In 1962, the historian of science Thomas Kuhn published a short book that changed how educated people think about intellectual progress. The Structure of Scientific Revolutions argued that knowledge does not advance through the steady accumulation of better facts. It advances through ruptures—moments when a prevailing framework, or paradigm, collapses under the weight of anomalies it cannot explain, and a new one takes its place. The Ptolemaic model of the solar system gave way to the Copernican. Newtonian mechanics gave way to relativity. The shift is rarely smooth or purely rational. People resist. Institutions resist. The old framework doesn’t simply yield to better evidence; it has to be displaced by an alternative that can explain not just the anomalies but everything the old model explained, plus more.
We are living through one of those moments now. The prevailing economic paradigm—the neoliberal consensus that dominated policymaking across the Western world from roughly the mid-1970 to 2020—has collapsed. It has not collapsed quietly, in the pages of academic journals, where it was already in serious disrepute. It has collapsed loudly, publicly, and catastrophically, in the lived experience of hundreds of millions of people who were told the model would deliver prosperity. Instead, they watched it deliver stagnation and insecurity and drew the obvious conclusion: The people running the system either do not know what they’re doing or do not care about them, or both. The democratic consequences of that conclusion are now visible everywhere.
This essay argues three points. First, that the democratic emergency we face—the rise of authoritarian populism across the developed world—is not primarily a political failure but an economic one. It is the result of a failed set of economic ideas: When the neoliberal paradigm lost its intellectual and popular support after the 2008 crisis, there was no credible alternative, and the resulting vacuum was filled by populism. Second, progressive responses—while valuable—have not filled the paradigm vacuum because they have operated largely within the neoliberal frame rather than replacing it. Third, that an emerging modern economic consensus we call Market Humanism has the potential to replace neoliberalism—not by proposing a new set of policies, but by constructing a new paradigm grounded in twenty-first-century science. This new paradigm can not only to help us create an economy that is fair, prosperous, and sustainable, but also repair our broken democracy.
I. How Neoliberalism Broke the Social Contract and Democracy
Democracies do not fail because citizens stop valuing freedom. They fail because citizens lose faith that democratic institutions can deliver the material conditions that make freedom meaningful: security, opportunity, the reasonable expectation of a better life for their children. When that faith collapses, authoritarian alternatives become attractive not because they promise liberty but because they promise order, belonging, and an explanation for why things went wrong and who is to blame.
The question that matters, then, is why faith in democratic institutions has collapsed. And the answer, we believe, is not primarily about political dysfunction, media fragmentation, or the psychology of tribalism—though all of these are real. It is about economics. Specifically, it is about 50 years of economic policy whose promises were not kept, and whose failures were not honestly explained.
The neoliberal consensus was an amalgam of free-market ideas drawn from neoclassical economics, neoliberal political economy, and libertarian philosophy. Its key intellectual figures included several Nobel laureates such as Milton Friedman and his Chicago colleagues George Stigler and Gary Becker, as well as Friedrich Hayek and James Buchanan. The neoliberal consensus told a coherent story. Markets, left largely to themselves, efficiently allocate resources, generate innovation, and produce broadly shared prosperity. Government intervention distorts this process. The role of the state is to maintain the rule of law, protect property rights, enforce contracts, and otherwise get out of the way. Inequality is largely meritocratic—the natural and efficient result of differential contributions to economic value. The proper response to poverty is not redistribution but growth, which will lift all boats. Tax cuts for the wealthy, deregulation, globalization, and weakened labor protections were not presented as ideology. They were presented as economics—as scientifically grounded prescriptions for how to make markets work better for everyone.
From the 1930s until the mid-1970s, the United States was governed by a very different economic paradigm, Keynesian social democracy, manifested in the policies of the New Deal, post-war reconstruction, and the Great Society. While there were differences between the parties, both Democrats and Republicans accepted the underlying paradigm, with even Richard Nixon once declaring, “I am now a Keynesian in economics.” Under the Keynesian consensus the gains of growth were widely shared, social mobility was high, and the United States built the largest, most prosperous middle class the world had ever seen.
That consensus shattered with the collapse of the Bretton Woods system and stagflation crises of the 1970s. When the crisis came, the neoliberals “had the ideas lying around,” as Friedman famously put it, and those ideas were adopted by a succession of both Democratic and Republican governments, beginning with Jimmy Carter’s major program of deregulation and privatization, accelerating with Ronald Reagan’s tax cutting and union busting, through Bill Clinton’s deregulating of the banking sector and negotiation of corporate friendly free trade pacts, and into the 2010s.
Neoliberal ideas also profoundly influenced Federal Reserve policy under chairs appointed by both Democrats and Republicans. Prior to this era, the Fed attempted to balance its dual mandate of stable prices and full employment. But from the 1970s onwards, the table tipped significantly away from workers and towards owners of capital. When labor markets tightened and wages rose, the Fed, fearing a “wage-price inflation spiral,” raised interest rates, suppressing wage growth. But when financial markets wobbled, the Fed, fearing that declining asset prices would lead
to reduced spending and an economic downturn, often cut rates, re-inflating asset prices. This intervention on behalf of capital owners became so predictable, that traders began calling it “the Fed put” betting that the Fed would protect them from losses.
