Late capitalism


The concept of late capitalism, sometimes also translated as late-stage capitalism, was first used in a 1925 publication by the German social scientist Werner Sombart to describe the new capitalist order emerging out of World War I. Sombart claimed that it was the beginning of a new stage in the history of capitalism. His vision of the emergence, rise and decline of capitalism was influenced by Karl Marx and Friedrich Engels's interpretation of human history in terms of a sequence of different economic modes of production, each with a historically limited lifespan.
As a young man, Sombart was a socialist who associated with Marxist intellectuals and the German Social Democratic Party. Friedrich Engels praised Sombart's review of the first edition of Marx's Das Kapital Vol. 3 in 1894, and sent him a letter. As a mature academic who became well known for his own sociological writings, Sombart had a sympathetically critical attitude to the ideas of Karl Marx — seeking to criticize, modify and elaborate Marx's insights, while disavowing Marxist doctrinairism and dogmatism. This prompted a critique from Friedrich Pollock, a founder of the Frankfurt School at the Institute for Social Research. Sombart's clearly written texts and lectures helped to make "capitalism" a household word in Germany and beyond, as the name of a socioeconomic system with a specific structure and dynamic, a history, a mentality, a dominant morality and a culture.

Different modern uses

The use of the term "late capitalism" to describe the nature of the modern epoch existed already for four decades in continental Europe, before it began to be used by academics and journalists in the English-speaking world — via English translations of German-language Critical Theory texts, and especially via Ernest Mandel's 1972 book Late Capitalism, published in English in 1975. Mandel's new theory of late capitalism was unrelated to Sombart's theory, and Sombart is not mentioned at all in Mandel's book.
For many Western Marxist scholars since that time, the historical epoch of late capitalism starts with the outbreak of World War II, and includes the post–World War II economic expansion, the world recession of the 1970s and early 1980s, the era of neoliberalism and globalization, the 2008 financial crisis and the aftermath in a multipolar world society. Particularly in the 1970s and 1980s, many economic and political analyses of late capitalism were published. From the 1990s onward, the academic analyses focused more on the culture, sociology and psychology of late capitalism.
According to Google Books Ngram Viewer, the frequency of mentions per year of the term "late capitalism" in publications has steadily increased since the 1960s. Sociologist David Inglis states that "Various species of non-Marxist theorizing have borrowed or appropriated the general notion of historical 'lateness' from the original Marxist conception of 'late capitalism', and they have applied it to what they take to be the current form of 'modernity'." This leads to the idea of late modernity as a new phase in modern society. In recent years, there is also a revival of the concept of "late capitalism" in popular culture, but with a meaning that is different from previous generations. In 2017, an article in The Atlantic highlighted that the term "late capitalism" was again in vogue in America as an ironic term for modern business culture.
In contemporary academic or journalistic usage, "late stage capitalism" often refers to a new mix of the strong growth of the digital, electronics and military industries as well as their influence in society, the economic concentration of corporations and banks, which control gigantic assets and market shares internationally, the transition from Fordist mass production in huge assembly-line factories to Post-Fordist automated production and networks of smaller, more flexible manufacturing units supplying specialized markets, increasing economic inequality of income, wealth and consumption, and consumerism on credit and the increasing indebtedness of the population.
In 2024, a Wall Street Journal writer complained that "Our universities teach that we are living in the End Times of 'late capitalism.'" Chine McDonald, the director of the British media-massaging thinktank Theos argues that the reason why so many people these days are preoccupied with the "end times", is because "doom sells": it caters to deep psychological needs that sell a lot of books, movies and TV series with apocalyptic themes. Reality may also hit people in the eye. Thus, according to PNAS, there is scientific evidence that exposure to brutal images is independently and significantly associated with stress symptoms and poorer functioning. In January 2026, a political campaign ad from Zack Polanski's UK Green Party advised viewers to “stop running, and look around”.

