It shouldn’t be a surprise to anyone that the wealth gap in the US has gotten larger over the last 50 years; productivity gains have slowed, wages have stagnated, the environment has been pillaged, and people are facing worsening mental health. Through a combination of government policies and capitalist exploitations, the finances, health, and relationships of many Americans are worse than they ever have been. 

Origins of Neoliberal and Late Stage Capitalism

This all started during and after the Regan era, a period of Neoliberal capitalism that developed into our current economic situation, commonly called ‘late stage capitalism.’

But to begin, we must first go back to 1970, when University of Chicago economist, Milton Friedman, wrote an essay in The New York Times in which he argued that the best way to be a good company in a capitalist system was to maximize shareholder value – meaning maximize profit and pass it along to shareholders, which marked a turning point in how corporations thought about their role in society. 

Up until the late-1970s, there was a tacit agreement between business and labor: wages were rising, and, especially unionized, labor had a sense of job security (Ortner). During this time, likewise, “government was expected to play a role in regulating the economy and in sustaining social programs for the general well-being” (Ortner). 

With Regan and the 1980s came neoliberalism, an economic theory centered on reduced government intervention and a blind faith in individual entrepreneurship and free markets that would theoretically provide the opportunity for full employment and serve the economic needs of all (Zeira). The Regan administration led the way with corporate tax breaks, deregulation, and employer-friendly policies at the expense of labor (Zeira). In his 2007 book, A Short History of Neo-Liberalism, author David Harvey argues that the “upward redistribution of wealth” came at the expense of people and countries at the lower end who suffered to provide for owners of capital (Ortner; Zeira). 

This extreme income inequality is a feature of neoliberal capitalism, not a bug. 

Neoliberal capitalism has led to worsening working conditions and stagnant wages due to worker disempowerment and job outsourcing (Zeira). All of this has resulted in staggering income inequality, insufficient social services, mass incarceration, and an expensive yet ineffective healthcare system. Furthermore, the growing income disparity fuels status competition and chronic stress, which causes increased mental health issues with yet less funding for social programs.

Forty years of neoliberal capitalism has resulted in ‘late stage capitalism,’ our current era of hypercompetition, supremacy of financial capital, the God-like entrepreneur-baron, and the resultant overexploitation of natural resources (Carroll).

What does all this mean for the average American?

With stagnant wages, rising cost of living, and a capitalistic system that demands we spend–even beyond our means–to maintain GDP growth, Americans are often in dire financial straits, living paycheck to paycheck, and unable to afford the American dream of home ownership. Healthcare costs have skyrocketed, while life expectancy has declined and the US suffers the highest burden of chronic disease of any wealthy nation (Hayes). Just to keep up with basic expenses, people are working more hours and spending more time commuting (to be able to live in an affordable area), which leaves less time and opportunity for family, friends, and community. 

Neoliberal and late stage capitalism have made us broke, sick, and alone. 

Economic fallout from capitalism

With the free market capitalism experiment of the last four decades, wealth has been concentrated in a small group of people, widening the gap between the rich and the rest. Workers have been exploited, contributing to a growing inequality. This capitalism also demands that the majority of people keep spending, even as it puts them into a cycle of debt. This has resulted in an unprecedented level of homelessness and indebtedness. 

Wealth for the few

According to an interactive chart by the Federal Reserve, in 1990 the top 0.1% of households had twice the total wealth of the bottom 50%. By 2022, that ratio had grown to nearly 5x, representing a massive wealth accumulation by those at the very top. Similarly, the pay gap between CEOs and the average worker has widened during this same time, such that by the COVID pandemic, those in the C-suite were making 324 times more than the average employee. From March 2020 until November of 2022, the 728 US billionaires added $1.5T to their wealth, bringing their cumulative total to $4.48T (Collins).

Workers

On the other hand, employees have suffered macro-level wage stagnation that started in 1979.  Productivity continued to increase but wages did not (Robinson-Puche). Unions were also faltering as the government became more pro-business and membership declined. 

Debt for the rest

The average American is burdened with debt. Student loan debt is a major problem, especially for younger generations, limiting their ability to buy homes, start families, and save for retirement. Many Americans are also struggling with credit card debt and other forms of consumer debt, only worsened by “buy now, pay later” offers on every checkout page. Medical debt is another major issue, as healthcare costs continue to rise, and is the number one cause of bankruptcy in the US. 