What happened when these policies were implemented is now a matter of record, and this publication has covered it extensively. Wage growth stagnated and decoupled from productivity growth in the mid-1970s and never recoupled. The middle class hollowed out. Economic mobility declined. The share of national income flowing to the bottom 90 percent of workers fell from 66 percent in 1975 to 53 percent by 2024. GDP growth slowed from 3.8 percent in the Keynesian postwar period (1947-1970) to 3.3 percent during the 1970s period of stagflation, then dropped to 2.6 percent during the neoliberal period from the 1980s onward. And almost all the gains of that slower growth were captured by the wealthiest 1 percent. The 2008 financial crisis—itself a direct product of the deregulatory agenda and a Fed blinded by neoliberal theories of market efficiency—caused the greatest economic catastrophe since the Great Depression, and the recovery from it was the most unequally distributed in postwar history.
None of this was an accident. None of it was bad luck. It was the outcome of a theory that was wrong about how human beings behave, wrong about how markets work, and wrong about what drives economic growth. The theory was not merely incomplete or in need of calibration. It was, as we will explain, built on foundations that modern social science has systematically demolished.
II. Why the Progressive Response Has Failed
Since the end of the Obama era in 2013 until Trump’s approval ratings began their collapse in 2025, polls by Gallup and others consistently show that voters think Republicans do a better job on the economy than Democrats, by margins of six to 14 points. This is despite the fact that data shows that for over 90 years the economy has performed significantly better under Democratic administrations. In a peer reviewed study, Princeton economists Alan Blinder and Mark Watson showed that from 1933-2013, GDP grew on average 4.6 percent under Democratic presidents and 2.6 percent under Republicans—a gap they called “startlingly large.” If we update the figures to the end of the Biden era in 2024, the gap is about the same—4.6 percent over 52 years of Democratic Presidents and 2.5 percent over 40 years of Republicans. Five out of five recessions from Reagan onward began under a Republican President. Private-sector job growth, business investment, productivity, and median wages have all risen faster under Democratic administrations.
This gap between perception and reality has not happened because progressive policies are unpopular (the individual policies poll well) or Democrats are simply bad at communicating (though perhaps they are). It has happened because decades ago progressives lost the paradigm fight. A paradigm is not a list of policies. It is the invisible logical architecture within which policy debates occur—the framework that determines how we see cause and effect, what counts as a reasonable question, what requires proof and what gets a free pass, which solutions look responsible and which ones look reckless. The neoliberal paradigm constructed a specific and devastating asymmetry of scrutiny.
Every proposal to directly benefit ordinary people—to raise wages, strengthen unions, or expand public goods—had to prove it would not harm growth, damage competitiveness, or distort the efficient allocation of capital. No such proof was required for tax cuts for the wealthy, deregulation, the systematic weakening of labor power, or the stratospheric compensation elites gained as a consequence. These were not political double standards. They were paradigmatic ones. When the operating framework defines growth as something that flows from the decisions of capital owners rather than from the participation and purchasing power of working people, policies that favor capital look rational, and policies that favor workers look like charity. You can win every individual policy argument on its merits and still lose the war, because the frame you are arguing inside is doing the real work against you.
The progressive response to this paradigm over the past 50 years has been, in retrospect, a strategic catastrophe. Rather than contest the neoliberal theory of growth—rather than argue that trickle-down economics was wrong about the mechanism, wrong about the causation, and wrong about where prosperity actually comes from—Democrats largely accepted its premises and argued only about its conclusions. They conceded that growth flows from capital and then insisted that working people deserved a fairer share of that growth. They accepted the premise that there was a tradeoff between higher wages and jobs, and they argued only about whether the fairness gain justified the cost. Every time a progressive politician framed their argument as a matter of fairness rather than growth—every time they said “working people deserve better” rather than “our policies grow the economy faster”—they were inadvertently ratifying the theory of growth that they needed to contest.
The result was a political trap. Voters overwhelmingly believe the point of economic policy is to grow the economy, not make it fairer—particularly when decades of neoliberal rhetoric convinced people that “fairer” meant fairer for people other than them (e.g. Reagan’s famous racist dog whistle of welfare queens in Cadillacs). When one side argues growth and the other argues fairness, growth wins—polls consistently show around half of Americans prioritize growth, while only a quarter to a third choose fairness. Progressives were not losing because their values were wrong or their policies were bad. They were losing because they were arguing inside a frame built by their opponents, designed to make those values and policies look like trade-offs against the thing voters care about most.
And you don’t win a paradigm fight with just more facts. As compelling as the facts are about the failures of the neoliberal consensus, they bounce off the public, the media, and most politicians. This is because people absorb a story about how the economy works, and that story filters everything else. Most Americans have heard, in a thousand variations over five decades, that tax cuts for the wealthy create jobs, that government spending crowds out private investment, that strong labor protections destroy competitiveness. Decades of behavioral science research shows that we interpret the world through stories and that a good story can often supersede facts. Facts without a framework to explain them are just noise.
