The transformations of American capitalism are crucial to study, especially since Europe always ends up adopting the same approaches within a few years. Since the 1960s, American capitalism has undergone three major metamorphoses: redistributive capitalism in the 1960s and 1970s, neoliberal capitalism in the 1980s and 1990s and, since the early 2000s, monopoly capitalism.
The first stage of American capitalism, therefore, occurred in the 1960s and 1970s. These years were marked at first by a minimal shift in income distribution in favor of corporations, and then by a relatively high level of public spending and taxation. The tax burden averaged 26% of gross domestic product, while it dropped to 24.5% in the following period, and the highest marginal income tax rate never fell below 70%.
Third, the 1960s and 1970s were characterized by relatively low income inequality. At the end of the 1970s, the Gini coefficient for income inequality was 0.33, compared with 0.37 at the end of 1980, 0.41 at the end of the 1990s and 0.42 today; the higher the Gini coefficient, the greater the inequality. And fourth, the 1960s and 1970s experienced relatively low levels of wealth inequality. At the end of the 1970s, the richest 1% of individuals held 22% of the national wealth in the US and, during this period, a mostly redistributive and relatively egalitarian form of capitalism flourished.
The second stage for American capitalism began with Ronald Reagan's rise to power in 1981. He deregulated many sectors (such as air transport and telecommunications), implemented strict competition control rules (a tough antitrust policy) and cut taxes − especially the top household income tax rate (which fell from 70% to 50% in 1985, and then to 28% in 1988). This neoliberal capitalist policy led to a significant distortion in the distribution of income to the detriment of employees and contributed to a sharp rise in income and wealth inequality. In return, there was heightened economic dynamism and entrepreneurial drive.
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