperation.

The major decision made was that the government went to the businesses and agreed on a deal. The businesses would give their resources to the government and their trade off was that there was a guarantee that capitalism will be held back. Governmental supports, banks and loans are all part of the system of such cooperation. Unemployment became even worse, as people were separated into those with great resources and those who were on the poverty line. Professor Richard D. Wolff reminds us that Roosevelt was a major figure who took care of things. The working class was separated into two parts. One was in support of unions and the other was given benefits. These were not two distinct classes, but existed together – In the last 50 years, the percentage of the taxation to the government has drastically changed. Previously, the businesses had to pay a dollar and a half for every dollar that the government received from individuals while presently, the businesses pay only twenty-five cents. Another significant point that Wolff makes relates to the cooperation between America and the Soviet Union. This took place before the WW II but did not bring any results because Joseph Stalin was much different, from the message that got to the United States. Wolff offers to bring back unions, so that they are made stronger in support of the greater society.

He stresses that modern economics, social powers and political parties should learn from history. A Spanish corporation called Mondragon is brought in as an example. The people who work at an organization want to be a working family that is united by values and common goal to work and make money. The employees have a share in the company, so when decisions are made, everyone has an input. This makes the business much more personal but at the same time, the decisions are unified which makes people one strong force. People at Mondragon have many skills and they know how to work all kinds of machinery. This way they have a stable employment and they are able to give back to the community. They get to vote whether their managers can keep their jobs.

This fact provides ultimate job security and the bosses cannot make more than 5 times the average worker. This sort of philosophy is very beneficial but it does not get enough of attention from the modern society. Because the system and the way to conduct business are so unique, many people are cautious as to the future of such an organization. One specific feature of the business is that it defines the atmosphere and the group of people who live and work in the area. There is complete absence of animosity or corporate hierarchy, which allows for better communication, and energy is not wasted on unnecessary stress. The employees have a high work security because the population and the government depend on the corporation to provide products and services to the public. This leads to high output and makes people happy.

It is a rule in capitalism that the higher the cost, the higher the prices, and in case it costs more to manufacture a product than sell it, then there is not enough output for the employer to hold an organization and pay salary to the workers. It is possible to decrease the price, which will lead to more spending and the total number of goods sold will be much higher. In the cooperative profit is not the major concern. The way Richard Wolff talks about politics and the work of corporations is very convincing and definitive. The concrete examples of the past and present demonstrate a perspective that allows comparing and seeing what functions well within a society. Unfortunately, there is also a problem of the inability to look deeper into the situation and predict or prevent.

From one perspective, it would be better to rely on governmental allocation of resources and economy support, but people must also be given an opportunity and ownership rights. It is a great idea that Mondragon does not only provide benefits to the employees, they receive bonuses and profits from sales of products as well. The pension of the employees is much higher and provides for stable future. This environment puts people in a position that gives a sense of self-assurance. Very often, one supplier can overtake one kind of technology or production and thus, determine the prices and output. But in Mondragon, there’s a system which is set up in such a way that cooperatives cannot compete. This was reached by the unique politics of the organization. Mondragon is involved in so many fields of production, there is even manufacturing of washing machines, and this makes the internal politics and adds stability to the company. The hierarchy is not controlled by managers but by workers, this guarantees equality among staff.

Presently, several places in the world do not believe in capitalism. The governments control the demand and supply and hence drive the economy either uphill or downhill. Nonetheless, there are avenues that are analyzed for better cooperation between the population and the government, especially businesses. The mutual support will make sure that the public receives proper products and services and the government will have a population that is happy and does not cause stress. For this case, it has to focus more on the total demand side, as it injects more funds into the economy increasing the investments and eventually the whole economy. Unity between corporations is important because it brings a sense of common goal and people become more connected. Everyone is employed, so people feel secure and needed.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2020, May 17). Capitalism in the US: Criticism and Alternative. https://ivypanda.com/essays/capitalism-in-the-us-criticism-and-alternative/

"Capitalism in the US: Criticism and Alternative." IvyPanda , 17 May 2020, ivypanda.com/essays/capitalism-in-the-us-criticism-and-alternative/.

IvyPanda . (2020) 'Capitalism in the US: Criticism and Alternative'. 17 May.

IvyPanda . 2020. "Capitalism in the US: Criticism and Alternative." May 17, 2020. https://ivypanda.com/essays/capitalism-in-the-us-criticism-and-alternative/.

1. IvyPanda . "Capitalism in the US: Criticism and Alternative." May 17, 2020. https://ivypanda.com/essays/capitalism-in-the-us-criticism-and-alternative/.

Bibliography

IvyPanda . "Capitalism in the US: Criticism and Alternative." May 17, 2020. https://ivypanda.com/essays/capitalism-in-the-us-criticism-and-alternative/.

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The Right and the Future of Capitalism: Part 1

• April 28, 2024

Editors’ Note:

This essay is adapted from a James Madison Program event on April 10, 2024, in Princeton, New Jersey. Oren Cass and Samuel Gregg discussed the right and the future of capitalism in the American founding and offered their perspectives on the conservative approaches to markets and the economy.

The editors lightly revised the transcripts for clarity and added the links to sources with more information on the points discussed.

Today, we are sharing Oren Cass ’ s remarks. Tomorrow, we will share Samuel Gregg ’ s . 