When the neoliberal paradigm failed, there was no coherent alternative explanatory framework ready to take its place. There were critiques of neoliberalism—good ones, many of them published here. There were policy proposals: higher minimum wages, expanded public investment, tougher antitrust enforcement, strengthened labor protections. These were mostly right as far as they went. But they did not constitute a new paradigm. They were patch-and-repair measures within the existing intellectual frame. And the intellectual frame, already broken, could not bear the weight of the political moment.
Into the vacuum came authoritarian populism. Not because it had better ideas—but because it had a story. A simple, emotionally satisfying story about who had betrayed the people, who was to blame, and how to restore greatness. You cannot defeat a bad story with a list of policies. You can only defeat it with a better story. And a better story requires a better paradigm.
III. The Scientific Revolutions Animating Market Humanism
While neoliberalism was failing in the real-world, at the same time, a revolution was quietly brewing in the halls of academia. Over the past five decades, a convergence of discoveries across economics, behavioral science, evolutionary anthropology, complex systems science, and political science have transformed our understanding of how human beings make decisions, how markets actually work, and what drives prosperity. These findings have earned multiple Nobel Prizes and reshaped academic disciplines. What they have not yet done—not nearly enough—is reshape the policy and political discourse that still operates according to outdated economic theories. Our contribution has been to assemble this modern interdisciplinary scholarship into a coherent and internally consistent new paradigm and give it a name: Market Humanism.
The goal of the economy is to enable human flourishing.
We have called the new paradigm Market Humanism because it has a simple normative message: markets must serve human beings. The goal of the economy is to enable human flourishing. That means not just satisfying our needs for material consumption, but also our needs for health, agency, social connection, security, dignity, purpose in our work, a functioning democracy, and a healthy natural world. It sounds obvious to say these things, but that is not what neoliberalism has built. In fact, neoliberalism has worked against every one of these dimensions of human wellbeing.
The new scholarship has sparked four revolutions that change our understanding of how the economy works, and how we might put it on a path to building an economy that serves human beings.
The First Revolution: From Selfish Homo Economicus to Cooperative Homo Sapiens
A foundational assumption of neoliberal economics was a claim about human nature: that economic actors are rational, self-interested maximizers—Homo economicus—who process information efficiently and make consistent choices that serve their individual interests. This was never an empirical finding. It was a philosophical speculation about human behavior first proposed by Jeremy Bentham in the eighteenth century and then adopted by economists in the nineteenth and twentieth centuries when they were trying to turn their field into a mathematical science and needed a simple, tractable way to represent people’s decisions. The problem is that it bears almost no resemblance to how actual human beings behave.
Beginning in the 1970s, Daniel Kahneman (2002 Nobel laureate) and his partner Amos Tversky, pioneered the development of behavioral economics, showing empirically that humans are not far-sighted, rational maximizers. We are subject to predictable biases—loss aversion, present bias, anchoring, framing effects—and we make decisions that violate the axioms of rational choice theory not occasionally but reliably.
But the flaws in Homo economicus go deeper than cognitive bias. Bentham asserted that humans are purely self-interested and transactional and that “the community is a fictitious body,” and for over a century economist modeled people in this way (and Margaret Thatcher echoed this view with her famous remark “there’s no such thing as society”). But decades of evidence from behavioral economics, experimental psychology, and anthropology (not to mention centuries of wisdom from faith traditions and the arts) show that humans are deeply, constitutively social. We cooperate. We reciprocate. We punish cheaters even at cost to ourselves—consistently, across cultures as different as the United States, the Amazon basin, and Papua New Guinea. People do not behave like Homo economicus. They behave like Homo sapiens: creatures for whom fairness, trust, and reciprocity are not distortions of economic rationality but essential features of it.
The deepest insight of this revolution comes from evolutionary anthropology. Joseph Henrich’s work on cultural evolution demonstrates that human cognitive advantages over other species are not primarily individual but collective; what he calls “collective intelligence”—the ability of groups to develop and culturally transmit knowledge across generations in ways no individual could replicate. Homo sapiens are, among mammals, extraordinarily cooperative. We are the species that builds cathedrals, sends probes to the outer planets, and eradicates diseases—not because we are individually smarter than other primates, but because we have a unique capacity to share knowledge, coordinate behavior, and sustain large-scale institutional structures across time and space. Economic growth, on this account, is not primarily about individual incentives. It is about the expansion of human cooperative capacity.
It is of course possible for selfish people to cooperate—cooperation can be in one’s self interest if the gains of cooperating are greater than the costs. But purely transactional, selfish cooperation doesn’t scale. The real world is noisy and uncertain, and information is imperfect. This makes calculating those costs and benefits problematic. For example, one might not perfectly know the payoffs of cooperation, or the payoffs might come at some point in the future, or one might not be able to perfectly predict the behavior of other players, and people might make mistakes, or be misinterpreted. All of this means purely self-interested cooperation is very fragile and is hard to sustain at large scales and over time.
