The Middle Class Is COLLAPSING. Fascism Could Be Next
March 27, 2026·1 hr 20 min·5 clips
Clara Mattei reveals that 12 people own more wealth than half the global population combined.
Clara Mattei, economics professor and author of Escape from Capitalism, joins the Downstream podcast to discuss the relationship between liberal economics and the rise of fascism. Her central argument is that capitalism is not a spontaneous or natural system but one maintained through continuous state intervention, primarily through what she calls the capital order: the political coercion that keeps workers dependent on wage labor.
Mattei presents Oxfam data showing that 12 individuals own more wealth than the bottom 4 billion people globally, while half the world lives on $6.85 per day and 2 billion people are food insecure. She argues this inequality is not an accident but a structural feature of capitalism, where the tendency toward societal polarization that Marx described is now being realized after a brief 1950s-1970s period when rising productivity allowed both wages and profits to grow.
The interview explores three pillars of austerity as Mattei defines them: cuts to social expenditures, regressive taxation that disproportionately burdens workers while capital gains and inheritance go largely untaxed, and labor deregulation including interest rate hikes that produce unemployment. She argues that even supposed social democratic havens like Sweden and Iceland are experiencing these same pressures, having invited her to speak because her book was translated into Swedish.
A key section covers why welfare reform threatens capitalism. Mattei cites the Johnson-era Great Society programs, where local agencies promoting community participation in resource distribution led to political empowerment and the urban uprisings of the 1960s. She references economist Michael Kalecki's argument that full employment is technically possible but politically impossible under capitalism, because workers with bargaining power would question why employers control the production process.
The post-COVID period serves as a modern example: unemployment dropped to 3.4%, a third of the U.S. workforce quit voluntarily, unions won battles, and strikes surged for the first time since the 1970s. Mattei frames the subsequent interest rate hikes as a reassertion of labor discipline through manufactured unemployment.
Mattei's PhD research on post-World War I Italy and Britain forms the historical backbone. After the war, workers who had experienced state-managed production and formed workers' councils demanded self-governance. In Italy, Mussolini brought mainstream economists into government to implement austerity as economic repression. In Britain, the Bank of England and Treasury achieved the same outcome through fiscal and monetary policy. Both approaches crushed the same threat: workers demanding too much.
Host Aaron Bastani draws parallels to British austerity since 2010 under George Osborne: VAT increases, corporation tax cuts, 40% reductions in local authority spending. He argues this created the political crisis culminating in Brexit and warns of further fragmentation. He also notes that German industrial production is declining while military budgets surge, echoing patterns German Social Democrats warned about before World War I.
Bastani offers a counterpoint from his experience in Denmark, where social democracy's 35-hour weeks, stable housing, and union wages created the surplus time necessary for a flourishing radical left, the opposite of the common assumption that social democracy pacifies radicalism. Mattei agrees, arguing that austerity forecloses rather than opens possibilities for the left, which is why it serves capitalism so effectively.
The conversation touches on state military spending as demand stimulation without the political risk of social services, the extraction of $65 billion annually from Africa over 26 years, Trump's planned $500 billion Medicaid cut alongside a push toward $1 trillion in defense spending by 2027, and the personal story of Mattei's great-uncle who was tortured and died in prison fighting the Nazi occupation of Italy.
