CAPITALISM HAS UNDERGONE a number of important transformations and challenges. Wars, depression and imperialism created the socialist revolutions of the twentieth century. But within the West, capitalism responded to these problems with Keynesian solutions, creating an expanded social contract and growing middle class. Perhaps with the fall of the Soviet Union capitalism became drunk with victory. But alongside its triumphalism, capitalism was reaching its own limits of expansion within the Keynesian model. Without an external threat, capitalism was free to focus on the wage structures and social benefits that restricted corporate profitability. The middle class had reached their limits and the working class had overreached theirs. Neoliberalism, led by financialisation, transformed capitalism into an updated model of its pre-Keynesian existence. Austerity, the export of jobs, privatisation and attacks on unions overwhelmed the working class.

The Washington Consensus was not just about the United States. In reality it was a capitalist consensus developed as an economic and political strategy by the emerging transnational capitalist class (TCC) (Sklair 2001; Robinson 2004; Harris 2008). Capitalism was rapidly transforming from a nation-centric system into a global structure of accumulation and power. Austerity in the developed North and structural adjustment programmes in the developing South resulted from a break with industrial-era national capitalism by a hegemonic TCC.

The democratic dialectic

The bourgeois democratic revolutions in the US and France were based on a revolutionary alliance between the capitalist class, craftsmen, workers, farmers and peasants. This created a historic dialectic that encompassed a contradictory and tension-filled relationship, but that nevertheless allowed for the incorporation of popular demands into capitalist society. As a result the working-class opposition has always existed inside the capitalist dialectic to produce democratic outcomes. These movements took shape not only inside the factories, but also as social movements that have encompassed the demands of women, minorities and other identities.

Antonio Gramsci's theory on hegemony best explained the twin aspects of consent and coercion that have characterised bourgeois rule. While force and violence was always present, consensus was the main tool of more developed capitalist societies (Gramsci 1971). This contradiction, built into the very origins of political institutional structures, produced the flexibility that allowed capitalism to adopt and continue to evolve.