Democracy’s Crisis: On the Political Contradictions of Financialized Capitalism

Samuel L. and Elizabeth Jodidi Lecture

Delivered by Nancy Fraser 

Image of the room where Nancy Fraser gave Jodidi Lecture

The following essay is an excerpt of Nancy Fraser’s Jodidi Lecture, delivered at the Weatherhead Center for International Affairs on November 5, 2018.

We are currently facing a crisis of democracy. That much is beyond dispute. What is less well understood, however, is that this crisis is not freestanding, and its sources do not lie exclusively in the political realm. Contra bien-pensant commonsense, it cannot be solved by restoring civility, cultivating bipartisanship, opposing tribalism, or defending truth-oriented, fact-based discourse. Nor, contra recent democratic theory, can our political crisis be resolved by reforming the political realm—not by strengthening “the democratic ethos,” reactivating “the constituent power,” unleashing the force of “agonism” or fostering “democratic iterations.”1 All these proposals fall prey to an error I call “politicism.” By analogy with economism, politicist thinking overlooks the causal force of extra-political society. Treating the political order as self-determining, it fails to problematize the larger societal matrix that generates its deformations.

In fact, democracy’s present crisis is firmly anchored in a social matrix. It represents one strand of a broader, more far-reaching crisis, which also encompasses other strands—ecological, economic, and social. Inextricably entwined with these others, it cannot be understood in isolation from them. Neither freestanding nor merely sectoral, today’s democratic ills form the specifically political strand of a general crisis that is engulfing our social order in its entirety. Their underlying bases lie in the sinews of that social order—in the latter’s institutional structures and constitutive dynamics. Bound up with processes that transcend the political, democratic crisis can only be grasped by a critical perspective on the social totality

Image of Nancy Fraser at podium

What exactly is this social totality? Many astute observers identify it with neoliberalism—and not without reason. It is true, as Colin Crouch maintains, that democratic governments are now outgunned, if not wholly captured, by oligopolistic corporations with a global reach, lately liberated from public control.2 It is also true, as Wolfgang Streeck contends, that democracy’s decline in the Global North coincides with a coordinated tax revolt of corporate capital and the installation of global financial markets as the new sovereigns that elected governments must obey.3 Nor can one dispute Wendy Brown’s claim that democratic power is being hollowed out from within by neoliberal political rationalities that valorize efficiency and choice and by modes of subjectivation that enjoin “self-responsibilization” and maximization of one’s “human capital.”4 Finally, Stephen Gill is right to insist that democratic action is being preempted by a “new constitutionalism” that locks in neoliberal macro-economic policy transnationally, through treaties such as NAFTA, which enshrine free-trade strictures as political trumps and foreclose robust social and environmental legislation in the public interest.5 Whether taken individually or read together, these accounts convey the entirely plausible idea that what threatens our democracy is neoliberalism.

Nevertheless, the problem runs deeper. Neoliberalism is, after all, a form of capitalism, and today’s democratic crisis is by no means capitalism’s first. Nor is it likely, if capitalism perdures, to be the last. On the contrary, every major phase of capitalist development has given rise to, and been transformed by, political turmoil. Mercantile capitalism was periodically roiled and eventually destroyed by a slew of peripheral slave revolts and metropolitan democratic revolutions. Its laisser-faire successor racked up a solid century and a half of political turbulence, including multiple socialist revolutions and fascist putsches, two World Wars and countless anti-colonial uprisings, before giving way in the inter- and postwar era to state-managed capitalism. The latter regime was itself no stranger to political crisis, having weathered a massive wave of anti-colonial rebellions, a global New Left uprising, a Cold War and a nuclear arms race before succumbing to neoliberal subversion, which ushered in the current regime of globalizing, financialized capitalism. 

This history casts the present democratic crisis in a larger light. Neoliberalism’s political travails, however acute, represent the latest chapter of a longer story, which concerns the political vicissitudes of capitalism as such. Not just neoliberalism, but capitalism, is prone to political crisis and inimical to democracy.

