Progressive capitalism
Progressive capitalism is an economic framework within fiscal progressivism that seeks to recalibrate the roles of the market, state, and civil society to enhance societal well-being. This approach recalibrates state and market roles to balance growth with equity. It combines market-driven innovation with targeted government investment in education, infrastructure, and healthcare, while establishing public alternatives in essential services. Progressive capitalism mediates between socialist state control and neoliberal deregulation. Unlike socialism, it preserves market competition; unlike neoliberalism, it enforces regulatory guardrails. Its core claim: capitalism with robust oversight produces broader prosperity than either extreme. Critics argue that its incremental reforms may not address deeper systemic issues within capitalism.
Historically, progressive capitalism has been associated with periods of significant economic growth and reduced inequality, such as the New Deal and the Golden age of capitalism in the mid-20th century. It contrasts sharply with neoliberal free market capitalism, which tends to reject such interventions in favor of self-regulating markets with more narrowly distributed results. Since the early 2000s, progressive capitalism has been prominently advocated by New Keynesian economist Joseph Stiglitz, by British politician David Sainsbury following his 2013 book "Progressive Capitalism: How to Achieve Economic Growth, Liberty and Social Justice", and by U.S. Congressman, Ro Khanna.
Definition
As defined by economist Joseph Stiglitz, progressive capitalism is a form of capitalism that proposes a new social contract to rebalance the roles of the market, the state, and civil society, leveraging market forces and entrepreneurship to enhance societal wellbeing. By rewriting economic rules, it addresses issues like market dominance, ensuring globalization benefits all citizens, and implementing government investments in technology, education, and green infrastructure, alongside public options for essential services. Stiglitz has also described progressive capitalism as "a better balance of government, markets, and civil society". Stiglitz elaborated that this balance requires stronger regulatory frameworks and public investment to counteract market concentration, distinguishing it from both laissez-faire capitalism and state-directed economies.Progressive capitalism is often presented as an economic approach that is in the middle between socialism and neoliberalism. Stiglitz has stated that progressive capitalism responds to the debate between capitalism and socialism by emphasizing reforms within the capitalist system. Progressive capitalism contrasts with traditional socialism, which advocates extensive state control of production. While socialist movements historically dominated European politics in the 20th century, contemporary European social democracies have largely abandoned demands for complete state ownership of productive assets. Economist Mark Cooper proposes a periodization that divides US economic history into two paradigms: free market fundamentalism and progressive capitalism. However, this binary framework of free market fundamentalism represents one scholar's analytical approach and does not reflect consensus among economic historians, who employ various competing periodization schemes. While progressive capitalism advocates for policies to correct market abuses and achieve socially beneficial outcomes, free market fundamentalism rejects such interventions, arguing that markets will self-correct and that regulation and antitrust enforcement only hinder business. Proponents of free market fundamentalism believe minimal government interference will lead to overall public benefit, despite the potential for worsening existing problems. Stiglitz argues that market fundamentalists wrongly label progressive capitalism as socialism, whereas it is distinctly neither socialism nor market socialism.
History
Progressive capitalism builds on the foundational ideas of John Maynard Keynes and Franklin D. Roosevelt, adapting their vision to the contemporary economic landscape. Keynes and Roosevelt advocated for a tempered capitalism where government played a crucial, though limited, role in ensuring stability, efficiency, and equity—goals that remain relevant today. This approach serves as a basis for modern progressive capitalism, which seeks to address the shortcomings of unfettered capitalism by promoting human freedom and balancing market forces with regulatory and public interventions.Mark Cooper categorizes US economic periods into two main models: free market fundamentalism and progressive capitalism. Free market fundamentalism includes the Gilded Age, the Post-WWI Roar, and Neoliberalism. Progressive capitalism encompasses the New Deal and the Golden Age, with transitional periods including the Progressive Era, the Crisis, and the Obama administration.
