Today, unleashed capitalism has forced earth to its limits. There is a need for a transformation of economic thinking and practice. Socially regulated capitalism was the standard economic model in the postwar period. In core countries of regulated capitalism, it was characterized by stable government, which had strong political legitimacy. The political sphere was usually dominated by two major parties representing either the conservative or the progressive spectrum of industrial society. A redistributive welfare state was supported by strong labor unions and public institutions.
The post war consensus broke during the 1970s, when capitalist accumulation tumbled into crisis due to market saturation and excessive public spending. The search for a new path to economic growth thus resulted both in the globalization of markets and in the trimming of the welfare state which had formerly pacified industrial societies class conflicts. The Keynesian post war consensus gave way to what is commonly known as neoliberalism.
Dismantling the welfare state, downsizing the public sector and expanding markets, however, did not deliver on the promise of massive economic growth for the economies of the capitalist core. Instead, while especially emerging economies have risen from poverty, social inequality returned to the old industrial world contributing to the political turmoil of the present. Neoliberalism as the leading socio-economic paradigm collapsed in the global financial crisis in 2008/2009, which has brought the state back into the picture. We have since lived in a situation of practical experiments with a post-neoliberal economy. We have, however, not agreed upon a new framework for economic development, which incorporates factors like environmental and social sustainability.
Social inequality