But what makes humans unique is our ability to cooperate at scale with non-kin, with strangers, over long periods of time, even across generations. As economists Samuel Bowles, Herb Gintis, and others have shown, this kind of enduring, stable cooperation rests on prosocial instincts and cultural norms—trust, generosity, reciprocity, and fairness. We can even be truly altruistic. Evidence shows that humans cooperate even when individual payoffs are uncertain or negative—the soldier who throws himself on a grenade, the worker who quietly goes the extra mile for her colleagues. As evolutionary theorist David Sloan Wilson puts it: “Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary.”
But of course we are not all cooperative angels all of the time—we are not claiming a naive view of human nature. Of course people can be selfish, lie, cheat, free ride, steal, and engage in all kinds of anti-social behaviors—and some individuals are downright sociopathic. So people don’t just naively cooperate; they carefully monitor cooperation and punish cheaters even at cost to themselves. And as Nobel laureate Elinor Ostrom showed, we build sophisticated institutional structures to manage cooperation and resolve disputes. Good institutions support our prosocial better angels, enabling trust and cooperation to flourish, while limiting and constraining our antisocial devils.
The connection between cooperation and economic value creation is simple. The things that make our lives better all require social knowledge and cooperation. Think of the thousands of hands involved in making your breakfast, or the global supply chains behind the phone in your pocket. Human progress is a process of scaling cooperation to solve ever more complex problems—from food scarcity to abundance, from infection to antibiotics, from ignorance to the world’s information in your pocket.
The engine of human prosperity is not selfishness. It never was. It is cooperation at scale.
The Second Revolution: From Markets as Efficient Allocators to Markets as Evolutionary Innovators
A second foundational claim of neoliberal economics was about how markets work: that free, competitive markets are self-correcting mechanisms that tend naturally toward optimal equilibria, allocating resources efficiently through price signals. General equilibrium theory, developed by Leon Walras in the nineteenth century and turned into its modern form by Kenneth Arrow and Gerard Debreu in the 1950s, purported to demonstrate this—but only under conditions requiring perfect competition, perfect information, no externalities, and complete markets for all future contingent goods. In the real world, none of these conditions holds. Markets are not efficient allocation machines. In reality, they are complex, dynamic, evolving systems that exhibit feedback loops, herding behavior, multiple equilibria, and sometimes catastrophic instability—all of which was abundantly on display in 2008.
The complex systems view—developed by economists like W. Brian Arthur, J. Doyne Farmer, Ricardo Hausmann, and other researchers affiliated with the Santa Fe Institute—treats the economy not as a machine but as an ecology: a dynamic, evolving system generating emergent order and constant adaptation. Prices are not just signals of scarcity; they are part of a vast information network through which economic actors discover and refine solutions to human problems.
Markets, when they work well, are not equilibrating mechanisms. They are evolutionary discovery systems in which people and organizations compete, to be sure; but they compete to be the best cooperators—combining their knowledge and know-how to discover better solutions to human problems than their rivals. For example, Apple and Samsung and their global supply chains are each massive, complex networks of cooperation that compete intensely against each other to provide you with a better smartphone. Yet they cooperate too—Samsung is Apple’s biggest supplier.
This is the true genius of market systems—not that they reward selfishness but that they harness the competitive drive in service of cooperative problem-solving at civilizational scale.
The Third Revolution: From Value Is Market Price to Value Is Solutions to Human Problems
This reframing transforms both what we think markets do and what prosperity is. In the neoliberal conception, markets allocate existing resources efficiently and value is simply whatever the market price says it is. But we know that markets do not always allocate resources optimally (was it really “optimal” for the richest 10 percent to capture all of the gains of growth for decades?). And we know markets give “value” to things that harm society—from fossil fuels that cause climate change to foods that damage our health, financial speculation that destabilizes economies, and social media that corrodes our democracy.
In the Market Humanist model, the role of markets is to evolve new and better solutions to human problems. True prosperity is not defined as the maximization of output (GDP) or the accumulation of more financial wealth, but as the accumulation of better solutions to human problems: economic activity that creates better health, more security, wider access to knowledge, cleaner environments, more meaningful work. This connects our notion of value—products, services, and activities that make our lives better in tangible ways—with the purpose of the economy—to enable human flourishing.
In the Market Humanist model, the role of markets is to evolve new and better solutions to human problems, not maximize GDP or financial wealth.
This definition changes what counts as economic success and what counts as failure. An economy that produces addictive products, extracts wealth through financial manipulation, or externalizes costs onto communities and the biosphere is not a high-performing economy with a few “market failures”—despite what GDP might say. It is a poor-performing, value destroying economy—one generating problems faster than it solves.
This change in perspective on the nature of prosperity has profound implications for our culture and society. It restores a role for our moral common sense in the economy. The neoliberal consensus worked hard to deny our moral intuitions, to convince us that if the market said something is good it must be good. But if value is created by problem-solving, then it gives us permission to ask, does this activity solve more problems than it creates? Does it improve human wellbeing or harm it?
