During his last decade of teaching, McCarthy focused on theoretical issues in the history of racist and imperialist thought, and particularly on their interweaving in theories of progress and development.
McCarthy's contribution to this tradition of thought comprises, first, further development of its philosophical and methodological underpinnings, particularly on issues surrounding the putative universality of modern Western ideas, practices, and institutions; second, interpretation and elaboration of Habermas's ideas that brought them into closer contact with Anglo-American traditions of philosophy and social theory, especially American Pragmatism; and third, application of the critical-theoretical perspective so developed to issues of racism and imperialism, which had been relatively undertheorized in the work of the first two generations.
These contributions, together with his general editorship of the series "Studies in Contemporary German Social Thought" (MIT Press, c. 100 volumes), and his graduate training of some two dozen members of the fourth generation of critical theorists, are the grounds upon which McCarthy is generally held to be a founding member of the American branch of critical, social and political theory.
In the first decade of the present millennium, in a series of articles and papers that culminated in a book on Race, Empire, and the Idea of Human Development (Cambridge UP, 2009), McCarthy turned his attention to the ideologies of race and empire that generally accompanied the rise of the West, and to the particular versions thereof that were integral to shaping American culture and society.
He concludes that despite the depredations and dangers of ideologies of progress, we have no alternative in a rapidly globalizing world but to rethink our conceptions of development so as to accommodate the multiple modernities now taking shape, without however, renouncing the aspiration to unity-in-difference for which there is no sensible substitute.