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It seems to me the question we need to address is what has happened to capitalism. Businesses still pursue profit, certainly, but not in the ways that are advancing the public interest. The statistic that I find most striking is that over the past fifty years, corporate profits, even adjusting for population growth, have risen about 185 percent. During the same period, wages rose 1 percent. American industry lost its technological edge in everything from semiconductors to aerospace to robotics. Investment stalled so much so that the entire corporate sector is now a net lender disgorging cash into financial markets faster than it borrows it. 

As American Affairs editor Julius Krein has observed , if a trillion dollars in annual stock buybacks are to be taken at face value and there are no better Investments to be made, it calls into question the viability of the free market capitalist system itself. And we should recognize that the things we’ve been taught, that we believe, don’t actually seem to be true. Managers are supposed to be accountable to owners, but the latter’s identity is no longer discernible. Most shares are held in passive funds, often on behalf of pension plans, on behalf of retirees or taxpayers, or else overseas, often in sovereign wealth funds. 

Comparative advantage is supposed to allow developed economies like ours to specialize in the most advanced and high-tech sectors. Yet the U.S. trade balance in advanced technology products has swung from a $60 billion surplus at the end of the Cold War to a $200 billion deficit at the start of COVID. 

Innovation is supposed to drive productivity, and yet, over the last ten years productivity in our manufacturing sector has declined — not its growth rate has slowed: productivity has declined . You need more labor in an American factory today to produce the same things that you would have produced a decade ago. And this system’s malfunction has dire human consequences. Whereas forty weeks of the typical male earning would have supported a family of four in 1985, by 2022, you needed sixty-two weeks of income (which is a problem because there are only fifty-two weeks in a year). Nearly half of Americans report having fewer children than they want. And outside of the very highest income, highest educated classes, the most frequently cited reason is affordability. The average American can no longer expect to earn more than his father did. Poorer regions can no longer expect to catch up with wealthier ones. The bottom 50 percent of households had less wealth in 2019 than in 1989, during which period the top 10 percent added 29 trillion [dollars]. Life expectancy, as has been well covered, has been falling. 

So, what’s been going on?

In The Wealth of Nations , Adam Smith described conditions under which the private pursuit of profit advances the public interest. I want to read to you the famous sentence about the invisible hand because I think it is so often misunderstood: 

By preferring the support of domestic to that of foreign industry, . . . and by directing that industry in such a manner as its produce may be of the greatest value, . . . [the capitalist is] led by an invisible hand to promote an end which was no part of his intention.

The Invisible Hand isn’t a magical force that makes capitalism work automatically. It’s actually a truism that if capitalists seek the expansion of domestic value creation as their best route to profit, then the nation will benefit.

But what about the converse of that? What are we seeing today if the hard capital and labor-intensive work of extracting natural resources, raising agriculture, building infrastructure, and manufacturing products offers a less attractive investment profile than developing a cloud-based application that might scale quickly to a few million users? Capitalism does not work, nor would Adam Smith have said that it worked, if firms facing pressure to raise wages, improve conditions, or otherwise invest in American workers and productivity can instead offshore production or import foreign labor for jobs Americans won’t do. If top business talent finds it can earn more money trading assets in circles than [by] making productive investments in the real economy, capitalism will not work. The market will deliver the profit — we’ve certainly learned that — but it will also deliver national decay. 

So what does this have to do with conservatism? 

It seems to me that rebuilding American capitalism is a quintessentially conservative task. Libertarians have essentially opted out of the process. They can’t understand that capitalism requires anything more than freedom, nor will they countenance a role for government in providing it. Progressives are disdainful of a system that leaves so much to private ordering and they’re eager to provide public programs where the markets will not. Only conservatives have the necessary gratitude for a free enterprise system that both grants liberty and imposes obligations, and comprehension of the need for institutions and constraints on market actors to productively channel their ambitions. 

On the one hand, yes, it’s absolutely true. Conservatives value the unique properties of the free market to allocate resources efficiently and [to] empower people to limit the power of central government to evolve over time in response to real-world conditions. But conservatives also recognize that markets have drawbacks and limitations, that the free market can reduce people to consumers and relationships to transactions, that it will in every case prioritize efficiency over resilience and individual self-interest over the common good. Unfortunately, conservative economics was supplanted on the American right-of-center over the past forty years by a market fundamentalism that saw capitalism as “just another word for economic freedom” in Senator Pat Toomey’s words. The task for policymakers in that frame is simple. To quote Jack Spencer, former vice president of the Heritage Foundation Institute for Economic Freedom and Opportunity, “Why don’t we look at a policy and just ask: does it expand economic freedom?” 

With that attitude, conservatives relinquished any right to advance a positive vision beyond free individuals exercising free choice in the market, each presumably able to optimize his own life. And that leads to thinking like what we hear from the American Enterprise Institute where Scott Winship, director of the Center of Opportunity and Social Mobility, argues : “Americans have voted with their wallets — for more stuff, smaller families, and less time devoted to housework, raising kids, and investing in communities.” What’s underlying this is a blind faith that is an actual clearly stated assumption. As Professor Glenn Hubbard, President George W. Bush’s economic advisor, said : “The goal of the economic system [is] optimizing consumption.” If you believe that, then what America makes, or whether America makes anything at all, does not matter. And that is, again, an explicitly stated assumption. Michael Boskin, chairman of the elder Bush’s Council of Economic Advisers, famously quipped : “Computer chips, potato chips. . . . What’s the difference?” 

