Introduction

Current crisis

When we started on this project in 2006, capitalism seemed to be bigger and stronger than at any point in history. It was truly a global system, fulfilling – for better or worse – Karl Marx's description in The Communist Manifesto of 1848: “The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere … In one word, it creates a world after its own image.”

The fall of communism in the Soviet Union in 1989 led market enthusiasts to proclaim that liberal capitalism was “the end of history.” The free market approach to capitalism had been hegemonic in the United States for over a quarter of a century, President Ronald Reagan having declared in 1981 that “Government is not the solution to our problem; it is the problem.” Although the dot.com boom of the late 1990s was over, there was the new housing boom. A financial crisis had exploded in Asia a decade before, but the West had weathered the storm, and it only confirmed the experts' conviction that the Keynesian approach of mixing government spending with the market, more typical in Asia, was bad for the economy. Whatever its validity, Keynesianism was defeated politically. The European model of capitalism, sometimes called social welfare capitalism because of its extensive government spending on social services (or branded as “socialism” by adherents of the free market), was under heavy pressure due to global competition with the more market-oriented approach of the Americans, known as neoliberalism.