What “Capitalism” Is Standing In For
The grievance is real. The villain is misnamed. The cures keep failing because of it.
The rivers are polluted, the oceans full of plastic, oil spills fouling the coasts, forever chemicals in your blood. Capitalism.
Three men own more wealth than the bottom half of the country combined. Most of the gains from a generation of growth went to the top while everyone else treaded water. The billionaires.
The factories left. The towns died. Fentanyl moved in to fill the silence, and a generation of men in Ohio and Pennsylvania and West Virginia is dying of despair. Globalism.
Your kid is on her phone nine hours a day, teenage loneliness is setting historical records, a handful of companies in Northern California ran the experiment on a generation of children for ad revenue. Big Tech.
Four people. Four different villains. One thing being complained about. None of them have named it.
That’s the problem. Naming it wrong is why the proposed cures keep failing.
The wrong target
There’s a name for what all four are actually complaining about. None of them are using it.
Jesús Fernández-Villaverde, an economist at Penn, spent the last week working through this on X in a three-thread sequence that Tabarrok aggregated on Marginal Revolution. His argument, distilled: most critics of capitalism are critics of modernity wearing borrowed clothes. The grievances are real. The diagnosis is wrong.
The natural experiment is sitting right there in the historical record. In the first thread, Fernández-Villaverde points out that the pollution, depersonalization, alienation, inequality, and consumerism people blame on American capitalism in 2026 also showed up — sometimes worse — in factories in Leningrad in 1970 and on collective farms in Jiangsu in 1978. The Soviet Union ran the most catastrophic environmental disaster of the twentieth century in the Aral Sea, drained an entire inland body of water for cotton irrigation, and produced air quality in its industrial cities that made Pittsburgh in its grimmest decade look like a spa. The nomenklatura had dachas and special hospitals and hard-currency stores while ordinary workers waited in bread lines — the form of inequality changed under socialism, the structure didn’t. China today, the canonical “communism with Chinese characteristics” outlier, is the world’s largest emitter, runs surveillance more aggressive than anything Silicon Valley has dared, and produces inequality that would embarrass a Gilded Age robber baron.
The second thread puts a finer point on it. Imagine you’re trying to run a serious country without capitalism. Now imagine you also want your citizens to have access to MRIs and mRNA vaccines and FLASH radiotherapy machines. You’re going to need the scientific-technological complex that develops those things. You’re going to need the industrial capacity to produce thousands of machines and millions of doses on schedule. You’re going to need bureaucracies — large, hierarchical, impersonal, rule-bound bureaucracies — to coordinate it all. There is no other way. And those bureaucracies are going to have all the pathologies — careerism, asymmetric information, internal politics, denied claims, three hours on hold — that critics blame on capitalism. The bureaucracy isn’t capitalist. It’s modern.
The third thread is the analytical engine, and it’s the one Tabarrok buried in a parenthetical. The standard objection — fine, but capitalism created modernity, so the distinction collapses — confuses two different questions. One is genetic: how did this institutional form arise historically? The other is taxonomic: what kind of thing is it, and how does it relate to other things of its kind? Even granting that capitalism caused modern bureaucracy, that tells you nothing about whether the pathologies of bureaucratic life are features of capitalism or features of bureaucracy. The Soviet evidence settles the second question. The iron cagedoesn’t care who owns it.
This is also why “late-stage capitalism” is doing no analytical work. The phrase was coined in German by Werner Sombart in the early twentieth century, revived in 1972 by the Marxist economist Ernest Mandel, and popularized in 1991 by Fredric Jameson. Capitalism has now been “late” for roughly a century. It survived the Great Depression, two world wars, the postwar boom, stagflation, neoliberalism, the financial crisis, the smartphone, the platform economy, AI, and Trump twice. If your category has outlived multiple eras, multiple technological revolutions, and multiple of its own predicted deaths, your category isn’t doing analytical work. It’s a vibe.