From that starting point, you get an agenda of tax cuts, deregulation, and free trade. It’s well suited to an ideology of freedom that’s disconnected from any conception of human flourishing. But we shouldn’t be surprised that the economic policy was a disaster for the nation. Globalization crushed domestic industry, leaving collapsed communities in its wake. Financialization shifted the economy’s center of gravity from Main Street to Wall Street, fueling an expansion in corporate profits alongside stagnating wages and declining investment. The decline of unions cost workers power in the market, voice in the workplace, and access to a vital source of community support. 

These trends, actively cheered on by a Right that I don’t think we can at all call conservative, contributed to rising inequality, slowing innovation, narrowing of opportunity, and the loss of middle-class security. And as with any fundamentalism, this reality was happily reframed as a beneficial and coherent narrative. Any market outcome, no matter how socially corrosive, we were told, was the right one. Broad regions experiencing economic decline was natural and beneficial “creative destruction” and a cue for left-behind residents to move to opportunity. Business talent flocking to hedge funds, private equity paydays, was efficient and a source of “enormous social value” created by financial engineering and trading assets in a circle. If China’s state-owned enterprises dump cheap products into the American market, pulling expertise and investment across the Pacific,  American consumers could merely enjoy the bounty at the Chinese Communist Party’s expense. 

The American dream wasn’t dead. Cars were cheaper. They had seat warmers. Our televisions were larger. And if economic growth were the only goal, what else could be done? 

As Club for Growth founder Steve Moore remarked in a recent debate with me on immigration and wages, “Cheap labor leads to a booming stock market? That benefits everyone.” 

How is any of this conservative? And for that matter, how is any of it capitalism? It has become popular in segments of the old Right to lament that conservatives are turning their backs on free markets and capitalism. I saw an advertisement for this talk as: “Should conservatives rethink their commitment to free market principles?” No. What we need to do is reclaim our commitment to free market principles and rescue capitalism from the fundamentalists who have warped it beyond recognition.

Let me take a moment to dig in on this. I use “fundamentalist” not as some sort of casual pejorative but as a precise and descriptive indictment. The fundamentalism that we’ve seen on the right of center when it comes to economics insists on a strict adherence to dogma with an attendant commitment to explaining away any evidence to the contrary. It fosters allegiance to an in-group and aggressively polices the outgroup for insufficient purity. It demands faith in an inaccessible absolute. It brooks no complexity. It offers no opportunity for reason. And it professes to represent unpolluted and original truths even as it requires extensive and selective reinterpretation of the sacred texts.

Once you’re listening for the telltale signs, it’s hard to hear anything else. 

Conservative economics, unlike the fundamentalism that supplanted it, embraces reason. As conservatives, we begin with a confident assertion of what the market is for and then consider the public policies necessary for shaping markets toward that end. The conservative conception of the common good requires a free market economy in which, yes, people can transact freely, but also in which all people can choose their own life course and through their productive efforts contribute to their communities. Where they can support families. Where they can raise children prepared for the same. 

This is a much richer notion of freedom than merely the market transaction. It’s attached to obligation. It recognizes that with economic rights come economic responsibilities. And the conservative vision thus asks more of markets, not only to allocate capital to productive uses, not only to serve consumers at the lowest price, but also to create a range of secure and dignified jobs and to produce growth that is widely shared and sustainable. 

The industrial commons requires protection to ensure that it’s capital-based, that its talent pool and centers of innovation fuel productivity gains and provide for the national defense. The labor market requires protection to ensure that the nation’s workers are essential to economic success and prepared to contribute to it. And the social fabric requires protection to ensure a sense of place, caring relationships built on mutual obligation, and the solidarity to solve problems and counter threats. 

I’m optimistic because capitalism properly understood can do all those things. One only need look at the first 200 years of American history where America went from colonial backwater to continent-spanning industry colossus to have confidence that it’s possible. 

But how did we do that? Not with free market fundamentalism. That wasn’t what the founders were talking about. That’s not what Abraham Lincoln was talking about. That’s not what Theodore Roosevelt was talking about. We did it with a robust national economic policy that promotes development through aggressive public investment involving industry and infrastructure, through heavy involvement in the financial system, through regulation for safe and equal access to vital public services. We pioneered public education. We pioneered organized labor. And we had, for most of our history, the highest tariffs in the world, behind which our domestic industry was allowed to develop and thrive. 

Those were not exceptions to American capitalism. Those were its scaffolding. 

In the twenty-first century, capitalism itself, and the public policy supporting, it look different.

This is not a nostalgic exercise in returning to the past. I prefer the analogy of what happens after an earthquake levels a city: the disaster causes great suffering, but it also exposes poor construction. It crushes unsuitable structures. It provides the opportunity to modernize. And rebuilding from that doesn’t mean recreating the old city. But it does mean building something that retains its character and preparing to better serve its residents for decades to come.

I want to conclude by making this concrete and highlighting two broad ways in which markets do in fact require assistance — or dare I say intervention — if capitalism is to function well. You can think of these as the macro and the micro, the top-down and the bottom-up, the shape of the markets, the institutions within them. I tend to speak in terms of, on the one hand, productive markets, and on the other hand, supportive communities. 