Skepticism about late capitalism

The idea of "late capitalism" was never accepted by the majority of social scientists, economists and historians, for five types of reasons:
It was considered that the expression was tinged with illiberal political biases about capitalism, and/or because it is unknowable or uncertain whether capitalism is "on its last legs", or "if and when it will end". The German-American economist Hans Philip Neisser, a lecturer at the New School of Social Research, stated in 1954 that:
The unresolved questions were: "late" in what sense? In comparison to what? How do we know? What could possibly replace capitalism? The liberal economist Paul Krugman stated in 2018 that:
There have been very severe "systemic" capitalist crises in the past. During the Great Depression, for example, real GNP in the United States fell by 9.9% in 1930, 7.7% in 1931, and 14.8% in 1932. In 1931, federal tax receipts were roughly half their 1929 level. In 1932, industrial production in Germany and the United States was 47% below their 1929 level – the value of net output was roughly halved. In the United States, net investment turned negative, unemployment rose to a quarter of the labour force, and in 1933, the country suffered the most severe banking crisis ever experienced in peacetime. However, the economy did recover to "business as usual" eventually, and new economic growth was achieved.
Theories of "late capitalism" or the "decline of capitalism" failed to explain events like:
If capitalism is really declining or on the road to collapse, what actually happened so far seems contrary to what we would expect. According to skeptics of the "late capitalism" idea, so far there just has not been any real evidence of:
  • Long-term economic stagnation or prolonged negative economic growth in the advanced capitalist countries.
  • Pervasive social decay and persistent cultural degeneration that just keeps getting worse and worse.
  • Pervasive and persistent rejection of capitalism and business culture by the majority of the population.
It is argued by skeptics that most of the time, in most places in the world, economic growth was either slower than the average, or faster than the average. Prolonged zero economic growth or negative growth has been rare. When it is argued that capitalist economic growth has persistently been sub-optimal, there is no scientific agreement about what optimal growth would look like, and how it would be achieved.
The puzzling paradox of late capitalism is that poverty exists amidst plenty, on a huge scale. The poverty keeps growing, and the growth in wealth is more and more concentrated among a relatively small group of owners. Critics of the skepticism about "late capitalism" will admit that there has been growth in the first quarter of the 21st century. However, they argue that this growth has been very uneven. Globally it involves mainly the top income quintile of the world population, plus a group of newly industrializing countries, which includes most importantly the economic growth in the People's Republic of China, with a population of 1.4 billion. This tilts the "grand averages" of the distribution of global wealth and income considerably.
It is quite possible for world GDP to rise, through robust growth in a group of countries, while the other countries show very little growth or even negative growth. The same applies to the GDP of an individual nation. If a map of the world's countries is resized according to national wealth, the area distortions are so large, that many countries are barely visible. Simply put, if workers in many low-income countries and regions can now earn a few extra dollars per day, this just does not change their total life situation very much.
In 2001, Ankie Hoogvelt stated:
The Human Development Report 2019 shows what economic inequality actually means. So the reply to the skeptics is that capitalism can still make life better for a part of the world population, but not for all – the majority of the world population do not benefit very much from it, get no benefit from it, or are worse off. If we focus only on well-off people in the advanced capitalist countries, we only get a part of the total picture. The independent thinktank Council on Foreign Relations stated in April 2022:
Total US GDP still does show growth, but for roughly half the US population, their GDP does not grow much at all. In September 2025, BBC News reported:
The Wall Street Journal reported in February 2025 that according to Moody's Analytics, the top 10% of US households by income now account for 49.7% of all consumer spending in America. This contrasted with 36% in 1989. The wealthy had been able to increase their spending faster than the rate of inflation, but everyone else didn't.
In the lead-up to the 2024 US presidential election, which was won by Donald Trump, liberal economists were alarmed when they discovered that large numbers of ordinary people were siding against the Democratic Party candidates. How could this be the case, if the post-pandemic recovery was going so well, GDP was going up, and inflation was coming down? In a CNN interview with Erin Burnett, president Joe Biden stated "the fact is that if you look at what the mean people have, they have the money to spend" and he claimed that in reality people were angry about other issues, such as shrinkflation and corporate greed. Mr Brad Bannon, a Democratic Party strategist, advised back then that "It's time for a change. Not in presidents but in the incumbent's economic message." But the White House had a different idea.
