This chapter begins the diagnosis of the ‘crisis of critique’ of contemporary Frankfurt School thought. It does so by engaging in a historical reconstruction of how the prevailing Habermasian framework of Critical Theory came into being. Against the conventional interpretation of the history of the Frankfurt School as an incremental learning process, it shows the present impasse of Critical Theory to be rooted in a series of long running aporias and contradictions. In particular, it argues that the origins of the present crisis can be traced back to the failure to correctly diagnose and overcome the previous impasse of Critical Theory, that of the first generation or early Frankfurt School. By re-interpreting the works of Theodor Adorno, Max Horkheimer, Herbert Marcuse and Friedrich Pollock, the chapter argues that the main unresolved tension at the heart of the tradition lies in Critical Theory’s abandonment of the critique of political economy and substantive misapprehension of the character of twentieth-century global capitalism.