These questions in turn highlight an essential role of government. In the neoliberal view, anytime the government “intervenes” in the economy it “distorts” efficient market outcomes and is thus by definition value reducing. In the Market Humanist view, democracies have both a right and a responsibility to shape markets toward problem solving and away from problem creating. Policies from consumer safety laws to worker protections, to government investments in science and public health have not replaced or distorted markets, but instead shaped them in the direction of improving human wellbeing. And in response to such shaping, markets did not collapse (as many neoliberals predicted) but used their evolutionary power to innovate and adapt—we got better products and services, better working environments, and better technologies. That is true value creation and true progress.
The Fourth Revolution: From Inequality Is Meritocratic to Inequality Is Created By Structure and Power
The fourth foundational claim of the neoliberal consensus was about inequality: that compensation reflects marginal productivity, people are paid what their contributions are worth, and the distribution of rewards is therefore roughly just. This moral claim—that inequality is largely meritocratic, the natural and efficient result of differential talent and effort—served as one of the ideological load-bearing walls of the entire edifice. If true, it meant that redistribution was not only unnecessary but harmful (even immoral), distorting the efficient signals that markets send about where talent and capital are most needed.
It is not entirely false. Talent and hard work of course matter—research on the sources of economic success consistently finds they account for a meaningful share of variation in outcomes, perhaps roughly half. But there are two other factors that drive distributions of income and wealth that the neoliberal consensus ignored or denied: structure and power.
By structure we mean the rules, norms, and institutions that define the economic game. The easiest way to see how these shape outcomes is with an analogy. Most people are familiar with the game of Monopoly. It has a board, rules, and roles for the players that structure the game. If you’ve ever played it all the way to the bitter end (it takes a long time!) you know the game always ends the same way—one player has almost all of the money and property, and everyone else is either poor or bust. It doesn’t matter how many times you play, who the players are, or how skilled or diligent they are, it always ends with this outcome—thus the name “monopoly.”
The reason is that the structure of the game has three mathematical properties: 1) a source of asymmetry—players get different rolls of the dice, 2) path dependence—where you land each turn is a function of where you were in the previous turn, and 3) compounding—the more properties and houses you get, the more rent you collect, the more properties and houses you can buy. Together, this means that inevitably, some player gets a few lucky rolls of the dice, their path takes them through some choice properties, the compounding kicks in, and a few hours later, they’re a plutocrat (who attributes their success to skill). Likewise, other players get a few unlucky rolls, go to jail, lose money landing on properties owned by others, and they go into a downward spiral.
The real-world economy has all three of these properties and exhibits the same pulling apart of life paths in ways that have little or nothing to do with talent or graft. One person gets a lucky break with a good job, leading to a better job, social connections, savings, a house, etc. Another person, with the same talent, is unlucky and has an illness, drops out of the job market for a period, accumulates debt, and goes in a downward spiral. And the usual neoliberal answers to inequality—more education and more equality of opportunity—don’t fix the problems. Sending everyone to Monopoly school will not change the outcome of the game. And Monopoly, unlike the real world, already has perfect equality of opportunity—everyone starts in the same place with the same money. Thus, the only way to avoid plutocracy is to change the rules and structures of the game. Which leads to our second point: power.
The work of Daron Acemoglu, Simon Johnson, and James Robinson—recognized by the Nobel Committee in 2024—demonstrated across centuries of historical case studies that the way in which power is distributed and managed in a society profoundly shapes the success or failure of economies. Talent and drive may get you into the game, but power determines the rules of the game. And in an economy where the rules are set by those who already won, the game is not as fair as the meritocratic story suggests.
A CEO does not earn 300 times a worker’s salary because her marginal productivity is 300 times larger—she earns it because she has captured the institutional mechanisms that set her pay. A minimum wage worker does not earn $10 an hour because that is the true value of her contribution—she earns it because she lacks the power to demand more. This is not conjecture. A 2026 NBER study showed that about one-third of the slowdown in wage growth during the neoliberal period can be attributed to rising monopsony power from employer concentration and anti-competitive practices, such as non-competes for low-wage workers. Wages, in short, reflect power.
Market economies thus have an in-built doom loop (first identified by Joseph Schumpeter 80 years ago) where market structures tend to concentrate wealth, and the winners of the game use their power to rig the game further in their favor, which then undermines the social cohesion needed for market economies (and democracies) to succeed. Unconstrained markets do not trend toward meritocracy. They trend toward oligarchy.
This also means that large, prosperous middle classes are not the natural product of market processes left to themselves. They never have been. Every large, durable middle class in history was built deliberately—through unions, labor laws, antitrust laws, progressive taxation, public investment, and the sustained exercise of countervailing power against the natural concentrations that markets produce.
