“The barbarians are inside the gate,” Republican U.S. House Speaker Mike Johnson wrote on X in July in the wake of a slew of primary victories by progressive candidates. By splitting the Democratic Party and inviting the ire of Republicans, these insurgents became a defining force in the U.S. midterms, with candidates such as James Talarico and Annie Andrews winning unlikely Senate seats in Texas and South Carolina, and Peggy Flanagan and Manny Rutinel clinching victories in Minnesota and Colorado, respectively. The formal adoption of a resolution condemning socialism recently in the House of Representatives and U.S. President Donald Trump’s warnings about the “communist menace” as fundamentally un-American on the country’s 250th anniversary signal how seriously the challenge was taken this past summer, even as—amid an ongoing cost-of-living crisis and growing disillusionment with the economic system—the concept of democratic socialism has become more palatable to American voters.

The verdict at the polls this week is a referendum on not just a highly consequential political contest, but also a historic battle of ideas. Having breached the gates, can this new wave of progressives change the architecture of U.S. capitalism?

On the left, politicians associated with democratic socialism, most prominently New York City Mayor Zohran Mamdani, Rep. Alexandria Ocasio-Cortez, and Sen. Bernie Sanders, have revived ideas once consigned to the margins—stronger labor institutions, higher minimum wages, universal healthcare, higher taxes, and a wider social safety net including paid family leave and government-funded preschool and college. At least 11 midterm races were decided on these issues, including the closely watched Senate race in Michigan won by Abdul El-Sayed.

But on the right, Trump, too, by introducing tariffs and returning to industrial policy, has thrown the conventional economic playbook out the window and eschewed the free-trade impulses that traditionally characterized Republican economics.

The two movements are perceived to be almost completely at odds. But what unites them is that they are—fundamentally—reactions to the economic consensus that has been dominant since the Cold War. Former British Prime Minister Margaret Thatcher, who along with former U.S. President Ronald Reagan ushered in capitalism’s era of dominance, described its global embrace with the pithy phrase: “There is no alternative.”

The political scientist Francis Fukuyama subsequently coined a grand formulation to describe the alliance between free market economics and liberal democracy as an elixir of economic and political life: the “end of history.” The economic proposition that underlay it, known as neoclassical economics, proposed to replace the faltering human touch with the “invisible hand.” Built around the belief that markets could coordinate millions of strangers, it promised to convert private interest into public benefit. Without requiring shared values or common purpose, it not only relied on the rationality of the price mechanism to allocate every resource to its best use but also promised to diminish inequality.

The system succeeded in delivering global growth on an unprecedented scale, roughly tripling  the world economy in size, yet the model’s blind spots have become increasingly harder to ignore. The imperfections of the price mechanism that treats carbon as a negative externality and children a positive one, but fails to put a value on either, are becoming more glaring. Collective-action problems, such as the alignment problem presented by artificial intelligence and climate change, demonstrate that individually rational choices can produce collective outcomes that are highly irrational. And inequality has increased, particularly within countries, even as aggregate output has grown.

Most fundamentally, around the world, the human psyche is instinctively rejecting the desiccated account of human nature as solitary and narrowly self-interested, on which economics is premised, and the institutions built around these assumptions that leave people feeling increasingly alienated.

Unsurprisingly, Gallup finds that confidence in U.S. institutions is near an all-time low. In that sense, both the populist right and the progressive left are rebellions against the attempt to shoehorn humans into the role of the relentlessly utility-maximizing Homo Economicus, or Economic Man, at the heart of the narrative of economics.

Flesh-and-blood people may respond to incentives, but they equally value emotion and social connection. Yet capitalism’s scaling logic has relentlessly favored speed and size. The result has been banks that are too big to fail, “Big Tech” that concentrates power and sets off antitrust alarms, and global supply chains whose efficiency can tip rapidly into fragility. The drive for economic growth quickly outpaces the human capacity for trust.

By contrast with the proportions of most of our economic institutions, the famous Dunbar number shows that each human being can sustain roughly 150 stable relationships. At the same time, a growing body of research establishes that cooperation and reciprocity are economically salient patterns of behavior defining our relationships.

Our institutions are simultaneously too small to contend with problems on a global or planetary scale—think of climate change, artificial general intelligence, financial contagion, global poverty, and pandemics—and so are, ethically and functionally, suboptimal on a cognitive level. Yet our nation-states, domestic economies, and corporations are too large to feel affectively meaningful.

So, what if, instead of building ever-larger institutions ever faster, we built “affective institutions” that acknowledge the human capacity for fellow feeling, engage the “moral machinery” or finer feelings, and aggregate them into consensus-based communities?

Elinor Ostrom’s Nobel Prize-winning scholarship illustrates, through examples such as forests, fisheries, and irrigation systems around the world, that community governance structures can rival markets and governments by deploying locally constructed norms to create robust economic communities.

Her findings are often considered quaint because of the constraint on institutional size that they impose, but new breakthroughs in network science provide a possible answer to the problem of scale. Dense communities where reputation and repeated interaction matter can be linked through threads or bridges that connect those communities, allowing information, capital, and successful practices to travel between them. The resulting architecture is a latticework of fishnets connected through fireworks, a system that is cohesive but not centralized, balancing local trust and large-scale reach.

Real-world models of what these “affective institutions” might look like already exist. Mondragon’s cooperatives in the Basque region of Spain combine locally governed, largely autonomous enterprises embedded in a shared financial structure. The group employed more than 71,000 people and recorded more than $12 billion in sales in 2025, serving as a significant proof of concept.

The 27-country-strong European Union, whose membership includes previously warring nations, represents a much larger, more ambitious experiment. Indeed, its structure, based on the principle of subsidiarity—which holds that decisions should remain at national, regional, or local level unless they can be achieved more effectively at the EU level because of their scale or effects—suggests a more useful economic approach than whether government should be bigger or smaller: At what level should each problem be solved, and how should those levels connect?

This new blueprint is of direct relevance to progressives across the United States. After America’s socialist summer, the question is whether the collective effervescence of the movement can congeal into something that can be sustained.

If the “warmth of collectivism” spreading from New York’s experiment with Zohranomics is to spark a revolution that tackles not just the crisis of affordability but also human agency, then the right scaling technology, built around citizens, consensus, and resilience, will be key. The midterms present a historic opportunity to turn widespread voter disaffection away from the self-destructive nihilism of the Make America Great Again movement and toward constructive agency. That will require moving beyond the stale market-versus-state binary and building structures rooted in individuals, embedded in communities, and linked through diffuse but connected networks. The scientific breakthrough has already happened; the politics just needs to catch up.

Few projects could be more faithful to the American promise than putting people—and the relationships between them—back at the center of economic and social life. Progressives now have a chance to stop being cast as the “barbarians at the gate” and storm the political citadel instead. But to do that, they will need to remodel the architecture of U.S. capitalism, by human hand.