Chapter 2 provides the necessary historical and theoretical scaffolding for the historical examination of the relationships between capitalism, the gay and lesbian movement and changing understandings of gay identity in the United States since World War II. It discusses the emergence of gay identity in the early 20thcentury, how that identity and the hetero/homo binary attached to it emerged and what understandings of sexual nonnormativity were excluded from that definition. Building off of earlier (and now ignored) analyses, the chapter introduces and fleshes out “the political economy of capitalism approach” to understanding the changing nature of the gay and lesbian movement and the collective identity promoted by the movement. It also provides a theoretical rationale for reinterpreting existing approaches and the concepts they use: political opportunities, economic resources, social networks and collective identities into this approach. Capitalist dynamics create shifting patterns of group interests, resources and political opportunities that affect many different aspects of social movements: what movements emerge in the first place, the class fractions represented in and left out of those movements, the resources used by those factions to mobilize, the elite vulnerabilities exploited by those movements and the scripts those movements use to mobilize.