Review of Pivotal Decade: How the United States Traded Factories for Finance in the Seventies

I’d first picked up Judith Stein’s book Pivotal Decade: How the United States Traded Factories for Finance in the Seventies for my History of Capitalism course at NYU. I’d only read a few chapters, however, and only recently did I decide to review my notes on the book and then complete the unread sections as I slowly start putting together a reading list/syllabus for the history of American neo-liberalism.

Stein’s book is primarily an institutional history from Nixon, the last New Deal president, to Clinton, the New Democrat. Although she does bring up the policies of Bush the Second and Obama, it is largely just to show how they continued to transform regulations and laws to align with neoliberal policy proscriptions suggested and enacted since Carter. The economic polices chosen by the presidents are contextualized within the rapid changes in the global trade networks in the post-WWII/Cold War world, detailed through the domestic circumstances that lead to such decisions and shows how the effects it had on the country’s working people lead to industrial flight and a declining middle class.

American policy makers feared European nations coming under Soviet influence following the second World War. The numerous Communist parties, which had varied relations to the Soviet Union, were initially quite successful in obtaining support. The State Department quickly realized that in order to prevent this they would need to not only engage in political manipulation in various forms but that they also needed to make sure that they received sufficient loans to rebuild their industries, that the status quo in the Middle East was maintained so that oil deliveries would be regular and tariffs lowered so European industries would have a market for their goods while they rebuilt. The loans were easy, however the nationalist revolutions and OPEC made maintenance of such amiable relations difficult and this often made foreign policy considerations direct economic policy. As a result of OPEC’s the oil-producing nations were able to demand higher prices in the 70s, the “greatest non-violent transfer of human wealth in human history” occurred. 2% of industrialized nations GDP went to these countries. As the U.S. lowered trade restrictions and became a market of last resort, domestic industries soon saw sales going increasingly to the goods produced by the newly capitalized EU and Japanese factories.

The focus on presidential campaigns in the beginning third of the book is somewhat slow reading and seems spurious until later when, implicitly, it’s shown how these events helped limit the political options of organized labor. Though the United States has never had the sort of comprehensive industrial policies in the same way that Germany and Japan did, hence assisting capital formation their due to the decreased competition in the domestic industries, Carter and Reagan furthered the anarchy of the market through deregulation that would lead to numerous boom and bust cycles and lead to the U.S. going from a creditor to a debtor nation that consistently maintained unfavorable trade imbalances.

Trilateralists, whose “professional diagnosis” on how to manage the nation’s economy just so happened to be aligned with the interests of the bourgeoisie, dominated Carter’s administration. Carter’s presidency shows an aversion to macroeconomic policies to deal with inflation, dismantling of social safety nets in favor of voluntariast community assistance and antipathy towards organized labor beings the large-scale political movement away from the traditional Democratic base towards business interests. These combined with a tepid economy due to failed auto and steel trade regulation policies and foreign policy problems, such as the Iran Hostage Crisis, leads to a one-term presidency.

Reagan continues much of what Carter had started. His breakup of the PATCO strike was just one of many public displays of antipathy to American unions. In addition to that his private assertions to business owners couple and underfunding of the NLRB and other worker’s protection organizations meant that a full-on offensive by the business community against the New Deal state could work towards unraveling hard-fought workers protections.

Through Stein’s historiography of Carter and Reagan’s presidencies, the pivotal moments of her Pivotal Decade is on full display. With barriers to foreign investment being dropped left and right capital flees overseas and finance, which once played a marginal role in the economy soon becomes a hegemonic sector. Through these dynamics and the turn towards supply-side economic policies – magical thinking on the part of the bourgeoisie economists, the immiseration, both economically and politically, rapidly accelerates and within two generations leads to the destruction of the affluent society now appealed to by right and left.