Last week was amazing for Joe Biden. The Red Wave fizzled. The Democrats kept the Senate. Even if the House slips from the Democrats’ grasp, as it is expected to, Biden will be credited with engineering the strongest midterm showing by an incumbent president’s party since 2002, and the most impressive such performance by a sitting Democratic president since JFK in 1962. Women’s anger at the supreme court’s Dobbs decision hammered the Republicans in key states. Many of Trump’s highest-flying, election-denying candidates fell to earth, damaging the ex-president’s aura of invincibility. Fights and recriminations have now broken out everywhere in Republican ranks.

And there’s more from last week to bring a smile to Biden’s face: inflation moderated, the Dow rocketed skyward, and Ukrainians pushed the Russians out of Kherson, a big win not just for Ukraine but for Biden’s European foreign policy. And, oh yes, in America, young people – the country’s future – came out in relatively large numbers and, in critical contests, broke for the Democrats in a big way.

And yet, what did this past week of exceptional political success yield for Biden and Democrats? Their majority in the Senate is still razor-thin. If they lose the House, their already narrow path to passing legislation will shrink further. House Republicans are likely to use a new House majority to flood media with an investigation of Hunter Biden and other vulnerable Democratic party figures – payback for the January 6 hearings. Even the most impressively conceived legislative proposals coming from the White House may be greeted with House Republican intransigence.

Nevertheless, looking ahead to 2024, there are grounds for optimism, not just that Democrats can win but that they can begin to build bigger and more enduring majorities. Most importantly, three major legislative achievements of the Biden administration to date are likely to have a greater impact on the 2024 election than they did in 2022. The most important of these is the curiously titled Inflation Reduction Act. That bill has not gotten the credit it deserves, in part because of its silly name and in part because it is much smaller than the $5tn Build Back Bill from which it is descended.

Watching that original bill get whittled down and carved up across 2021 and 2022 was not a pretty sight. Yet the final version of the legislation contains truly important initiatives in multiple spheres, nowhere more so than the nearly $400bn appropriated for investments in green technology and for tax breaks and subsidies to businesses and homeowners to convert to clean energy. The bill constitutes the biggest single investment that the federal government has made in a green energy future.

Of nearly equal importance in Biden’s first two years were two other bills: the trillion-dollar Infrastructure Investment and Jobs Act, to improve the nation’s crumbling physical infrastructure; and the Chips Act, to re-shore, in a massive way, the research, design and production of semi-conductor computer chips, those tiny, ubiquitous and indispensable components that drive every computer and virtually all of America’s (and the world’s) machines and phones.

In these three initiatives, the Democrats have laid down a foundation for a program of political economy that diverges significantly from its neoliberal predecessor. This older vision of political economy, long embraced both by Republicans and Democrats, insisted on freeing markets and capital from government oversight and direction. The Biden program, by contrast, is grounded in the belief that a strong government is necessary to steer – and, in some cases, compel – markets and corporations into serving the public good. It crystallized from the extensive discussions between the Joe Biden and Bernie Sanders wings of the Democratic party across 2020 and 2021. It represents a profound departure from the last 30 of governing practice.

The industrial policies being promoted by the Biden administration won’t lead to nationalization; they focus instead on incentivizing the private sector to pursue broadly agreed upon economic aims. Two of the three aforementioned bills – the Chips Act and the Infrastructure Act – passed the Senate with significant Republican support. Quietly, Biden has delivered on his promise to open a new pathway to bipartisanship. There will be opportunities to broaden this bipartisanship, especially in regard to breaking up or regulating the monopoly power of the giant social media companies. Strong support for doing so exists on both sides of the Senate aisle. One key question is whether this incipient senatorial cross-party collaboration can soften the country’s paralyzing political polarization and persuade a few House Republicans to support upper chamber initiatives. Another is whether the Democrats can use their new program of political economy to sell a broad swath of the electorate – including constituencies currently lying beyond Democratic redoubts – on the party’s vision of the good life.

Judging by the midterms’ voting patterns alone, one might be tempted to say no. But there are reasons to think otherwise. For one, economic circumstances will be different in 2024 than they are now. Inflation will probably have moderated and thus may have faded as a political flashpoint. The recession that the Fed seems so determined to trigger will have occurred, and a recovery will be under way. Additionally, by 2024, corporate America (as a result of the Inflation Reduction Act) will be more deeply invested in green technology. The conversion to post-fossil fuel economy will have correspondingly accelerated, as America’s robust private sector glimpses the profits to be made in the clean energy revolution. Moreover, by 2024, the first new infrastructural projects should be nearing completion, yielding visible improvements in America’s creaking system of bridges, roads, and transportation hubs and networks. All this investment and building should generate jobs and, perhaps, the promise of a better life for many long denied it. A somnolent US labor movement is reawakening, a development that, if it continues, will help to ensure that future jobs carry with them decent wages. Perhaps word will spread that Democrats are capable of managing America’s dynamic but unruly economy in the public interest.

Is this too rosy a picture? Perhaps. Biden will never be a “great communicator”. Trump’s shrinking but still ardent band of zealots will continue to threaten American democracy. The red state-blue state divide endures. House Republicans together with the US supreme court may obstruct further Democratic efforts at reform. And we don’t know what a desperate Putin might inflict on the world if he truly believed that his reign over Russia was about to end.

If we take the long view, however, and concede that a progressive political order requires a long march, then we might one day look back on this midterm – and on Biden’s first two years – and discern in them the first steps toward a better future.

• Gary Gerstle is Mellon professor of American history emeritus at Cambridge and a Guardian US columnist. His most recent book is The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era (2022)