There is no “late-stage" capitalism

Capitalism does not progress through predictable stages, is not nearing collapse, and is an overbroad boogeyman for complicated problems.

Months into Donald Trump’s first presidency, the online left popularized the term “late-stage capitalism” to explain trends or events that struck them as ridiculous symptoms of excessive profit-seeking. Though Karl Marx did not coin the term, his ideological offspring did, and its use today has clear Marxist connotations.

Specifically, the phrase implies that capitalism develops in inevitable stages, and that we are now in the last of these stages, presumably nearing the point when capitalism will collapse on account of its internal “contradictions.” The popular subreddit r/LateStageCapitalism claims to be rooted in “broad-based anti-capitalist thought, with an emphasis on Marxist concepts and analysis and a commitment to antiracism and inclusive feminism.”¹

I would not be surprised if this term makes a comeback during Trump’s second administration.² His first featured daily absurdities which his second is likely to repeat, and as progressives flee “woke” branding to put all their chips on “economic populism,” there will be a big appetite to blame those absurdities on capitalist excess. “Late-stage capitalism” puts an academic gloss on the far left’s preferred explanation for our growing exasperation.

It’s also nonsense. The things implied by the term are not true. We are not in late-stage capitalism because capitalism does not have consistent and predictable stages in the first place. And if aspects of our economic system need reform or produce steep inequalities (which they do), blaming those problems on capitalism as a whole is a generally lazy, unproductive, pseudo-intellectual distraction from needed solutions.

“Late-stage capitalism” can be used in either a formal/academic sense or a casual/sarcastic sense. I will address them both in order.

Formally, the idea that capitalism develops through predictable stages culminating in its inevitable collapse is rooted in Marx’s theory of historical materialism, which he claimed was a provable science. Marx claimed history was guided not by lofty ideas (like reason, religion, or nationalism) but by economic forces, specifically the relation of economic classes, which were in turn defined by their relation to the means of production. Marx predicted that the forces at work in the capitalist mode of production would inexorably lead to its destruction as wages, profits, and business competition fell, creating unsustainable conditions and mass social revolutions.

In other words, people have predicted that capitalism would soon collapse for 158 years, and so far, none of those predictions have come to pass. In fact, this left-leaning academic philosopher’s review of the record concludes that Marx was “completely mistaken on almost every point of substance and detail,” and it seems his Marxist successors were even worse:

“Although capitalist markets have changed over the past 150 years, competition has not devolved into monopoly. Real wages have risen and profit rates have not declined. Nor has a reserve army of the unemployed developed…Socialist revolutions, to be sure, have occurred throughout the world, but never where Marx’s theory had predicted—in the most advanced capitalist countries. On the contrary, socialism was forced on poor, so-called Third World countries. And those revolutions unwittingly condemned the masses to systemic poverty and political dictatorship.”

Other Marxist theories have not fared any better, as Joseph Heath recently explained. The labor theory of value is easily disproven hogwash. “From each according to their ability, to each according to their need” creates fatal incentive problems for any large economy. The line between “private property,” “personal possessions,” and “means of production” is neither clear nor morally significant in our increasingly white-collar economy. A “dictatorship of the proletariat” turns out to be just a dictatorship, except especially violent on account of its imagined moral high ground.

Philosophically, Nozick showed that a moral objection to “exploitation” is incompatible with belief in self-ownership. Economically, Keynes provided a much more compelling explanation for recessions and economic crises. And historically, nationalism and military power shaped 20^th-century events at least as much as class struggle.

For all these reasons, Marxism is essentially dead in academia. Its terms and iconography are used more as a fashion statement expressing egalitarian sentiments than as a consistent argument for anything Marxists actually believed.

In fairness, many of the people who joke about “late-stage capitalism” are probably not doctrinaire Marxists. Many are probably just left-leaning ironists who are upset about wealth inequality and climate change and see capitalism as the cause of those problems. Perhaps they use the term as a proxy for “the excessive greed of rich people and large corporations,” or something to that effect.

But even in this softer usage—even dropping “late-stage” and its ideological baggage—capitalism is an overbroad and unhelpful scapegoat for the complicated problems of modern economies, even if you have strongly egalitarian sentiments. This is for several reasons.