IV. What We Should Do: Four Imperatives of Market Humanism
Scientific revolutions not only change how we describe the world. They change what we can and should do about it. When Pasteur replaced the miasma theory of disease with germ theory, the implication was not merely intellectual—it was practical and moral: wash your hands, build sewers, vaccinate children. Ignorance of germ theory was no longer an excuse. The same logic applies to the Market Humanism revolution described above. If prosperity is created by large-scale cooperation, if markets are socially constructed evolutionary systems, if real value is created by solving human problems, and if inequality is significantly the product of structure and power, then a number of imperatives follow as to how we should design markets, measure prosperity, distribute power, and govern the economy (described in more detail in our online booklet Markets Built For Humans). Four stand out:
Grow the economy by making it fairer. If prosperity is the product of cooperation and problem-solving rather than capital accumulation, then fairness and inclusion are not a drag on it—they are a cause of growth. An economy that excludes large portions of the population loses their ideas, their productivity, and their demand. An economy riddled with mistrust and resentment loses the social fabric on which cooperation depends. The equity versus efficiency tradeoff that paralyzed progressive economics for a generation disappears. Fairness is not in tension with prosperity. It is one of its principal drivers. This means that fair social contracts are a bedrock of economic success. And indeed, countries with fairer social contracts (think of the Nordic countries for example) have stronger records of high standards of living and quality of life, while nations with unfair social contracts and extractive institutions are inevitably poor. The core of the American social contract was, “If I work hard and play by the rules, I’ll have a good life and my children will do even better.” Neoliberalism broke that promise, feeding populism and endangering democracy. Thus, policies that create inclusion, reciprocity, agency, security, investing in capabilities, and ensuring everyone—even the rich—are playing by the same rules, are essential for a growing, prosperous, democratic economy.
Grow the economy by supporting the middle class. A core neoliberal claim is that the economy grows top-down by providing owners of capital with incentives and the key policy to do that is tax cuts for wealthy “job creators” and corporations. Yet when economist and former head of the Council of Economic Advisers Jared Bernstein plotted the top marginal tax rate against every outcome trickle-down theory predicts tax cuts will improve, across nearly seven decades of data, not a single chart showed the predicted relationship. The data are, in Bernstein’s phrase, “uniformly hostile to the theory.” The reality follows from the first revolution’s account of what really drives prosperity: not capital accumulation at the top but the expansion of human cooperative capacity across the whole of society. Broad participation in economic life—in education, labor markets, healthcare, access to capital, democratic governance—is not just morally desirable. It is economically productive. It expands the talent pool contributing to problem-solving. It builds the consumer demand that rewards successful innovation with market returns. It generates the high-trust, high-functioning social environment in which cooperation at scale is possible. An economy that excludes people by race, gender, class, or geography is not a lean, efficient, competitive economy. It is an amputated one. And policies that build the middle class—minimum wages, labor protections, public education, universal healthcare—are not concessions to fairness at the expense of growth. They are investments in the cooperative networks of capacity on which growth depends. A thriving middle class is not the consequence of growth; it is its cause. The economy doesn’t grow from the top down, it grows from the middle out.
Measure what matters—human flourishing. This follows from Market Humanism’s redefinition of value. If prosperity is the accumulation of solutions to human problems, then GDP—which counts addictive products, financial manipulation, and environmental destruction as contributions to output—is not just an imperfect measure, it is a systematically misleading one. And GDP does not account for how that output and income is distributed in society. Instead of measuring output, Market Humanism insists on measuring outcomes: health, security, capability, control over one’s life, the quality of work, and the sustainability of the natural systems on which all prosperity depends. At a recent political event in the UK, a politician was proclaiming the government’s promise to grow GDP and a citizen in the audience chimed “Who is GDP?” We need to be clear what the real goal is—to make people’s lives tangibly better—and measure that.
Make the state a partner in prosperity. The neoliberal consensus conceived of the state as an obstacle to market efficiency. The progressive left, working within the neoliberal frame, conceived of it as a corrector of market failures but otherwise deferring to market logic. Market Humanism, drawing on the work of economists such as Mariana Mazzucato, Dani Rodrik, and Joseph Stiglitz, argues that both are wrong. The state does not merely correct markets that fail; it actively creates the conditions for markets that succeed. As Mazzucato shows, the interstate highway system, the internet, GPS, the human genome project, the basic research underlying every major pharmaceutical innovation, and artificial intelligence—the most transformative investments in American economic history were public, or public-private, in origin. The entrepreneurial state is not an exception to the market economy. It is one of its engines.
And as we’ve discussed, democratic governments have an obligation to shape markets toward problem solving and away from problem creating. Markets were not conjured into being by God or nature. They were human constructions—created by legal systems that define property rights and enforce contracts, by regulatory structures that prevent fraud and anticompetitive behavior, by social norms that sustain trust and reciprocity, by public goods like infrastructure and education that make participation possible. This means there is no such thing as a “free” market in the sense neoliberalism intended—only markets with different rules serving different ends. The question is not whether to shape markets but whose interests they are shaped to serve. Every choice about market design is a political choice. Market Humanism insists we make those choices consciously and democratically rather than pretending we aren’t making them at all.