First, productive markets. As the term implies, not all markets are productive. What we are looking for is markets whose conditions and constraints channel investment toward the most valuable uses for workers, for the broader economy, and for the nation. For instance, we must embrace the principle that making things matters and boost investment in critical Industries. It’s a simple principle, isn’t it, that making things matters? So obvious to anyone without an economics degree and yet so quickly squeezed out of those who pursue one. Acknowledging it requires acknowledging a limit on the market, a need for intervention. And so instead, the free market extremists simply deny it. They try to say with a straight face that making things doesn’t matter. That’s the fundamentalism at work. Conservatives reject such thinking. 

The second area is supportive communities. Policymakers must help reinvigorate the institutions that operate alongside and within the market. The American labor movement has devolved into a dysfunctional and sclerotic collection of unions that fail to advance workers’ interests or represent many at all. But the idea of a strong labor movement, actual representation for workers, their ability to act on an equal playing field with management and capital, is vital for capitalism to function well. Public education, which has become obsessed with college prep (and does it poorly) is not at all what Americans want. They want to see an education system that helps students develop the skills and values they need to build decent lives in the communities where they live. And at the foundation of it all, families must form and flourish where capitalism succeeds and people thrive. 

This is true partly because families are important to a well-functioning capitalist system, but more because they are themselves its proper end. Families don’t exist to support capitalism. Capitalism exists to support families. The decision to form a family and raise children is not a consumption choice. It’s not an experience to be weighed against a nice vacation or more time for gardening. It’s the basic obligation of life and citizenship incurred by virtue of having been born and raised oneself and by virtue of enjoying liberty and prosperity in a nation built through that same work performed countless times across generations. A capitalism that avows neutrality on the importance of this pursuit compared to others rather than upholding it as the highest good has no future and does not deserve one.

I wonder why we bother to call it capitalism at all.

Image by Lazy_Bear and licensed via Adobe Stock .

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Can you trust 2024 election polls on Donald Trump and Joe Biden? Here's how to cut through the noise.

Love them or hate them, political polls aren’t going anywhere. As the 2024 presidential election kicks into high gear, the internet will be flooded with surveys tracking the horserace between President Joe Biden and former President Donald Trump.

Keeping track of the numbers can be daunting: Who's ahead in national polls? Who's ahead in state-level surveys? Figuring out which numbers to pay attention to – and whether any of it actually matters – can be even more challenging.  

Luckily, the USA TODAY Network has got you covered. Here’s a refresher on why polls matter, whether you can trust them and what to look out for this year.  

What do polls tell us about the election?  

Think of polls as quick snapshots rather than crystal ball readings.  

Prep for the polls: See who is running for president and compare where they stand on key issues in our Voter Guide

They don’t necessarily predict the results of an election. Rather, they’re used to gauge how people feel about a race during a specific period. Pollsters may ask questions about the future, but surveys have more to say about the voters' current temperature.

Polls also tend to have a short shelf life. Public opinion can shift quickly, meaning that the results of polls are often only a reliable measure of the state of a race during the time they were taken. 

A survey taken two months ago won’t reflect the state of a race today, and a poll fielded tomorrow won’t tell us who is going to win the presidential election in November.

However, that doesn't mean polls captured at the beginning of a campaign cycle don't matter. The insights from early polls tease out the major issues voters are thinking about that could shape the race.  They also help trace the trendlines of how a candidate is performing – whether they’re gaining traction, stagnating or losing support. 

Pollster John Zogby likened the importance of looking at early polling to checking benchmarks while trying to reach an exercise goal.  

“Am I going to get on the scale the day before to see how I did?” said Zogby. “No, I get on the scale every so often to say what am I doing? How am I doing? What am I doing right?” 

Conducting polls early in a race and often throughout the course of an election allows political scientists, journalists and the public to track trends and spot major inflection points in campaigns.  

Beware of two-candidate polls  

Not all polls are built the same. The way a survey is designed, from how questions are worded to the demographics of the participants chosen, can influence the accuracy of its results.  

David Paleologos , director of the Suffolk University Political Research Center, said political polls are most accurate when they replicate as closely as possible the questions and options voters will see on their ballot.

For instance, he said that polls on the 2024 presidential election should include choices beyond the two major party candidates – Trump and Biden – because most ballots will contain third-party and independent candidates who will garner some support.  

“If the polls only show a binary choice, between Trump or Biden, you're not getting the full picture,” Paleologos said.

He pointed to close margins in critical swing states, including Wisconsin, Arizona and Georgia, during the 2020 election as an example. Trump lost in those states by fewer votes than Libertarian Party candidate Jo Jorgensen received.  

If Jorgensen had not been in the race, the results in those battlegrounds, and possibly the outcome of the election nationally, could have looked markedly different, Paleologos said.

The Libertarian Party hasn’t yet chosen its candidate for the 2024 election. But early polls that include the party and other independent candidates as options are likely to more accurately show how disaffected voters are looking at their options, he explained.

Suffolk University and USA TODAY have a partnership collecting polling data and insights.

Who's being polled?

Another factor that can impact a poll’s accuracy is the sample population surveyed. Polls randomly select a small sample of people designed to represent the broader views and attitudes of a larger population. But every organization uses different methodologies to create their samples.  

For instance, some election polls take the temperature of the general population, while others only include active voters or likely voters. They also may weigh demographic information, such as the ratio of Democrats to Republicans, differently.  

In the 2024 race, Zogby, author of the forthcoming book "Beyond the Horse Race: How to Read Polls and Why We Should," suggested that the most accurate polls include only likely voters, the pool of people already planning to cast a ballot in November.