First, capitalism is defined by several criteria at once, which don't necessarily go hand in hand, and which could be a mix of good and bad things. Take the Wikipedia definition by way of example:

“Capitalism is an economic system based on the private ownership of the means of production and their operation for profit.^{[1][2][3][4][5]} The defining characteristics of capitalism include private property, capital accumulation, competitive markets, price systems, recognition of property rights, self-interest, economic freedom, work ethic, consumer sovereignty, economic efficiency, decentralized decision-making, profit motive, a financial infrastructure of money and investment that makes possible credit and debt, entrepreneurship, commodification, voluntary exchange, wage labor, production of commodities and services, and a strong emphasis on innovation and economic growth.”

That’s…[counts on fingers]….19 different things!! If something has 19 “defining characteristics,” none of those traits are truly defining. All 19 can be present or not in varying degrees. All 19 are measured in unique and non-aggregable units. And because there’s no objective way to weigh one trait’s importance relative to another’s, gauging "how capitalist" a society is is extremely arbitrary. The United States, Norway, and China have three very different economies, but all three could be described as a form of capitalism.

This also makes it essentially impossible to determine, and unproductive to debate, the economic consequences of capitalism as a whole, rather than of its individual components. Market pricing could be very good, while private ownership of land is flawed, while private ownership of companies is good, while intellectual property is bad, while globalization is mostly good but partly bad, etc.

Since all economies are mixed economies, and all economies have both good and bad outcomes, evaluating systems at this zoomed-out level frees partisans to credit all the good outcomes to their preferred -isms, and blame all the bad outcomes on their disfavored -isms. Is Venezuela capitalist, or socialist? Is Sweden capitalist, or socialist? What’s the difference between “market socialism” and “capitalism with a safety net”? Is there such thing as a “free market,” or is capitalism also a planned economy? There’s no objective answer to these questions, so pie-in-the-sky ideologues just adopt whatever answer aligns with their bias. Our only prayer of uncovering truth and good policy is by assessing each factor independently.

Sometimes people argue we’re in late-stage capitalism because we “work more for less,” which can only continue so long until people revolt. This is mostly not true, and only half-true in a few economic sectors. In both the United States and the world, people work fewer hours per day on average than they did in our parents or grandparents' generations, and far fewer than they did in pre-industrial times. These trends have only accelerated after COVID.

It is true that in the United States, real wages have stopped growing or grown slowly over the past 40 years or so, especially for lower-income Americans. But a) this is not the same as working "for less" and b) this is largely an artifact of soaring costs for health insurance—provided by employers for most American workers but not counted as wages—consuming an ever-larger portion of total employee compensation. The rise in health insurance costs masks the fact that the dollar value of total compensation (the cost to employers of employing you) has indeed gone up steadily, even in real terms.³

What causes health insurance prices to soar is a complicated question, much more so than many who blame "late-stage capitalism" may have you believe. It's also a more niche problem with narrower solutions than the entire economic system being in a death spiral. Likewise, the cost of housing and college education have skyrocketed for their own niche and complicated reasons that we ought to diagnose and address individually.

People like to feel that they understand the world around them, and the world has many important, emotionally draining problems we feel compelled to address. It is tempting and comforting to blame all these complex problems on one relatively simple, easily understandable cause, such as greed or government or “the establishment.” But the truth is rarely that simple, and capitalism is no exception.

1. Remember in my election autopsy post when I pushed back on the idea that “woke” identity politics come from the center, not the left? How I said “those two flavors of ideologue inhabit identical social and digital spaces ” and “the online trends that buffered Bernie Sanders ran perfectly parallel to those that shot Robin DiAngelo, Ibram X. Kendi, and Ta-Nehisi Coates to brief intellectual stardom”? Yeah…r/LateStageCapitalism is Exhibit A.

2. Indeed, December 2024 saw the 3rd highest month on record for “late capitalism” search queries on Google.

3. The “work more for less” argument also ignores the billions of people outside the US who've gotten meaningfully better off over those same decades, often at least in part because of globalization, which many decry as capitalism.