Tom Palley writes that the US "growth model" of recent decades >contrasts with the earlier business cycles that rested not on borrowing but on wage growth tied to productivity growth and full employment. Spending, combined with full employment, encouraged investment, which increased productivity and fueled higher wages.<
yes, but the autocentric "growth model" (Social Structure of Accumulation, Mode of Regulation, stage of capitalism, etc.) of the US was clearly at its end in the 1970s. It had to be replaced by _something_. More importantly, the "Golden Age" growth paradigm (yet more jargon) did not drop from the sky. It was proposed and implemented by noble and wise politicians and/or economists. It is the result of class struggles in the 1930s and 1940s. These are the sources of the New Deal institutions that strengthened labor. That is, the struggles of the 1930s and 1940s allowed organized labor and its allies to extend some of its power into the 1950s and 1960s. This was helped for a while by some other movements (such as the Civil Rights movement) which pressed for progressive change, even though they came into conflict with organized labor now and then. Most importantly, given the weak state of organized labor (compared to W. Europe) and the steadily weakening clout of that movement starting in the 1950s, we have to pay attention to the political-economic environment which allowed such a "growth model." The US was "on top of the world" after World War II, having manufacturing, financial, and military hegemony within the capitalist sphere. The US government not only involved a "welfare state" but also a "warfare state." The persistence of "full employment" in the late 1960s/early 1970s (to the extent that it did) was not due to the good intentions of those in power. Rather, it had a lot to do with the Vietnam war and domestic unrest (urban riots, etc.) The authorities wanted to stop the growing inflation of the late 1960s (by ending full employment) but couldn't do so because (1) they didn't want to stop the war; (2) they thought it was politically infeasible to cut civilian programs or raise taxes significantly; and (3) the Federal Reserve had its hands tied, because it had to keep the US$ exchange-rate fixed. That last point brings up another point about the "paradigm shift" between the 1960s and the 1980s: with the end of the Bretton Woods fixed exchange-rate system, the locus of power shifted from fiscal policy to monetary policy, from a part of the government that's vaguely responsive to the democratic will to one that's very responsive to the needs and wishes of Wall Street and the banks. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