“A likely voter today may not be a likely voter on October 31,” Zogby said, but capturing these voters allows political scientists to better understand the Americans who will choose the next president.

Should I pay attention to national polls or state surveys?

Pollsters were lambasted in 2016 for projecting that then-Democratic nominee Hillary Clinton would win the election over Trump.

But national polls , which are supposed to reflect the popular vote across all states, were technically right. Overall, Clinton won nearly 2.9 million more votes than Trump.  

So, what went wrong? Many analysts overstated Clinton’s lead in national polls, and few organizations conducted state-specific polls in former Democratic strongholds, such as Wisconsin, Michigan and Pennsylvania, that Trump was able to capture. His wins in those states ultimately landed him the electoral college victory.  

That’s not to say that national polls are inferior to state polls, but you should think of them differently.

“National polls are more valuable to understand what the issues are impacting likely voters,” Paleologos said, while state polls better represent the horserace.

He and other polling experts told USA TODAY that Biden needs to lead Trump by three to four percentage points in a national poll to be tied with the Republican in the electoral college . That's because large liberal-leaning states like California and New York tend to tilt the results of national polls in Democrats’ favor, whereas the "electoral college these days skews Republican," Zogby said.

In other words, a national poll showing Biden and Trump tied would tell a similar story to a swing state poll that shows Trump leading Biden by a few points.  But generally, experts warn against comparing national and state surveys, which are built off of different methodologies, against one another.

Can you trust the polls?  

Mostly. Because polls are analyzing a myriad of shifting factors, they'll always have some level of uncertainty baked in, regardless of the specific election. Organizations also don’t collaborate on what states they plan to poll, or when, which means there’s always potential for blind spots, like in 2016. 

Some political observers rely on poll averages, such as a tally from Real Clear Politics. These are generally reliable, but they can miss trends.

But when interpreted properly, polls often provide an accurate portrait of the state of an election. 

“There are folks that will say, ‘Oh, you missed the election by two points,’” Zogby said. "Well, two points – that showed the ballpark of what was going to happen.” 

And the more polls there are, the easier it is to evaluate the race.  

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In a Communist Stronghold, Capitalists Become an Economic Lifeline

Cuba’s Communist revolution took aim at private businesses, making them largely illegal. Today, they are proliferating, while the socialist economy craters.

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By David C. Adams

David C. Adams visited more than a dozen private businesses in Havana to document the growth of the private sector.

A modern grocery store whose shelves are packed with everything from pasta to wine fills a spot in central Havana once occupied by a drab state-owned flower shop, its ceilings and walls repaired and repainted.

Listen to this article with reporter commentary

A former state glass company in a Havana suburb now houses a showroom for a private business selling Cuban-made furniture.

And at the Cuban capital’s port, forklifts carefully unload American eggs from a refrigerated container. The eggs are bound for an online private supermarket that, much like Amazon Fresh, provides home delivery.

These ventures are part of an explosion of thousands of private businesses that have opened in recent years across Cuba, a remarkable shift in a country where such enterprises have not been permitted and where Fidel Castro rose to power leading a communist revolution determined to eliminate capitalist notions like private ownership.

But today Cuba is confronting its worst financial crisis in decades, driven by government inefficiency and mismanagement and a decades-long U.S. economic embargo that has led to a collapse in domestic production, rising inflation, constant power outages and shortages of fuel, meat and other necessities.

So the island’s communist leaders are turning back the clock and embracing private entrepreneurs, a class of people they once vilified as “filthy” capitalists.

Taking advantage of loosened government restrictions granting Cubans the legal right to set up their own enterprises, roughly 10,200 new private businesses have opened since 2021, creating a dynamic, if fledgling, alternative economy alongside the country’s hobbled socialist model.

Underscoring the growth of private businesses — and the government’s economic travails — private sector and government imports last year each totaled about $1 billion, according to government data.

Much of the private sector imports came from the United States and were financed by cash remittances sent by Cubans there to relatives back home. About 1.5 million people work for private businesses, a 30 percent jump since 2021, and they now represent almost half of the total work force on the Caribbean island.

“Never has the private sector been given so much space to operate in Cuba,” said Pavel Vidal, who studies Cuba’s economy and is a university professor in Cali, Colombia. “The government is bankrupt, so it has no other choice but to invite other actors in.”

Despite the private sector’s growth, its overall contribution to Cuba’s economy, while increasing, remains modest, accounting for about 15 percent of gross domestic production.

Still, the economic transformation is significant enough that it is leading to deep divisions in the island’s communist system as a new business elite acquires wealth, something anathema to Cuba’s revolutionary ideology.

Cubans working for the state, including white-collar professionals, doctors and teachers, make the equivalent of roughly $15 a month in Cuban pesos, while employees in the private sector can make five to 10 times that amount.

A government salary does not go very far in the private stores that have popped up, where a bag of Italian potato chips costs $3, a bottle of good Italian wine $20 and even an everyday need, like toilet paper, costs $6 for a pack of 10 rolls.

Most customers who can afford those kinds of prices receive money from abroad, work for other private businesses or are diplomats.

“You have to be a millionaire to live in Cuba today,” said Yoandris Hierrezuelo, 38, who sells fruit and vegetables from a cart in Havana’s Vedado neighborhood, earning about $5 a day. “The state can no longer meet the basic needs of the population.”