That, in any case, is the thesis I shall argue here. Treating democracy’s present-day crisis as one strand of the general crisis of the social totality, I shall construe the object of that crisis as capitalist society in its present form. But I shall also argue the stronger thesis that every form of capitalism harbors a deep-seated political contradiction, which inclines it to political crisis. Like capitalism’s other contradictions—economic, ecological, social, this one is inscribed in its DNA. Far from representing an anomaly, then, the democratic crisis we experience today is the form this contradiction assumes in capitalism’s present phase, which I shall call financialized capitalism

Image of Michele Lamont

1. The political contradiction of capitalism “as such”

My thesis rests on enlarged understandings of capitalism and capitalist crisis. Many leftwing thinkers, including most Marxists, understand capitalism narrowly, as an economic system simpliciter. Focused on contradictions internal to the economy, such as the falling rate of profit, they equate capitalist crisis with economic system dysfunctions, such as depressions, bankruptcy chains and market crashes. The effect is to preclude a full accounting of capitalism’s crisis tendencies, omitting its non-economic contradictions and forms of crisis. What are excluded, above all, are crises grounded in inter-realm contradictions—contradictions that arise when capitalism’s economic imperatives collide with the reproduction imperatives of the non-economic realms whose health is essential to ongoing accumulation, not to mention to human well-being. 

An example is what I have called the “social reproductive” contradiction of capitalist society. Marxists have rightly located the secret of accumulation in the “hidden abode” of commodity production, where capital exploits wage labor. But they have not always fully appreciated that this process rests on the even more hidden abode of unwaged carework, often performed by women, which forms and replenishes the human subjects who constitute “labor.” Deeply dependent on such social-reproductive activities, capital nonetheless accords them no (monetized) value, treats them as free and infinitely available, and assumes no responsibility for sustaining them. Left to itself, therefore, and given its relentless drive to limitless accumulation, it is always in danger of destabilizing the very processes of social reproduction on which it depends.6 

Another example of inter-realm contradiction is ecological. On the one hand, the accumulation of capital relies on nature—both as a “tap,” which supplies material and energic inputs to commodity production, and as a “sink” for absorbing the latter’s waste. On the other hand, capital disavows the ecological costs it generates, effectively assuming that nature can replenish itself autonomously and without end. In this case, too, capitalism’s economy tends to eat its own tail, destabilizing the very natural conditions on which it relies.7 In both cases, an inter-realm contradiction grounds a proclivity to a type of capitalist crisis that transcends the economic: social reproductive crisis, in one case, and ecological crisis, in the other. 

These considerations suggest an enlarged understanding of capitalism—no longer a “mere” economy, but an institutionalized social order. Above and beyond its economic subsystem, capitalist society also encompasses the non-economic realms that support its economy—including social reproduction and nonhuman nature. As such, it harbors a plurality of crisis tendencies—not just those stemming from intra-economic contradictions, but also those based in inter-realm contradictions—between economy and society, on the one hand, and between economy and nature, on the other. Not just Marxian contradictions, then, but also Polanyian contradictions, are built into capitalist society. 

Image of the audience at the Jodidi Lecture

This enlarged understanding affords a way of understanding democracy’s present travails that escapes the trap of politicism. No longer seen as freestanding, these appear as a further strand of capitalist crisis, grounded in yet another inter-realm contradiction: a contradiction between the imperatives of capital accumulation and the maintenance of the public powers on which accumulation also relies. This political contradiction of  d can be stated in a nutshell: legitimate, efficacious public power is a condition of possibility for sustained capital accumulation; yet capitalism’s drive to endless accumulation tends over time to destabilize the very public powers on which it depends. On this view, today’s democratic crisis is a strand of capitalist crisis whose broader contours supply the key to its resolution. 

Let us pursue this hypothesis by noting, first, that capital relies on public powers to establish and enforce its constitutive norms. Accumulation is inconceivable, after all, in the absence of a legal framework underpinning private enterprise and market exchange. It depends crucially on public powers to guarantee property rights, enforce contracts, and adjudicate disputes; to suppress rebellions, maintain order, and manage dissent; to sustain the monetary regimes that constitute capital’s lifeblood; to undertake efforts to forestall or manage crises; and to codify and enforce both official status hierarchies, such as those that distinguish citizens from “aliens,” and also unofficial ones, such as those that distinguish free exploitable “workers,” who are entitled to sell their labor power, from dependent expropriable “others,” whose assets and persons can simply be seized.8