The right uses different vocabulary, but it’s not actually anti-capitalist either. It says “globalism.” It says “the managerial class.” It says “the deep state,” “woke capital,” “Big Pharma,” “the system,” “the cathedral.” Different words. Same target. Impersonal, rationalized, scale-driven coordination grinding individuals up. The left calls it capitalism. The right calls it everything else. Both are pointed at the same thing, and neither has the name right.
Modernity isn’t one thing
Granted all of that. The diagnosis is right. But Fernández-Villaverde stops where the interesting question begins.
He ends in fatalism. Modernity is inescapable. Deal with it.
That’s where I get off the train.
Human flourishing was never about a single layer. Coordination happens at different scales, and the scales want different things.
At the largest scale — nation, supply chain, hospital system, semiconductor fab, university, military — you need rationalized, impersonal, rule-bound bureaucracy. There is no MRI without it. There is no iPhone, no vaccine, no power grid, no Boeing. Trying to run any of that on personal trust and particular relationships is a fantasy. The big stuff requires the big institutional form, and the big institutional form has costs. People don’t get to be known there. The form is the form.
At the smallest scale — neighborhood, family, congregation, fraternal order, school small enough that the principal knows your kid by name — the same logic is poison. People need to be known. They need particular relationships, not impersonal ones. They need institutions where the rules bend for the kid you’ve watched grow up, not where the rules apply uniformly to a case number. The bottom layer doesn’t run on rationalized impersonal coordination. It runs on the opposite.
The mistake isn’t choosing one layer over the other. The mistake is treating them as a single problem.
Two camps, each half right
Two camps in current American politics each see one layer clearly and miss the other.
The populist right — the Cass-Vance-American Compass coalition, with the New Right intellectuals around it — correctly diagnoses the hollowing-out. Oren Cass put it cleanly on Yascha Mounk’s podcast earlier this year: when you say you don’t care about the factory and let it close and move to China, the experience of that community is going to be very, very different. The factory anchors the town. The town is more than the factory, but it isn’t viable without one. Cass is right about this, and the policy tools he proposes — tariffs against rigged competition, reshoring of strategic industries, industrial policy that values production over pure consumer welfare — are real tools that defend real things.
But here’s where it goes wrong. Tariffs and reshoring defend the economic conditions for community. They don’t, by themselves, build community. You can keep the factory open and still have nobody at the diner, no rotary club, no parish, no parents who know each other’s kids’ names. You can win every trade fight Cass wants to fight and end up with a town where everyone has a job and nobody has a neighbor. Economic policy is necessary. It is not sufficient. Treating it as sufficient is the error.
The abundance liberals — Yglesias, Klein, Thompson, Smith, after Klein and Thompson’s Abundance, Noah Smith’s review of it, and Yglesias’s own articulation of the project — make the opposite mistake from the opposite direction. They correctly diagnose the supply problem. America builds too little housing, too little energy, too little of everything that matters. Most of the scarcity people scream about is self-inflicted, the product of veto points and procedural gunk and well-meaning rules that strangle the things they were supposed to enable. The abundance camp is right about this, and the policy tools they propose — zoning reform, permitting reform, more housing, more energy, more state capacity — are real tools that build real things.
(Worth noting that Yglesias’s Substack is named Slow Boring, after Weber’s “Politics as a Vocation” — politics as the slow, strong boring of hard boards. Yglesias has been the most explicitly Weberian voice in American political writing for five years. When Fernández-Villaverde says “spend more time with Weber,” the abundance liberals are the people who already are. There’s a real fight between Cass and Yglesias about this — they debated it directly at the Abundance 2025 conference, and it’s worth your time — but it’s a fight inside the top layer. Neither side is wrong. Both are partial.)
Here’s where it goes wrong on the abundance side. Material abundance does not produce community as a side effect. You can build a million more housing units and have nobody know their neighbors. You can solve every supply problem the abundance camp wants to solve and end up with a country of cheaply housed, well-fed, climate-controlled, fundamentally lonely people. Noah Smith calls industrial modernity “the powerful, but fragile, engine that allows humanity to escape” the natural state of poverty, and he’s right. But the engine doesn’t make a life. It makes the conditions for one. Material flourishing is necessary. It is not sufficient. Treating it as sufficient is the error.