An alternative explanation is that ordinary people of modest means were very well aware of their situation, and also about the candidates, but that in their own situation, the cost of living did rise strongly so that consumer prices were permanently at a much higher level, while their own inflation-adjusted after-tax income hardly increased and job opportunities were scarce. That was their reality, just as "real" as the reality of high-GDP wealthy people. They were more likely to vote against Biden/Harris, or not to vote at all.
Liberal economists could not understand this, precisely because the liberal economists were fixated on "total GDP" and "grand-average" statistics for the whole country. This concealed the economic reality of inequality. It is a reason why Thomas Piketty advocates standard statistical measures of the distribution of real disposable income and net wealth. Such measures are needed to restore objectivity to economic science. In 2018, Harvard economist Larry Summers published an article in the Financial Times about his holiday trip, driving cross-country from Chicago to Portland, Oregon:
Senator Bernie Sanders has argued – echoing Martin Luther King Jr. – that there are Two Americas, where people live in two completely different worlds – and it is therefore misleading to represent them as if they are one homogenous unit with "average" lifestyles. The New York Times reported that "The U.S. economy in 2025 is split in two: Everything tied to artificial intelligence is booming. Just about everything else is not." These insights about inequality are not a small matter — a recent scientific study offers evidence for the claim that "economic inequality is one of the strongest predictors of where and when democracy erodes."
Straight after losing the 2024 election and throughout 2025, the "managerialist" US Democrats invested heavily in focus group research and survey research by party-linked pollsters and market research firms, to understand voter attitudes, especially among groups where the Democrats lost ground. They wanted to find out via reports to party leaders why support for the Democrats had eroded, and how they might win the hearts and minds of the people next time.
The conclusion reached by September 2025 was that ordinary Americans were concerned most of all about "affordability" — a "populist" problem they appear to have, and that the wealthy US elites apparently do not have. That was precisely the voter sentiment which the liberals had, despite good advice, deliberately dismissed during the election campaign in 2024 — to their peril. On 18 December 2025, the US Democrats said that they would not release the official "autopsy report" on what went wrong in the 2024 presidential election, because "a public airing of its failures would distract from focusing on winning future elections".
Alexandria Ocasio-Cortez argued in March 2025 that the US Democratic Party "can come together around fighting for the little guy and gal", a core value she insisted "does not belong to any particular ideological camp — or at least shouldn't." Ocasio-Cortez said she believes "economic populism is the path forward". That would involve winning votes with plans to reverse the cutbacks of US welfare state provisions and redistributing income and wealth. However, this does not yet solve the fiscal problem of creating the wealth that can repay the gigantic US public debt.
A Wall Street Journal writer commented in November 2025 that "Trump and Mamdani both campaigned on affordability, but the issue is amorphous and poorly defined" and that "There is nothing any elected official can do to "solve" the affordability crisis reliably". In early December 2025, the liberal Financial Times admitted a growing rich-poor gap in the United States, but argued that the importance of this theme is that it is now a political liability for President Trump, on the road to the mid-term elections. Popular discontent about the inequality issue could cost Mr Trump a lot of political support. The editorial board of the Financial Times affirmed explicitly that 'America's affordability crunch is real', and that it got worse under Mr Trump's reign which had "added to the squeeze".
However, a survey by Data for Progress found in January 2026 that:
A reason why people use the concept of "late capitalism" nowadays is, that they believe contemporary capitalism could become unsustainable, if total debt growth is persistently faster than the total growth of value-added and productive investment, inflation turns into stagflation, large-scale capital flight occurs, and creditors finally refuse to lend. Put another way, inequality could become a killer for the economy.
For decades, Americans were encouraged to finance their lifestyles by buying on credit, while for the majority, their real buying power did not rise very much at all. Consumer price-levels and cost-structures rose faster than after-tax incomes adjusted for inflation, leading to increased imports of cheap foreign goods. Private debt levels kept increasing. During and after the Covid-19 pandemic a lot of extra money was pumped into the economy, which pushed up inflation and raised price levels by large amounts. The relationship between buying power and consumer prices went out of kilter, and is becoming unsustainable, meaning that poverty increases.
Pessimists argue that it must lead to another "credit crunch" adjustment in the future, sooner or later, possibly when the AI bubble pops. Billionaire investor Stan Druckenmiller predicted in September 2018 that the next financial crisis would likely be worse than the last one, because of skyrocketing debt loads. "We have this massive debt problem. We tripled down on what caused the crisis. And we tripled down on it globally."
Wolfgang Streeck judged in 2014 that:
In January 2026, Newsweek cited an Economist/Yougov poll which found that American voters attached more importance to civil liberties than to the immigration issue.