Historically, the public powers in question have mostly been lodged in territorial states, including those that operated as colonial powers. It was the legal systems of such states that established the contours of seemingly depoliticized arenas within which private actors could pursue their “economic” interests, free from “political” interference. Likewise, it was territorial states that mobilized “legitimate force” to put down resistance to the expropriations through which capitalist property relations were originated and sustained. Then, too, it was national states that conferred subjective rights upon some and denied them to others. It was such states, finally, that nationalized and underwrote money. Having thus constituted the capitalist economy, these political powers subsequently took steps to foster capital’s capacities to accumulate profits and face down challenges. They built and maintained infrastructure, compensated for “market failures,” steered economic development, bolstered social reproduction, mitigated economic crises and managed the associated political fall-out. 

But that is not all. A capitalist economy also has political conditions of possibility at the geopolitical level. What is at issue here is the organization of the broader space in which territorial states are embedded. This is a space in which capital would seem to move quite easily, given its inherent expansionist thrust and its deep-seated drive to siphon value from peripheral regions to its core. But its ability to operate across borders, to expand through international trade, and to profit from the predation of subjugated peoples—all this depends not only on national-imperial military might but also on transnational political arrangements: on international law, brokered agreements among the Great Powers and supranational regimes that partially pacify (in a capital-friendly way) a realm that is sometimes imagined as a state of nature. Throughout its history, capitalism’s economy has depended on the military and organizational capacities of a succession of global hegemons, which have sought to foster accumulation on a progressively expanding scale within the framework of a multi-state political system.9 

At both levels, then, the state-territorial and the geopolitical, the capitalist economy is deeply indebted to political powers external to it. These “non-economic” powers are indispensable to all the major streams of accumulation: to the exploitation of free labor and the production and exchange of commodities; to the expropriation of racialized subject peoples and the siphoning of value from periphery to core; to the organization of finance, space, and knowledge—hence, to the accrual of interest and rent. In no way marginal adjuncts, political forces (like social reproduction and nonhuman nature) are constitutive elements of capitalist society. Essential to its functioning, public power is part and parcel of the institutionalized social order that is capitalism.

Image of Nancy Fraser hugging Cornel West

But the maintenance of political power stands in a tense relation with the imperative of capital accumulation. The reason lies in capitalism’s distinctive institutional topography, which separates “the economic” from the “political.” In this respect, capitalist societies differ from earlier forms, in which those instances were effectively fused—as, for example, in feudal society, where control over labor, land and military force was vested in the single institution of lordship and vassalage. In capitalist society, by contrast, economic power and political power are split apart; each is assigned its own sphere, endowed with its own distinctive medium and modus operandi.10 The power to organize production is privatized and devolved to capital, which is supposed to deploy only the “natural,” “non-political” sanctions of hunger and need. The task of governing “non-economic” orders, including those that supply the external conditions for accumulation, falls to the public power, which alone may utilize the “political” media of law and “legitimate” violence. In capitalism, therefore, the economic is non-political, and the political is non-economic. 

Definitive of what capitalism is, this separation severely limits the scope of the political. Devolving vast aspects of social life to the rule of “the market” (in reality, to large corporations), it declares them off-limits to democratic decision-making, collective action, and public control. Its very structure, therefore, deprives us of the ability to decide collectively exactly what and how much we want to produce, on what energic basis and through what kinds of social relations. It deprives us, too, of the capacity to determine how we want to use the social surplus we collectively produce; how we want to relate to nature and to future generations; how we want to organize the work of social reproduction and its relation to that of production. Capitalism, in sum, is fundamentally anti-democratic. Even in the best-case scenario, democracy in a capitalist society must perforce be limited and weak.

But capitalist society is typically not at its best, and whatever democracy it manages to accommodate must also be shaky and insecure. The trouble is that capital, by its very nature, tries to have it both ways. On the one hand, it freeloads off of public power, availing itself of the legal regimes, repressive forces, infrastructures and regulatory agencies that are indispensable to accumulation. At the same time, the thirst for profit periodically tempts some fractions of the capitalist class to rebel against public power, to badmouth it as inferior to markets and to scheme to weaken it. In such cases, when short-term interests trump long-term survival, capital is like a tiger that eats its own tail. It threatens to destroy the very political conditions of its own possibility.