Democratic governments have an obligation to shape markets toward problem solving and away from problem creating. Markets were not conjured into being by God or nature.
Together, these four imperatives resolve the central impasses that have paralyzed progressive economics for a generation. The equity-efficiency tradeoff dissolves: Equity is a precondition for efficiency, not a trade against it. The growth-versus-distribution debate dissolves: Distribution is a determinant of growth, not merely an allocation of its fruits. The idea that we have to sacrifice human wellbeing to the god of GDP dissolves—the goal is wellbeing. The market-versus-state binary dissolves: Markets and states are co-constitutive, each requiring the other to function.
This is all quite philosophical, so a natural question to ask is what are the policies? Most of the policies that follow from these imperatives are things progressives have long advocated for: a fair, progressive tax system, higher minimum wages, effective anti-trust and anti-monopsony policies, public investments in education, infrastructure, and knowledge, universal healthcare, a functional social safety net, strong environmental laws, smart industrial policies, and so on. And new policies may emerge too, such as schemes for a jobs guarantee, or an AI sovereign wealth fund for workers.
But the point of a paradigm shift isn’t the individual policies, instead the point is that changing the paradigm changes which policies are possible and necessary. It enables us to see policies in a new light. Washing one’s hands was not a new idea, but when Pasteur’s germ theory of disease came along it changed from something doctor’s rarely did to something they had to do. And that one change had immense consequences for human wellbeing. Likewise, most of the policies in Roosevelt’s New Deal were not new ideas, but they weren’t politically possible until the crisis of the Depression and Keynes’s paradigm shift made them a necessity.
Progressives have no shortage of good policy ideas. But they aren’t in a policy fight. They are in a paradigm fight. The policies are not possible until the paradigm changes.
V. Why Market Humanism Helps Democracy Succeed
We’ve discussed how neoliberalism broke the social contract, concentrated power, captured our institutions, and opened the door to authoritarian populism. But neoliberalism and democracy are incompatible at an even more fundamental level.
Neoliberalism is, surely, an economic theory. But more broadly than that, it is also a value system. At its core, it elevated capital efficiency to something approaching a supreme social good—the standard against which all other values were to be measured and, where necessary, discounted. Fairness was acceptable if it did not impede efficiency. Democracy was tolerable if it did not constrain markets. Community, ecology, human dignity—these were fine as personal preferences, but they had no standing to override the fundamental logic of capital allocation. When Peter Thiel wrote in 2009, “I no longer believed that [capitalist] freedom and democracy are compatible,” he was not expressing a fringe view. He was following the paradigm’s value hierarchy to its honest conclusion: If capital efficiency is the highest good, then democracy—which gives majorities the power to override market outcomes—is not just inconvenient but illegitimate. Market Humanism rejects this value hierarchy at its foundation. An economy is not a system for optimizing capital returns. It is a human institution, created by human beings, for human purposes—and it succeeds or fails by human measures.
We mean this in three distinct senses.
The first is about power. Democratic governance requires a rough dispersal of political power across citizens, institutions, and competing interests. Extreme concentrations of economic power—of the kind that fifty years of capital-preference policy has produced—inevitably translates into concentrated political power. Neoliberalism had a specific mechanism for accelerating this concentration of power. By systematically weakening the countervailing institutions—labor unions, regulatory agencies, antitrust enforcement, campaign finance rules—that had historically prevented economic power from fully colonizing political power, it enabled the construction of something approaching oligarchy within the formal shell of democratic institutions. The result is a political economy in which the policy preferences of powerful elites are adopted, while those of median voters are largely ignored (as documented in Martin Gilens and Benjamin Page’s landmark study of American voters and policymaking). When democratic institutions systematically produce outcomes that serve elites rather than majorities, citizens are not wrong to conclude that democracy is not working.
The second incompatibility is philosophical, and it goes deeper. Democracy as a system of government rests on a set of assumptions about human beings: that they are capable of self-governance, that they can reason about public goods and collective interests as well as private ones, that they have obligations to each other as members of a civic community, and that political equality has intrinsic value independent of its consequences for economic efficiency. These assumptions go deeper than mere idealism and address the fundamentals of what democracy means.
Neoliberalism’s theory of human nature—Homo economicus, the rational, self-interested maximizer—is flatly incompatible with these assumptions. If human beings are fundamentally self-interested maximizers, then the idea of citizens deliberating about the common good is a fiction (just as Bentham said). Democratic institutions are either captured by self-interest (Buchanan’s public choice theory) or they are obstacles to efficient market allocation (Friedman’s view). The neoliberal intellectual project, carried to its logical conclusion, has no room for democracy as a substantive political form—only for democracy as a procedural mechanism for aggregating voter preferences. And even that limited role has been undermined by concentrations of economic power.
This philosophical incompatibility has had practical consequences. When greed is good self-interest is mainstreamed as the scientific account of human motivation—taught in business schools, embedded in corporate governance, celebrated in popular culture—it erodes the civic culture on which democracy depends. It teaches citizens that looking after yourself is rational and looking after others is naive, that politics is corrupt because everyone in it is self-interested. It dissolves the trust and shared obligation that are the social capital of democratic governance. Market Humanism’s account of human nature—cooperative, social, morally motivated, institutionally shaped—is what democracy has always assumed about citizens, grounded now in rigorous science rather than political philosophy alone.