Both camps are correct about what they see. Both are wrong about what’s missing. The fight between them is real, but it’s a fight inside the top layer of the system. Neither one is doing serious work on the bottom layer, because the bottom layer isn’t an economic problem.
The coalition no one names
This is why American politics keeps realigning in ways the legacy categories can’t account for.
“Modernity is grinding me up” doesn’t fit the left-right axis. So you get strange-bedfellow coalitions complaining about the same thing in different vocabularies: the trad-Catholic right and the degrowth left. The Wendell Berry agrarians and the Brooklyn anti-development activists. RFK wellness and post-work theorists. Rural conservatives who think the FDA is run by Big Pharma and urban progressives who think the FDA is run by Big Pharma. Mom influencers fighting seed oils and homesteaders fighting the grid and union men fighting H-1Bs and academics fighting “the neoliberal university” — all complaining about the same thing from different angles, in different vocabularies, convinced their enemies are each other.
The grievance is real. The thing being grieved is real. Modernity does grind people up. The dignity of being known to your community, the rhythm of unmediated work, the experience of consequence at human scale — these are real losses, and the people who feel them are not crazy and not crybabies and not, usually, even confused about what they’ve lost. They’re confused about what to call it. And calling it the wrong thing produces wrong cures.
Freddie deBoer, a Marxist who is more honest than most about this, calls the reflex to dismiss every modernity-grievance as crank stuff “the digital immune system.”Worth reading. He’s also written, in a different piece, against the lazy left reflex of blaming everything from depression to bad dating apps on capitalism. A leftist saying “stop blaming capitalism for everything” and a Penn economist saying “stop blaming capitalism for everything” are pointed at the same problem from opposite tribes. That should tell you something about where the actual fault line runs.
What the bottom layer actually requires
Here’s the part that should change the politics.
If you took the Cass program — reshoring, strategic tariffs, industrial policy, antitrust against captive markets — and combined it with the abundance program — more housing, more energy, walkable zoning, removing the veto points and procedural gunk that strangle building — you’d get most of the conditions the bottom layer needs.
A working factory in a town with affordable housing in walkable neighborhoods, near extended family, with cheap energy and accessible production and a Main Street that isn’t a ghost town. That isn’t nothing. That’s actually a lot. Both camps think they’re enemies. On the conditions question, they’re allies who refuse to recognize each other.
But conditions aren’t community. You can have all of that and still not know your neighbors. The factory being open doesn’t mean people show up at the rotary club. Walkable zoning doesn’t mean walkers say hi. Affordable housing in your hometown doesn’t mean you’re embedded in anything when you live there. The conditions are necessary. What you build inside them is what matters, and that’s where the actual civic work has to happen.
What does that work look like?
Defend civic and religious institutions from regulatory creep. Tax-exempt status protected, even for institutions that are out of fashion. Less paperwork to operate a youth sports league, a fraternal order, a parish. End the regulatory pressure that pushes every civic institution into either becoming a 501(c)(3) social-services arm or dying. Stop treating informal community structures as suspect by default.
Smaller schools, neighborhood schools, parental authority. End the mega-consolidated model that produces graduating classes of eight hundred and parents who’ve never met. K-8 within walking distance. Parent organizations with real budgetary authority, not advisory roles. School boards small enough that running for one doesn’t require a campaign manager.
Walkable, mixed-use zoning. Legalize the corner store in residential neighborhoods. Allow accessory dwelling units near family. Cut minimum parking requirements that kill main streets in favor of strip malls. Stop pretending walkable community happens by accident; it requires being legal.
Cut the regulatory load on small commercial spaces. Liquor licenses, food permits, ADA compliance, occupational licensing, insurance requirements — each defensible individually, collectively a slow strangle of the bar, the diner, the bowling alley, the music venue, the third places that make community possible. Apply rules proportionally. A five-employee business shouldn’t face the compliance burden of a five-thousand-employee one.