Cuban government officials said the legalization of private businesses was not a grudging acceptance of capitalism for the sake of economic survival, making it clear that state-run industries still dwarf the private sector’s role in the economy.

“It’s not an improvised strategy,” Susset Rosales, the planning and development director at the Ministry of Economy, said in an interview. “We have a very clear idea of the pathway for gradual recuperation of the economy with the incorporation of new economic actors that are complementary to the socialist state economy.”

But U.S. officials say that the growth of private businesses could be a game changer, paving the way for greater democratic and economic freedom.

“The question is — are they enough?” said Benjamin Ziff, the chargé d’affaires who heads the United States Embassy in Cuba. “Cuba is falling apart faster than it is being rebuilt. There is no turning back.’’

A key question, he added, is whether the government will allow the private sector “to expand fast enough and freely enough to meet the challenges.”

Cuba’s rapidly expanding private sector has attracted deep skepticism within Miami’s staunchly anti-Communist Cuban exile community, where many dismiss it as a ruse by Cuba’s communist leaders to ride out the economic crisis and cling to power.

Representative Maria Elvira Salazar, a Republican and one of South Florida’s three Cuban Americans in Congress, led a congressional hearing in January about private business titled “The Myth of the New Cuban Entrepreneurs” and suggested that licenses for such ventures were reserved for relatives of Cuban government officials.

“The Cuban regime is still in the business of power, and there’s nothing that proves to me that they’re willing to give a portion of that market share to anybody else but themselves,” she said in an interview.

Since banning private businesses in the 1960s, Cuba has, in fact, experimented with free market practices during other times of hardship, only to roll them back later when economic pressures eased.

When the Soviet Union collapsed in the early 1990s and left Cuba without its main economic benefactor, the government issued a limited number of “self-employment” licenses for some low-income tradespeople, including barbers and tire repairers.

After President Barack Obama restored diplomatic relations with Cuba in 2015 and relaxed the U.S. embargo, American tourists flooded the island, and U.S. companies began exploring investments.

Still, the Communist Party never fully embraced the private sector, regarding it as a potential Trojan horse for “Yanqui imperialists.”

Then came a double blow. Donald J. Trump’s election in 2016 led to the restoring of sanctions on Cuba, including a ban on U.S. cruise lines sailing there. Three years later, the Covid-19 pandemic shut down Cuba’s tourism sector entirely, its largest source of foreign currency.

Since then, Cuba has been in financial free fall. Production of pork, rice and beans — food staples — plunged by more than half between 2019 and 2023, according to the government.

This year Cuba requested — for the first time — help from the United Nations World Food Program, to provide enough powdered milk for children, the state-run media reported. A lack of oil and an aging electrical grid have led to rolling blackouts across the country.

The worsening living conditions triggered a rare public display of unhappiness in March as hundreds of people took to the streets of Santiago de Cuba, the country’s second-largest city, chanting, “Power and food,” according to social media and official government reports.

The economic hardships have set off an enormous surge in emigration. Since 2022, roughly 500,000 Cubans have left the island, an extraordinary exodus for a country of 11 million, and most Cubans who have left have gone to the United States.

Amid so much deprivation, privately run small businesses offer a small dose of hope for those with the money to open them, and for their employees.

Many are taking advantage of regulations introduced in 2021 granting Cubans the legal right to set up their own enterprises, which are limited to 100 employees.

Across Havana, new delis and cafes are appearing, while entire office floors are leasing space to young entrepreneurs bursting with business plans and products, from construction and software to clothes and furniture.

Diana Sainz, who had lived abroad for much of her life and worked for the European Union, took advantage of the economic changes in her homeland and opened two Home Deli markets in Havana, offering a mix of locally made items like pastas and ice cream, as well as imported goods, such as beer and cereals.

Ms. Sainz says Cuba had not had a private supermarket in decades. “Now it’s beautiful to see a store on every street corner,” she said. “When you compare things to five years ago it’s totally different.”

Still, many business owners said the Cuban government could do more to build the private sector.

Cuba’s state-owned banks do not allow account holders to access deposits in dollars to pay importers because of the government’s lack of foreign currency to pay its own bills. U.S. sanctions also prohibit direct banking between the United States and Cuba.

And the Cuban government has kept major industries off limits to private ownership, including mining and tourism.

But that has still left plenty of opportunities.

Obel Martinez, 52, a Cuban American interior decorator from Miami, recently partnered with a local restaurant owner to reopen a landmark Havana restaurant, La Carreta, that was abandoned by the state a decade ago.

“The ceiling was falling, and we had to totally demolish the interior and rebuild it,” he said.

Mr. Martinez grew up in Cuba and after working in Spain and Mexico, he resettled in Miami but never gave up his Cuban residency.

“We are showing the state that it’s possible to do things another way,” said Mr. Martinez, as he surveyed a busy lunchtime crowd in the 136-seat restaurant, which serves traditional Cuban fare. “And we’re totally private.”

Read by David C. Adams

Audio produced by Patricia Sulbarán .

Sophia Bush comes out as queer, confirms relationship with Ashlyn Harris

Actor Sophia Bush came out as queer in an emotional essay in Glamour and confirmed she’s in a relationship with retired U.S. Women’s National Team soccer player Ashlyn Harris. 

“I sort of hate the notion of having to come out in 2024,” Bush wrote in a cover story for the fashion magazine published Thursday. “But I’m deeply aware that we are having this conversation in a year when we’re seeing the most aggressive attacks on the LGBTQIA+ community in modern history.” 