Environmental Destruction

The relentless pursuit of economic growth under neoliberalism has led to environmental degradation and climate change. The exploitation of natural resources and the promotion of unsustainable consumption patterns have had devastating consequences for the planet. As Carroll points out, late capitalism is characterized by systemic environmental decline. The extraction of fossil fuels, deforestation, and pollution have contributed to global warming, rising sea levels, and extreme weather events. These environmental challenges not only threaten our planet but also have significant social and economic implications, such as displacement, food shortages, and increased health risks.

The Health Crisis

Neoliberal policies have had a significant impact on public health. The emphasis on profit maximization has led to a decline in public health infrastructure and a rise in chronic diseases. The US healthcare system is one of the most expensive in the world, yet it often fails to provide adequate care for its citizens. 

Public Health Decline

Income inequality, fueled by stagnant wages documented by Robinson-Puche and rising costs of living, leads to health disparities. Those struggling financially often lack access to quality healthcare and nutritious food, a situation linked to chronic illnesses and lower life expectancy (Roosa & Abrams). As Hayes points out, the US has the lowest life expectancy and highest chronic disease burden of any wealthy nation.

Furthermore, the influence of profit-driven industries, like processed food and tobacco companies, exacerbates health problems.

Dr. Robert Lustig, in his book "Metabolical", argues that the overconsumption of sugar and processed foods, heavily promoted by these industries, is a major contributor to chronic diseases like diabetes, heart disease, addiction, depression, and autoimmune conditions. Dr. Lustig also asserts that while the health insurance industry didn’t cause these diseases, they ultimately profit from them, as the industry denies coverage and increases rates.

This scenario has led to soaring profits for Big Food and Big Pharma, while causing disease all across the world. 

Physical health is just one part of the health decline. Mental health issues like anxiety and depression are also soaring. Food is a big contributing factor, but sometimes it’s due to the pressure to succeed in a competitive job market, as Zeira points out.

The Mental Health Crisis

The constant pressure to succeed, the financial stress, and the lack of social support have contributed to a mental health crisis. Rates of anxiety, depression, and suicide have been on the rise. Zeira highlights the concept of 'deaths of despair,' which refers to the increased rates of suicide, drug overdose, and alcohol-related deaths linked to economic hardship and social isolation. The rising mental health issues are arguably connected to the stresses of neoliberal capitalism, namely economic inequality, job insecurity, and social isolation (Zeira).

The Loneliness Epidemic

Neoliberalism's focus on individualism fosters a culture of competition over collaboration. This weakens traditional support systems like families and communities. Zeira highlights the decline in social ties and community engagement, leading to feelings of loneliness and a decline in mental well-being. 

The trend of larger homes with fewer inhabitants, as noted by DataTrek Research and Covington, has contributed to increased social isolation. This phenomenon, combined with longer work hours and less community engagement, further exacerbates feelings of loneliness and disconnection. Oftentimes, in order to achieve affordability with these larger houses, they’re located further away from city centers, friends, family, and social activities. 

The emphasis on consumerism and materialism has further contributed to feelings of dissatisfaction and emptiness. As individuals are constantly bombarded with advertisements and social media posts promoting the latest products and trends, there’s pressure to keep up with the Joneses, leading to a sense of inadequacy and dissatisfaction. This relentless pursuit of material possessions can distract people from more meaningful activities, such as building strong relationships, pursuing hobbies, or engaging in community service. As Zeira suggests, neoliberal capitalism fosters a culture of individualism, which can lead to feelings of isolation and alienation, further exacerbating the negative impact of consumerism on mental health and well-being.

Can Neoliberal Capitalism Redeem Itself?

The Case for Neoliberalism

Supporters of capitalism, such as The Heritage Foundation, point to its ability to generate wealth and drive innovation. They argue that individual freedom and opportunities for entrepreneurs are essential for economic growth. Among the arguments that stand out are: the United States is the most prosperous nation in the world with one of the largest and wealthiest middle classes.

Alternative Approaches

It is true that capitalism has brought greater economic and cultural freedom to more people than any other system in history. While capitalism has undoubtedly driven economic growth and innovation, it is essential to acknowledge its limitations and negative consequences. 

