Despite the many virtues of Barack Obama’s presidency, the masses have not shared equally in economic growth during it. Income and wealth inequality are still near all-time highs, and the trend of galloping monopolization of business — greased by lobbying from amoral Democratic Party elites like Rahm Emanuel — has barely slowed.

This wasn’t always the case. In the 1936 election, in which he ran on a firmly anti-corporate platform, Franklin Roosevelt famously said, "Government by organized money is just as dangerous as government by organized mob." What happened to that tradition?

That is the subject of a brilliant essay by Matthew Stoller, who lays out how the Watergate Babies — the huge Democratic majority in Congress elected on the heels of Nixon’s downfall — laid the groundwork for a tremendous concentration of economic power, in the process discarding decades of hard-won political wisdom.

The setting was the mid-1970s, and society was consumed with Nixon’s corruption, the abject failure of the Vietnam War, and economic upheaval in the form of a combination of high inflation and high unemployment.

The first and greatest error was on the part of the fading New Dealers, who struggled to adapt to the changing politics of civil rights, and generally supported the Vietnam War. The New Deal coalition infamously included Southern Democrats, and thus had to make its peace with American apartheid. With the rise of the civil rights movement, this became politically untenable, but many New Dealers failed to pitch their politics to the new reality. As Stoller notes, the post-Watergate majority quickly removed the famous finance skeptic Wright Patman from the chair of the House Committee on Banking and Currency, in part because he was a Texas Democrat who had supported segregation.

Meanwhile, the grotesque, pointless casualties of Vietnam — started by a Democratic president and supported by a great number of Democratic congressmen and political elites — inspired enraged resistance from young liberals and further split the Democratic coalition. At the 1968 Democratic National Convention, where pro-war Hubert Humphrey was nominated for president, left-wing antiwar protesters were mercilessly beaten by riot police deployed by Democratic Mayor Richard Daley. (Only Robert Kennedy made a serious attempt at a national fusion of traditional New Deal economics with antiwar politics and an earnest outreach to newly-enfranchised black voters — but that effort died with him.)

However, the rising generation of liberals committed a terrible error of their own. They came of age during the tremendous postwar boom, and basic tenets of New Deal policy — in particular, the necessity of government action to prevent business concentration and dangerous financial speculation — seemed quaint and out-of-date. The perception that such policies were associated with racism and war discredited them further. Hence, libertarian-inflected arguments that deregulated markets were the way out of the troubles of the 1970s were endorsed by liberal icons like Ted Kennedy. President Jimmy Carter deregulated finance, banking, and trucking, and appointed a labor-smashing neoliberal to the head of the Federal Reserve.

There is a great historical cycle here, which has occurred several times in American history. Neoliberal worship of markets is rooted in the ideology of classic economists like David Ricardo and Adam Smith; it is highly prized by business and conservatives for its political implications. Yet such a system delivers most of its benefits to the very rich and causes frequent financial panics — the worst of which, the Great Depression, dealt a smashing blow to the credibility of classical ideology.

Starting in the Gilded Age, liberals like Louis Brandeis painstakingly built up a counter-ideology emphasizing the necessity of government action to prevent market concentration and crises on Wall Street (as well provide for social welfare with benefit programs). The Depression gave them a golden opportunity to cement it firmly into place in the Democratic Party.

But the tremendous prosperity created by New Deal institutions in the postwar generation allowed Democratic Party elites to forget how that prosperity came about in the first place. What’s more, the chaos of the ’70s was a golden opportunity for "neoclassical" economists to push a repackaged version of the pre-Depression ideology. Once the protections against monopoly power had been ripped up, and Wall Street was let off the chain, the result was galloping inequality and a series of increasingly severe economic crises, culminating in the Great Recession of 2007-09. Today’s Democratic Party is far more egalitarian with respect to race and gender identity than it once was, but presiding over an economic retread of the Gilded Age.

Encouragingly, there is some sign that even Hillary Clinton — a product of the neoliberal tradition if there ever was one — is grasping the danger of concentrated corporate power and careening finance to her own political position. If she were looking to ensure reelection in 2020, an all-out attack on corporate concentration and the bloated size of Wall Street would be quite a good place to start.