The state of Joe Biden’s union: The return to democratic capitalism

 Robert Reich -   It has taken one of the oldest presidents in American history, who has been in politics for over half a century, to return the nation to an economic paradigm that dominated public life between 1933 and 1980, and is far superior to the one that has dominated it since.

Call it democratic capitalism.

The Great Crash of 1929 followed by the Great Depression taught the nation a crucial lesson that we forgot after Ronald Reagan’s presidency: that the so-called “free market” does not exist. It’s a fiction. Markets are always and inevitably human creations. They reflect decisions by judges, legislators, and government agencies as to how the market should be organized and enforced — and for whom.

The economy that collapsed in 1929 was the consequence of decisions that had organized the market for a monied elite — allowing nearly unlimited borrowing, encouraging people to gamble on Wall Street, suppressing labor unions, holding down wages, and permitting the Street to take huge risks with other people’s money.

Franklin D. Roosevelt and his administration reversed this. They reorganized the market to serve public purposes — stopping the excessive borrowing and Wall Street gambling, encouraging labor unions, establishing Social Security, and creating unemployment insurance, disability insurance, and a 40-hour workweek. They used government spending to create more jobs. During World War II, they controlled prices and put almost every American to work.

Subsequent Democratic and Republican administrations enlarged and extended democratic capitalism. Wall Street was regulated, as were television networks, airlines, railroads, and other common carriers. CEO pay was modest. Taxes on the highest earners financed public investments in infrastructure (such as the national highway system) and higher education.