The nub of the problem is encapsulated in four words that begin with “D.” First, capitalist societies divide their economies from their organized political powers. Second, it constitutes their economies as dependent on political powers in order to run. But third, because capital recognizes only monetized forms of value, it free rides on public goods and disavows their replacement costs. Geared to endless accumulation, finally, capitalism’s economy is primed periodically to destabilize the very political powers that it itself needs. 

Together, these four D-words spell out a political contradiction lodged deep in the institutional structure of capitalist society. Like the economic contradiction(s) that Marxists have stressed, this one, too, grounds a crisis tendency. In this case, however, the tension is not located “inside” the economy but rather at the border that simultaneously separates and connects economy and polity in capitalist society. Inherent in capitalism as such, this inter-realm contradiction inclines every form of capitalist society to political crisis.

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Nancy Fraser is the Henry A. & Louise Loeb Professor of Philosophy and Politics at the New School for Social Research. She delivered the Samuel L. and Elizabeth Jodidi Lecture at the Weatherhead Center for International Affairs on November 5, 2018. Watch the video of the full lecture on the WCFIA Facebook page. Her essay will be one of several published as part of a book titled What’s Wrong with Democracy? A Debate between Klaus Dörre, Nancy Fraser, Stephan Lessenich and Hartmut RosaI (Suhrkamp Press), edited by Hanna Ketterer and Karina Becker, forthcoming in 2019.

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1  I have selected these expressions to represent a range of different perspectives in democratic theory, those respectively of William E. Connolly, Andreas Kalyvas, Chantal Mouffe and Seyla Benhabib. But I could have chosen others as well. 

2 Colin Crouch, The Strange Non-Death of Neoliberalism (Cambridge UK: Polity, 2011).

3 Wolfgang Streeck, Buying Time: The Delayed Crisis of Democratic Capitalism (London and Brooklyn: Verso, 2014).

4 Wendy Brown, “American Nightmare: Neoliberalism, Neoconservatism, and De-Democratization,” Political Theory 34,6 (2006): 690–714, and Wendy Brown, Undoing the Demos: Neoliberalism’s Stealth Revolution (Brooklyn: Zone Books, 2015).

Stephen Gill, “New Constitutionalism, Democratisation and Global Political Economy,” Pacifica Review 10,1 (1998) 23–38. For a more recent statement, see Stephen Gill, “Market Civilization, New Constitutionalism and World Order,” in New Constitutionalism and World Order, ed. Stephen Gill and A. Claire Cutler (Cambridge UK: Cambridge University Press, 2015), pp. 29–44.

6 Nancy Fraser, “Contradictions of Capital and Care,” New Left Review 100 (2016): 99–117.

7 Nancy Fraser and Rahel Jaeggi, Capitalism: A Conversation in Critical Theory, ed. Brian Milstein (Polity Press, 2018), pp. 35–37, 90–101.

8 For an account of this last distinction as corresponding roughly but unmistakably to the global color line, see, Nancy Fraser, “Is Capitalism Necessarily Racist?” [2018]. [2018 Presidential Address, APA Eastern Division], Proceedings and Addresses of the American Philosophical Association, vol. 892 (2018).

9 Giovanni Arrighi, The Long Twentieth Century: Money, Power and the Origins of Our Time (London and New York: Verso, 1994).

10 Ellen Meiksins Wood, “The Separation of the Economic and the Political in Capitalism,” New Left Review I/127 (1981): 66-95.


1. Nancy Fraser delivering the Samuel L. and Elizabeth Jodidi Lecture at the Weatherhead Center for International Affairs on November 5, 2018. Credit: Martha Stewart

2. Nancy Fraser at the podium. Credit: Martha Stewart

3. Weatherhead Center Director Michèle Lamont, Robert I. Goldman Professor of European Studies and Professor of Sociology and of African and African American Studies introduces Nancy Fraser. Credit: Martha Stewart

4. Amongst the standing-room-only audience in the Belfer Case Study Room were (left to right) Faculty Associate Susan Pharr, Edwin O. Reischauer Professor of Japanese Politics; Faculty Associate Frank Dobbin, professor of sociology; and George Hoguet, AB 1969, MBA 1973, KSG 2002. Credit: Martha Stewart

5. Nancy Fraser and Cornell West, Professor of the Practice of Public Philosophy, Harvard Divinity School, greet each other before the start of the lecture. Credit: Martha Stewart