According to Cooper, progressive capitalism has been shown to outperform neoliberalism across key economic indicators using econometric analysis and that during the progressive capitalism era, GDP growth surged by 2.78%, compared to a modest 1.51% under neoliberalism and that productivity growth also favored progressive capitalism, showing an increase of 2.60% versus 0.84% for neoliberalism. Private investment levels were higher under progressive capitalism at 1.66%, while neoliberalism saw only 0.29%. Unemployment rates improved more under progressive capitalism, decreasing by 2.62%, compared to a reduction of 1.08% under neoliberalism.
Overview
Core principles
Progressive capitalism principles include recognizing excessive corporate power as oppressive, viewing government as a check on private excess, understanding diverse methods for distributing economic benefits, valuing secure and well-paid workers as capitalism's consumers, and rejecting a trade-off between fairness and economic growth, with reduced inequality potentially fostering greater prosperity. A central tenet of progressive capitalism is its focus on enhancing overall well-being, going beyond GDP metrics with the explicit goal of reducing inequality across measurable dimensions such as income distribution and access to essential services.Stiglitz delineates four key priorities of progressive capitalism. Firstly, it restores equilibrium among markets, the state, and civil society to tackle issues like economic stagnation, rising inequality, and environmental degradation through government regulation and investment. Secondly, recognizing the pivotal role of scientific inquiry and social cooperation in wealth generation, it supports markets governed by the rule of law and democratic oversight. Thirdly, addressing the problem of concentrated market power, which contributes to inequality and stifles economic growth, by curbing the dominance of large corporations. Finally, progressive capitalism seeks to sever the nexus between economic and political influence, advocating for reforms to reduce the sway of money in politics and mitigate wealth inequality, ultimately fostering a fairer and more prosperous society.
According to Richard North Patterson, the credo of progressive capitalism is grounded in several core principles: oppressive corporate power can be as stifling as oppressive government; government should act as a check on private excess rather than as a collaborator; there is no universal formula for distributing prosperity; well-compensated workers are valuable customers, not antagonists; and, crucially, there is no inherent trade-off between fairness and growth. Instead, addressing inequality can enhance both economic prosperity and fairness, potentially expanding the overall economic "pie." Patterson states that:
The goal of progressive capitalism is restoring societal balance by recognizing that private enterprise is the core of a broadly successful economy, but that the ideology of supposedly-unfettered markets underpinning shareholder capitalism—abetted, in reality, by subjective public policy choices—is inefficient, destabilizing, and far from inevitable.Progressive capitalism aims to enhance America's prosperity by facilitating the expansion of individual opportunity instead of nurturing perpetual reliance on an excessively intrusive government. Aligned with progressive capitalism are societal aims such as prioritizing education from K-12 to adapt to the evolving economy, ensuring relief from college and student debt, and offering comprehensive support for families, including access to healthcare. It also provisions for a fairer tax system, strengthening the social safety net, combating workplace discrimination, addressing racial and economic segregation in housing and affordability, upgrading national infrastructure, and fostering economic growth in stagnant communities where relocation is challenging.
Stiglitz argues that progressive capitalism aims to build a society characterized by greater creativity, care, honesty, and empathy, which in turn will enhance both economic and social functioning. He contends that this vision, while retaining the term "capitalism," represents a significant departure from current practices. In this framework, "capital" encompasses not only physical and financial assets but also human, intellectual, organizational, social, and natural capital—reflecting the evolving nature of the economy and society. According to Stiglitz, progressive capitalism addresses key elements of a "good and decent" society. It focuses on living in harmony with nature through strong environmental regulations, an area where current capitalism falls short. It also aims to help individuals flourish and reach their potential by implementing predistribution and redistribution strategies. While current capitalism often undermines honesty, empathy, and cooperation, progressive capitalism promotes these values through a supportive framework of institutional arrangements.
Progressive capitalism should not aim to create perpetual dependency on an overreaching government but should focus on enhancing America by broadening individual opportunities. While it is realistic to acknowledge that some inherent and environmental disadvantages cannot be eliminated, progressive capitalism seeks to address and reduce those disadvantages that have been artificially intensified.