How Identity Politics Rewired Capitalism: from class struggle to cultural identity

When the Berlin Wall crumbled, so too did the ideological foundation of the global left. For decades, socialism and communism offered an utopian alternative to the cold efficiency of capitalism, positioning themselves as the champions of the working class, economic equality, and social justice. But after the Soviet collapse, the left faced a stark disillusionment. Their grand visions of egalitarian utopia lay in ruins, and the working class—once their heroic subject—seemed uninterested in revolutions, preferring the comfort of consumerism and the relative stability of capitalist democracies.

Leftist intellectuals and movements, disillusioned but not defeated, began a subtle transformation. Instead of retreating, they adjusted their approach, adopting a new weapon in their quest to reshape society: identity politics. In an era where the language of class struggle had lost its allure, identity—race, gender, sexuality—became the new battleground. And, ironically, capitalism, the system the left had long despised, proved perfectly adaptable to this new front.

A Shift from Class to Identity

The brilliance—or perhaps the stealth—of this shift was that it exploited a vulnerability within capitalism itself. Capitalism, while effective at encouraging innovation and economic growth, has always struggled with the social question of economic inequality. The struggle between capital and labour, rich and poor, remained unresolved. Workers might have been able to buy more material goods, but wealth inequality persisted, and the left’s traditional tool of class struggle seemed to have lost its appeal in the face of a burgeoning middle class.

So, the left pivoted. They moved away from traditional economic critique and instead targeted the cultural dimensions of society. Class, once the primary axis of conflict, was replaced by identity categories: race, gender, sexual orientation, and other forms of social identity became the new focal points. Economic systems were no longer attacked for their inability to distribute wealth evenly; they were attacked for their perceived failure to address social and cultural inequalities.

Identity Politics as a Stealth Infiltration

In a cynical twist of fate, capitalism—originally built on individual freedom, choice, and merit—was unprepared to counter this new critique. The left had discovered a form of stealth infiltration: identity politics. Unlike class struggle, which demanded systemic change and redistribution of wealth (threatening to capitalism), identity politics was something capitalism could accommodate. Why? Because identity politics did not fundamentally challenge the accumulation of capital; it merely demanded that marginalised identities be recognised, celebrated, and integrated into the existing system.

Capitalism, a system that thrives on commodification and market expansion, was quick to absorb this new language of identity. Corporations, always seeking to align themselves with the cultural zeitgeist, began promoting diversity and inclusion not out of newfound moral conviction but because it was profitable. Products and brands could be marketed with a new veneer of virtue, appealing to the socially conscious consumer. Representation became the new currency, and capitalism was more than happy to mint it.

Denaturing Capitalism’s Core: Freedom and Individualism

In this process, capitalism’s original framework—grounded in individualism, freedom, and meritocracy—was subtly but profoundly denatured. Where once the system was built on the promise of personal autonomy and individual success, it now began to prioritise group identity. The left’s infiltration through identity politics replaced the focus on the individual with a focus on group dynamics and victimhood narratives.

Freedom, once understood as the freedom to compete, innovate, and succeed, was redefined as the freedom to assert one’s identity. Economic freedom was sidelined in favour of cultural recognition. And meritocracy—once capitalism’s great selling point—was labelled as a mask for systemic oppression. The focus shifted from rewarding individual effort to ensuring group representation, regardless of merit. The rules of the game were rewritten.

Capitalism’s Willing Embrace of Identity Politics

But here’s the irony: capitalism, while resistant to the left’s old economic critiques, was perfectly equipped to absorb this new emphasis on identity. Unlike class struggle, which threatened the very foundation of capitalist structures, identity politics posed no such existential threat. The corporate world could adjust its branding, update its HR policies, and launch inclusive ad campaigns without losing a dime. In fact, in many cases, it made money. Woke capitalism was born.

Brands plastered rainbow flags over their logos for Pride Month, launched diversity initiatives, and marketed their products using diverse models and influencers. They sponsored social justice movements not because they genuinely believed in the causes, but because it was good business. Diversity became a commodity, and capitalism—always opportunistic—found ways to monetise this new cultural currency.

The Economic Class Remains Unaddressed

While identity politics was embraced, the real economic issues—those that socialism and communism had once sought to address—remained unresolved. Income inequality continued to widen, housing costs skyrocketed, and the gig economy exploited workers in new ways. But these struggles no longer took centre stage in leftist discourse. Instead, the left became consumed with issues of representation and social identity, leaving economic justice as a footnote.

Capitalism could accommodate identity politics because it did not require the redistribution of wealth. It required only a redistribution of attention. Corporations didn’t need to pay workers more or address economic disparities; they just needed to hire more diverse employees, sponsor a few progressive causes, and ensure that their advertising reflected the “right” social values. The system, in essence, remained the same, but with a new coat of paint.

Conclusion: A Faustian Bargain

Ultimately, the left’s adoption of identity politics and infiltration into capitalism represents a Faustian bargain. By shifting focus from economic justice to social identity, the left rebranded itself and remained culturally relevant. But in doing so, it has also allowed capitalism to remain unchallenged in its economic foundations. The promise of socialism, with its radical economic critique, has been replaced by a form of progressive capitalism that celebrates diversity while leaving wealth inequality intact.

So, we find ourselves in a strange new world where leftist rhetoric and capitalist profit motives coexist in curious harmony. Once the enemy of the left, capitalism has not only survived but thrived, adopting the language of its former critics without ever addressing the deeper, structural inequalities that persist.