As Ortner points out, the neoliberal era has led to significant wealth inequality and social problems. While capitalism has undoubtedly lifted millions out of poverty, it has also created new forms of inequality and exploitation. The pursuit of profit maximization has often come at the expense of worker rights, environmental sustainability, and social justice. 

There is a growing recognition that regulation and social safety nets are necessary to address the negative aspects of unfettered capitalism. For example, exploring alternative economic models may provide insight into policies, practices, and approaches that would uplift a wider swath of the population. Consider social democracies, such as those found in Scandinavian countries, as a promising alternative by combining market mechanisms with robust social safety nets. These models prioritize social welfare, equality, and environmental sustainability.

The sharing economy, which emphasizes collaborative consumption and peer-to-peer exchange, has the potential to reduce waste, promote sustainability, and create new economic opportunities. Universal basic income, a policy that provides a regular income to all citizens, could alleviate poverty, reduce inequality, and stimulate economic growth. By exploring these alternative approaches, there is a possibility of a more just, equitable, and sustainable future.

Conclusion

The negative consequences of neoliberal capitalism are far-reaching and devastating. It has made us sick, broke, and alone. To address these problems, we need to move towards a more equitable and sustainable economic system. This will require significant changes to our current policies and institutions. We need to prioritize social welfare, environmental protection, and economic justice. We need to create a society where everyone has the opportunity to thrive, not just a select few.

REFERENCES

Carroll, T. (2022). 8 “Neoliberalism, Globalization, and Late Capitalism: Capital, Ideology, and Making the World Market.” The Oxford Handbook of Economic imperialism (pp. 135–135). essay, Oxford University Press.

Collins, C. (2022, November 21). Updates: Billionaire wealth, U.S. job losses and pandemic Profiteers. Inequality.org. https://inequality.org/great-divide/updates-billionaire-pandemic/

Covington, T. (2023, January 2). Supersized: Americans are living in bigger houses. The Zebra. https://www.thezebra.com/resources/home/median-home-size-in-us/

Datatrek Research - American downsizing: Smaller new homes. (2019, August 22) DataTrek Research - Wall Street’s Go-To Commentary for Differentiated and Actionable Investment Ideas. https://datatrekresearch.com/american-downsizing-smaller-new-homes/

Edwards, Lee. (2020, May 21). The Case for Capitalism. The Heritage Foundation. https://www.heritage.org/conservatism/commentary/the-case-capitalism 

EAT. (2015). Processed food: An experiment that failed. https://www.youtube.com/watch?v=h-8Sbem4G3s.

Federal Reserve System, B. of G. (2023, June 16). Distribution of Household Wealth in the U.S. since 1989. The Fed - Distribution: Distribution of Household Wealth in the U.S. since 1989. https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:1989.3,2023.1

Hayes, K. (2022, August 11). Capitalism is making us sick and sucking us dry. Truthout. https://truthout.org/audio/capitalism-is-making-us-sick-and-sucking-us-dry/

Husson, M., & Louçã, F. (n.d.). Late capitalism and neo-liberalism – a perspective on the current phase of the long wave of capitalist development. Social Studies. https://www.sociostudies.org/almanac/articles/late_capitalism_and_neoliberalism_a_perspective_on_the_current_phase_of_the_long_wave_of_capitali/

Lustig, R. H. (2021). Metabolical: The Lure and the Lies of Processed Food, Nutrition, and Modern Medicine. United States: HarperCollins.

Ortner, S. B. (2011, May). “On neoliberalism.” Anthropology of this Century. http://aotcpress.com/articles/neoliberalism/

Robinson-Puche, M. (2023, June 21). I’m honestly feeling so attacked RN. Money Scoop. https://www.morningbrew.com/money-scoop/stories/2023/06/21/im-honestly-feeling-so-attacked-rn

Roosa, T. and Abrams, M. (2020, January). U.S. Health Care from a Global Perspective, 2019: Higher Spending, Worse Outcomes?. The Commonwealth Fund. https://www.commonwealthfund.org/publications/issue-briefs/2020/jan/us-health-care-global-perspective-2019 

Zeira A. (2022). Mental Health Challenges Related to Neoliberal Capitalism in the United States. Community mental health journal, 58(2), 205–212. https://doi.org/10.1007/s10597-021-00840-7