End the over-regulation of informal reciprocity. A grandmother should be able to watch her neighbor’s kids without a license. A retired coach should be able to coach the rec league without a credential. We have credentialed and regulated and formalized basic human reciprocity into oblivion, and people are paying for daycare and tutoring services that used to happen across a fence.
Federalism that means something. Block grants instead of categorical funding. Let states actually differ from one another instead of pretending we’re a federation of slightly-tinted Departments of Labor. Let counties differ from each other within states. Different places want different things. That’s not a bug.
Local journalism. This one’s harder. The market hasn’t sustained it and there isn’t a tidy answer. Tax credits, philanthropic models, public-broadcasting-style funding for local newsrooms — something. The death of the local paper is one of the most consequential losses of the last twenty years and it’s directly upstream of communities not knowing what’s happening on their own school boards.
None of this is glamorous. None of it makes a viral post. None of it builds an electoral coalition by itself. All of it is what we mean when we say a place is a community rather than a zip code. And almost none of it is on the agenda of either camp.
What I might be wrong about
The Marxist rejoinder is real. The serious version of it goes: scale itself was driven by capital accumulation. Soviet industrialization was reactive — the USSR was modernizing in a competitive world shaped by capitalist powers, racing to keep up or get crushed. Maybe the distinction between modernity and capitalism collapses under historical pressure, and Fernández-Villaverde waves at this with Quine and moves on too fast. I think the Soviet evidence still does the work — the pathologies persisted long after the immediate competitive pressure — but I don’t want to pretend the move is obvious. It’s the strongest objection in the room.
The anti-monopoly diagnosis is the second tension, and it’s the sharpest critique in this terrain. Captive markets erode agency. Amazon as platform-plus-merchant, hospital systems consolidating until the nearest alternative is two states away, four meatpackers controlling most of the market, four airlines controlling the skies — these are real concentrations of power, and “we have markets” is not an answer when buyers and sellers have no real alternatives. Cass and the New Right see this clearly and propose antitrust and structural reform within capitalism, which is defensible and probably correct. The danger isn’t Cass. The danger is when the same diagnosis gets weaponized in the other direction: parts of the left argue from “concentrated power erodes agency” toward state-as-sole-supplier, which is monopoly all the way down. The socialist commonwealth is by definition the ultimate monopoly: one provider of MRIs, one allocator of housing, one employer, one owner. The diagnosis can run two ways; only one of them survives its own logic. Antitrust is right where it lives — at the level of the firm, the sector, the market. It is wrong as a stalking horse for the state-as-sole-supplier.
The revealed-preference critique is the third. Most people, given the choice, pick modernity. The Soviet citizen did not, in fact, want to go back to the village. The American suburbanite does not, in fact, want to give up the MRI machine for the front porch. Maybe what I’m calling community erosion is the price modernity charges, and most people have already decided to pay it. Maybe I’m overweighting what’s been lost relative to what’s been gained. I don’t think so — the loneliness numbers, the civic association numbers, the suicide and despair numbers all suggest the price is higher than the revealed preferences make it look — but it’s a real argument and it deserves to be named.
Here’s where I land.
Modernity is real, and it isn’t going anywhere. The MRI machine isn’t optional. Neither is the supply chain that makes it, the bureaucracy that staffs it, or the rationalized impersonal coordination that delivers it to your hospital on time. Anyone telling you we can return to a smaller, more particular world by tearing modernity down is selling you nostalgia at the price of children dying of cancers we can currently cure.
But human flourishing was never just the top layer. People need to be known. They need places where they belong, institutions they recognize, neighbors who would notice if they vanished. None of that comes from optimizing modernity. None of it comes from rejecting modernity either. It comes from doing different work — civic work, particular work, work at a different scale — that modernity cannot do for us and cannot replace.
The fight that matters isn’t capitalism versus its alternatives. It isn’t even abundance versus industrial policy. It’s whether we can keep modernity working at the top while refusing to live entirely inside it. Keep the MRI hospital. Build the front porch. Stop pretending those are the same fight, and stop pretending you have to pick.
That isn’t nostalgia. That’s the actual project.