Bush noted that there were more than 500 anti-LGBTQ bills proposed in state legislatures last year and said this motivated her to “give the act of coming out the respect and honor it deserves.” 

“I’ve experienced so much safety, respect, and love in the queer community, as an ally all of my life, that, as I came into myself, I already felt it was my home,” she wrote. “I think I’ve always known that my sexuality exists on a spectrum. Right now I think the word that best defines it is queer . I can’t say it without smiling, actually. And that feels pretty great.”

The “One Tree Hill” star filed for divorce from entrepreneur Grant Hughes in August. People magazine first reported in October that Bush and Harris were dating, but neither confirmed nor commented on the report. The pair later attended an Oscar’s viewing party together in March . 

In the essay, Bush addressed online rumors that her relationship with Harris began before Harris had officially divorced from fellow soccer star Ali Krieger, in September. 

“Everyone that matters to me knows what’s true and what isn’t,” Bush wrote. “But even still there’s a part of me that’s a ferocious defender, who wants to correct the record piece by piece. But my better self, with her earned patience, has to sit back and ask, What’s the f------- point? For who? For internet trolls? No, thank you. I’ll spend my precious time doing things I love instead.”

Bush said that after news about her and Harris became public, her mom told her that a friend called and said, “Well, this can’t be true. I mean, your daughter isn’t gay .” 

“My mom felt that it was obvious, from the way her friend emphasized the word, that she meant it judgmentally,” Bush wrote. “And you know what my mom said? ‘Oh honey, I think she’s pretty gay. And she’s happy .’”

Bush wrote that she felt like she was wearing a weighted vest that she could finally put down. 

“I finally feel like I can breathe,” Bush wrote. “I turned 41 last summer, amid all of this, and I heard the words I was saying to my best friend as they came out of my mouth. ‘I feel like this is my first birthday,’ I told her. This year was my very first birthday.”

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Jo Yurcaba is a reporter for NBC Out.

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Junk science is cited in abortion ban cases. Researchers are fighting the ‘fatally flawed’ work

Researchers are calling for the retraction of misleading anti-abortion studies that could influence judges in critical cases

T he retraction of three peer-reviewed articles prominently cited in court cases on the so-called abortion pill – mifepristone – has put a group of papers by anti-abortion researchers in the scientific limelight.

Seventeen sexual and reproductive health researchers are calling for four peer-reviewed studies by anti-abortion researchers to be retracted or amended. The papers, critics contend, are “ fatally flawed ” and muddy the scientific consensus for courts and lawmakers who lack the scientific training to understand their methodological flaws.

While some papers date back to 2002, the group argues that now – in the post-Roe v Wade era – the stakes have never been higher. State and federal courts now routinely field cases on near-total abortion bans , attacks on in vitro fertilization and attempts to give fetuses the rights of people .

“When we saw the meta-analysis presented again and again and again – in the briefs to the Dobbs case ” that overturned Roe v Wade “and state cases” to restrict abortion, “the concerns really rose,” said Julia Littell, a retired Bryn Mawr professor and social researcher with expertise in statistical analysis.

A meta-analysis is a kind of research that uses statistical methods to combine studies on the same topic. Researchers sometimes use these analyses to examine the scientific consensus on a subject.

Littell was “shocked” by a paper that said women experience dramatic increases in mental health problems after an abortion – primarily because of the paper’s research methods.

Of the 22 studies cited by the meta-analysis, 11 were by the lone author of the paper itself. The meta-analysis “failed to meet any published methodological criteria for systematic reviews” and failed to follow recommendations to avoid statistical dependencies, according to a criticism published in the British Medical Journal (BMJ).

Large scientific bodies have found no evidence to suggest abortion causes increases in mental health problems. The best predictor of a woman’s mental health after an abortion is her health before. What’s more, there is substantial evidence that women who are denied a wanted abortion suffer both mental and financial harms.

From the time it was published, this 2011 meta-analysis has drawn consternation. Still, it remains in the scientific record in a dispute that the 17 authors of the BMJ criticism, including Littell, say goes beyond mere scientific disagreement.

The paper has been cited in at least 24 federal and state court cases and 14 parliamentary hearings in six countries.

Dr Chelsea Polis , a reproductive health scientist in New York City, who helped gather the group of academics, says her “concerns with the meta-analysis on abortion and mental health published … are based on it being, in my professional opinion, egregiously methodologically flawed”.

The researcher who wrote the article, Priscilla Coleman, a retired professor from Bowling Green State University in Ohio, has responded to calls for retractions with legal threats and descriptions of conspiracy. She said calls for retraction were “an organized effort to cull professional literature and remove studies demonstrating abortion increases risk of mental health problems to impact the legal status of abortion”.

Since the supreme court overturned the constitutional right to abortion and allowed 21 states to severely restrict or ban the procedure, a series of retractions and investigations show how the scientific community is slowly beginning to re-evaluate work cited in these court cases.

“We’re seeing claims made with legal force behind them, and that’s causing people to look at a lot of this research in a different way,” said Mary Ziegler, a professor of law at the University of California Davis, and an expert on the history of reproduction.

A second author whose work is at the center of the BMJ critique is David C Reardon, a longtime abortion opponent. A 2002 study by Reardon, also published in BMJ, is now under investigation.

