The shift that began around 1979 was not just a change in economic policies—it was a regime change in capitalism. Both forms of capitalism, regulated and neoliberal, had a relatively coherent institutional structure, supported by a distinctive world outlook and associated with a particular form of the capital–labour relation. Both regimes promoted profit-making and capital accumulation. The term ‘regulated capitalism’ indicates the major role of non-market institutions—state administration, unions, corporate bureaucracies—in managing economic activity. The label ‘neoliberal capitalism’ denotes the far greater role of market forces and market relations in the regulation of economic life.

the long-discredited Say’s Law that supply creates its own demand—that is, weak total demand is never a constraint on economic growth

An accumulation regime fosters capital accumulation through three channels: it enables a high profit rate, fosters the growth of total demand and creates conditions of stability and predictability for future-oriented investment. A structural crisis begins when the institutions of the regime no longer promote accumulation. The evidence shows that neoliberal capitalism still promotes a high rate of profit, but that alone is not sufficient. The regime no longer offers the kind of stability that promotes accumulation and, most importantly, its process of demand stimulation through asset bubbles and debt-financed consumer spending broke down with the financial crisis and Great Recession of 2008–09. The institutions of neoliberal capitalism have remained in place, and inequality has continued to rise since 2007 (Figure 14). But the other features of neoliberal capitalism were foreclosed. After the financial crisis, it was no longer possible to inflate asset bubbles large enough to support a consumption-led economic expansion at anything like the previous rates. New regulations reduced banks’ ability to engage in the risky activities undertaken before 2008, while households have reduced their level of debt relative to disposable income (Figure 10, above). Neoliberal capitalism now suffers from a problem of demand that has no obvious solution.