The third incompatibility is material. Democratic governance requires citizens who have the security, time, and capacity to participate meaningfully in political life. It requires that people feel their voices matter and that collective decisions affect their lives. Fifty years of wage stagnation, rising economic insecurity, declining mobility, and the sense that the economic rules are rigged against working people have produced a citizenry that is, in many cases, rationally disengaged from democratic participation, or angry enough to reach for whoever is promising the most radical disruption of the system that has failed them.
If neoliberalism undermines democracy in these three structural ways, then what would an economic paradigm look like that actually supports democratic governance?
It would look like Market Humanism.
On the power question: because Market Humanism understands markets as constructed institutions, it has a clear account of why market design matters for democracy. Rules that allow monopolization, regulatory capture, and the removal of labor protections are not “free-market” policies—they are choices to build markets that concentrate power. Antitrust enforcement, labor law, and progressive taxation are design choices about what kind of political economy we want. Market Humanism provides the intellectual foundation for making those choices explicitly and democratically.
On human nature: As cooperative beings, we can and must deliberate on the common good. And we need healthy democratic institutions to enable that. Again, Market Humanism sees such institutions not as an impediment to economic efficiency and growth, but as a necessity for the large-scale cooperation that creates prosperity and progress.
On the material conditions: This is where middle-out economics is most directly relevant to democratic health. A large, economically secure middle class is far more economically productive than the alternative. And importantly, it makes for far more political stability as well. Broadly distributed property ownership and economic opportunity produced the civic engagement, mutual obligation, and moderate politics that made American democracy distinctive. When economic concentration destroys the middle class, it destroys the social base of democratic governance. Rebuilding it is not just good economics. It is civic infrastructure.
Every democracy that has survived and flourished has done so on a foundation of broadly shared prosperity. Every democracy that has collapsed into authoritarianism has done so in conditions of concentrated wealth, hollowed institutions, and citizens who felt the system no longer worked for them. We are not watching a mystery unfold. We are watching a pattern repeat. The only question is whether we act on what we know before the pattern completes.
VI. The People’s Paradigm
It is useful to recall what happened during a previous time a major paradigm changed. For most of recorded history—thousands of generations—people looked up at the sky and saw what seemed obvious: the sun moved, the earth stood still. Entire systems of knowledge, theology, and political authority were built on that foundation. Then, in the early seventeenth century, Galileo Galilei perfected the telescope and turned it on the heavens. What he saw—moons rotating around Jupiter and the phases of Venus—was inconsistent with a universe organized around a stationary earth at the center of the universe. Galileo’s theory actually had evidence you could see with your own eyes.
He brought that evidence to the most powerful institution of his day. He showed the Church’s leaders what the telescope revealed. They looked. They understood what they were seeing. And then they told Galileo to shove his telescope where the sun did not shine. He was tried by the Inquisition and spent the rest of his life under house arrest.
Why? Not because they couldn’t see the evidence. But because if the earth was diminished, so were they. The geocentric paradigm was not just a theory of astronomy. It was a foundation of institutional authority, and the people whose power rested on that foundation were not interested in whether it was true. They were interested in whether it was useful—to them.
This is the situation we are in now. The evidence against the neoliberal paradigm is not ambiguous—we can see it right in front of our eyes. But the paradigm has made a small number of people very wealthy, and they have spent decades building the infrastructure that keeps it alive in policy long after it died in the academy. They will not abandon it. They will call the alternative radical, un-American, dangerous. The rich and powerful will circle the wagons and spend whatever it takes.
They will still lose. Not because they suddenly see the light. Because a paradigm that is empirically wrong cannot indefinitely outrun one that is empirically right—not when ordinary people are the ones living the difference and noticing it. The defenders of the old paradigm will lose because stagnant wages, predatory healthcare, and hollowed-out communities are not abstract to the Americans paying their costs. They will lose because ordinary people pick up the telescope, look through it, and refuse to look away.
That is what Market Humanism is. It is not the property of the academics who built it or the policymakers who will implement it. It belongs to the people whose lives it describes—workers, small business owners, teachers, nurses, scientists, young people told their whole lives that the rules of the neoliberal economy are incontestable facts of nature, and who now are beginning to suspect, rightly, that they were scammed.
This paradigm does not need permission from the people in power to take hold. It needs only to be claimed by the people who have been waiting for it. That is how every paradigm that ever displaced a wrong one has won—not because the powerful changed their minds, but because enough ordinary people stopped accepting a story that no longer matched the world they lived in.
That is what is being asked of us now. The telescope is pointing at the sky. The evidence is clear. The alternative is built. What remains is the work of ordinary people, in extraordinary numbers, refusing to live inside a story that no longer explains the world. The people told for 50 years there is no alternative are about to discover that there is—and that it has been theirs all along.