BMJ said in a statement that the “issue remains under consideration by our research integrity team”, and that their final decision would be made “public once we have completed our internal process”.

Reardon trained as an engineer, but found his calling in research that claimed a connection between abortion and poor mental health. He founded the Elliot Institute in Illinois, an openly anti-abortion non-profit, to pursue that research.

Today, Reardon is affiliated with the Charlotte Lozier Institute, funded by one of the most powerful anti-abortion campaign organizations in the US, Susan B Anthony Pro-Life America. Reardon also co-authored two of the articles that were retracted before supreme court hearings, both by a colleague at the Lozier Institute. Reardon did not respond to multiple requests for comment.

According to analyses of the literature and experts such as Julia Steinberg, an associate professor of family science at the University of Maryland School of Public Health and a co-author of a recent critique of these studies in BMJ, the science is not in dispute. The “rates of mental health problems for women with an unwanted pregnancy were the same whether they had an abortion or gave birth”, an analysis by the UK’s National Collaborating Center for Mental Health found in 2011. That review was cited as one of the best by the US National Academies of Sciences, Engineering and Medicine, in its own 2018 review of the issue.

Other reviews, such as one from 2009 by the American Psychological Association , found evidence “did not support the claim that observed associations between abortion and mental health problems are caused by abortion per se”.

“One can be pro-choice or pro-abortion or anti-abortion, but still understand what the science says with respect to abortion and mental health,” said Steinberg.

Although matters of scientific integrity may seem academic, they can have concrete impacts on policy in the US post-Roe.

One of the few cases of scientific retractions to break through to the wider public was in Texas, where a federal court relied heavily on two studies in a decision to invalidate the approval of mifepristone – better known as the “abortion pill” .

The case was appealed all the way to the supreme court, where it was heard in March in oral arguments in Alliance for Hippocratic Medicine v FDA . Just weeks before the justices were set to hear the case, and as nearly the entire scientific community screamed about the “ junk science ” at its heart, the heavily cited studies were retracted by Sage Publications. Even so, the article’s claims remained in briefs before the court, and were cited as evidence by one of the most conservative justices, Samuel Alito .

Like Reardon, Coleman also recently had a paper retracted, this one in Frontiers in Psychology in 2022. The journal said publicly that the paper “did not meet the standards for publication”. Notably, one of the paper’s reviewers also worked at the Lozier Institute. Coleman unsuccessfully sued the journal over its decision to retract. The court ruled against Coleman in March 2023, Frontiers told the Guardian.

Coleman’s 2011 meta-analysis, published in the British Journal of Psychiatry, was also involved in a heated retraction fight in the UK. The first calls for retraction of the article came soon after it was published in 2012.

It was again brought to journal editors in 2022 after the BJP established a research integrity group . “Motivated by strong agreement with” the importance of scientific integrity, said Polis, “I led a group of 16 scholars to summarize and submit our concerns, again, about the Coleman meta-analysis to BJP.”

In response to these concerns, the BJP established an independent panel of experts to investigate. The panel recommended Coleman’s article be retracted, but was overruled by the Royal College of Psychiatrists, the professional association that publishes the BJP. The move prompted members of the independent panel and some editorial board members to resign .

Later reporting that appeared in the BMJ included panel members saying they believed the college declined to retract because they may not have had comprehensive legal cover in the United States. Coleman threatened to sue – twice – according to letters obtained by the BBC .

Although Coleman denied that her legal threats contributed to the BJP’s decision not to retract her study, she said help from attorneys had been important to defending her work.

“I have spent the last two years vigorously defending three of my own articles and without the financial means to hire highly competent lawyers and the time and opportunity to write lengthy rebuttals, the impact could have been very damaging,” said Coleman.

The Royal College of Psychiatrists responded to inquiries from the Guardian by sending a 2023 statement on its decision. That statement read, in part: “After careful consideration, given the distance in time since the original article was published, the widely available public debate on the paper, including the letters of complaint already available alongside the article online, and the fact that the article has already been subject to a full investigation, it has been decided to reject the request for the article to be retracted.” The statement added: “We now regard this matter as closed.”

Coleman has also defended her work when she testified in US courts, including in a Michigan hearing in which she said her study was “not retracted”.

Steinberg said: “That’s what’s really infuriating.”

Coleman “hasn’t even had to admit that she made an error”, she added.

Researchers also called for retraction of a 2009 article in the Journal of Psychiatric Research by Coleman and the anti-abortion activists Catherine Coyle and Vincent Rue. This article too has been under fire for years and even publicly debunked .

In spite of apparent flaws, Coleman included this 2009 article in her meta-analysis, which critics say compounds the errors.

Additionally, authors of the BMJ critique called for a 2005 article in the Journal of Anxiety Disorders by Coleman, Reardon and a Florida State University psychology professor, Jesse Cougle, to be accompanied by an expression of concern.

Ivan Oransky, one of the founders of the Retraction Watch blog, said that although retractions had become more common, they were nowhere near common enough to correct the scientific record. About one in 500 papers are retracted today, but perhaps as many as one in 50 ought to be, he said.

“All it does is further throw into question what the heck value these multibillion-dollar publishing companies are adding,” said Oransky. For critics of the scientific publishing industry, like Oransky, the response shows how flawed studies cited by courts are a “symptom” of problems with publishers, rather than a failure of courts.

To Littell, the solution is in plain sight: “We really need to be publishing fewer papers, better work, better science.”

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