When Capitalism Worked for the Rest of Us
How a thriving middle-class economy was gutted, by design, to enrich the few and divide the rest.
The average working-class American knows something is deeply wrong with the economy. Wages have stagnated, good jobs feel harder to find, and the cost of living keeps rising. But ask people what the problem is and how we got here, and you’ll get wildly different answers. Some blame immigrants. Others blame government overreach. Many point to corporations and billionaires. The truth is, the economic system itself was deliberately redesigned to benefit the wealthy at the expense of everyone else.
Post-WWII Capitalism: A System That Worked for Workers
After World War II, the U.S. economy operated under a very different set of rules, ones that prioritized workers, consumers, and long-term economic stability. This period, often called the Golden Age of Capitalism (1945–1970s), saw strong wage growth, a thriving middle class, and broad economic prosperity. While Trump has never been clear when he feels America was great, his push for corporate welfare does not evoke this era.
What made this possible?
1. High Taxes on the Wealthy and Corporations
In the 1950s, the tax system was structured to ensure that wealth flowed back into the economy rather than concentrating at the top.
The top marginal tax rate was over 90% on the highest earners, even under Republican President Dwight Eisenhower.
Corporate tax rates were significantly higher than today, encouraging businesses to reinvest in workers, innovation, and infrastructure rather than funneling wealth to executives and shareholders.
Compare that to now: The top tax rate has been slashed to 37%, and corporations routinely pay little to nothing in taxes while funneling profits to stock buybacks and executive bonuses.
2. Strong Unions and Worker Protections
Union membership peaked at 35% of the workforce in the 1950s–60s, ensuring higher wages, pensions, and job security.
The Wagner Act (1935) and other labor protections made it easier for workers to organize and collectively bargain.
Today, union membership has fallen below 10%, thanks to decades of union-busting and “Right to Work” laws that favor corporate interests over workers.
3. Massive Government Investment in Infrastructure and Education
The GI Bill (1944) helped millions of veterans afford college and buy homes, leading to the rise of a strong middle class.
The Interstate Highway System (1956), led by Eisenhower, was one of the largest government projects in history, creating jobs and boosting commerce.
Public universities were heavily subsidized, allowing many Americans to graduate without crushing debt.
Compare that to today: Student loan debt has exploded, infrastructure is crumbling, and public services are underfunded.
4. Regulated Capitalism (Instead of Corporate Free-for-All)
The financial sector was heavily regulated. Banks were separated from investment firms (Glass-Steagall Act, 1933), preventing the reckless speculation that led to the 1929 crash and, later, the 2008 financial crisis.
Anti-monopoly enforcement was stronger, preventing corporations from consolidating too much power and crushing competition.
Corporations were expected to reinvest profits into workers and communities, rather than just maximizing short-term stock prices.
5. CEO Pay Was Reasonable
In 1965, the CEO-to-worker pay ratio was about 20:1, meaning executives made about 20 times what their average worker earned.
Today, that ratio is 400+:1, with some CEOs making thousands of times what their workers earn.
What Changed? The Rise of Rigged Capitalism
The shift away from this system began in the 1970s and accelerated in the 1980s with Reaganomics, deregulation, and the rise of neoliberal economics. Key policy shifts included:
Massive tax cuts for the wealthy (Reagan slashed the top rate from 70% to 28%)
Deregulation (banks and corporations gained more power, leading to financial crises and monopolization)
Union busting (Reagan’s firing of striking air traffic controllers in 1981 sent a clear message that corporate power was favored over workers’ rights)
The rise of "shareholder capitalism" (corporate priorities shifted from workers and consumers to maximizing stock prices for investors)
By the 1990s and 2000s, both major political parties had embraced this corporate-friendly economic model, leading to the hollowing out of the middle class, skyrocketing inequality, and wage stagnation we see today.
The Takeaway: It’s Not About Left vs. Right, it’s About the System
Many working-class Americans instinctively know the system is broken, but they’re told to blame the wrong things, immigrants, government handouts, or the opposing political party. But the real divide isn’t between left and right, it’s between the wealthy elite and everyone else.
The good news? History proves that capitalism can work differently. The question now is whether we have the will to demand an economic system that serves the many, not just the few.
Originally published February 17, 2025 on Oregon’s Bay Area Facebook page.