·
After the collapse of the capitalist economy in 1929, the
Roosevelt administration intervened to try to restore the system to health
o
.Though he was often accused of being a socialist, FDR tried
to save capitalism, and was actually a fiscal conservative who continually
sought to have a balanced budget and pay-as-you-go programs. Whenever it seemed
that the private economy was pulling out of the doldrums, he attempted to scale
back government spending on public programs that reduced unemployment.
o
In addition, FDR
financed many of his programs with regressive taxation. For example, social
security funds, based on taxes on wages rather than income, initially paid for
work relief. There was a lot of rhetoric about the redistribution of wealth,
but New Deal social policy was based on attempts to restore business
confidence. In deference to this and fiscal concerns, FDR scaled back many
successful public works programs.
·
It was only with WWII that the Great Depression ended.
o
Massive amounts of government (deficit-spending) on war
production brought full-employment.
·
But what would happen after the war?
o
Labor Movement supported deficit spending on behalf of human
and social needs, much like European labor movements (which succeeded to a
greater degree)
o
Labor during the New Deal had been the major organizational
base for a politics directed toward the original vision of Keynes: government
spending that was directed toward the needs of citizens and toward full
employment. Behind this idea was the notion that if government spending was
needed to sustain capitalism, democratic governments should ensure the ability
of people to survive and benefit from the system.
o
FDR issued economic
bill of rights in 1944 because of their demands. Most people never expected
continued expansion of military, so how would system be sustained? Many people
thought through
Economic Bill of Rights: The right of a useful
job, right to earn enough to provide adequate food and clothing and recreation,
right of every farmer to raise and sell his products at a return which will
give him and his family a decent living; right of every businessman, large and
small, to trade in an atmosphere of freedom from unfair competition and
domination by monopolies at home or abroad; right of adequate medical care and the opportunity to achieve and enjoy
good health; right to adequate protection from the economic fears of old age,
sickness, accident and unemployment, right to a good education.
--Popular legislation, Murray-Kilgore bill, promised to
fulfill some of these rights, and the labor movement seemed powerful enough to
mobilize people on behalf of them, if they could succeed in organizing the
south and breaking the power of conservative Democrats that controlled politics
in the south
o
But U.S. business planned worldwide expansion of markets in
the postwar era, end to domestic-based economy only, and sought to contain
labor-based drive for full-employment and expansion of universal entitlements
like health care.
·
The Cold War helped to resolve the “problem” of government
spending to sustain the economy, a problem that seemed to harbor a new politics
for the postwar. But dreams of an economy organized to provide security was
replaced by an economy organized to sustain U.S. global power
·
The Cold War helped to contain the labor movement because of
the domestic anticommunism that split the labor movement and caused it to be a
junior partner in the Democratic Party.
o
Anticommunism is
also a factor in the collapse of the attempt to organize the south, which
retains a political stronghold for the entire nation. Southern politicians
control a one-party system that results in a great degree of power in both
Democratic and Republican administrations, and the power of deal-making shapes
all of the possibilities of welfare state legislation.
·
Liberals reduced their ambitions for an expanded welfare
state, and instead became committed to the concept of “growth with
equity”—growing the economy by expanding capitalist markets domestically and
abroad. Government would help the capitalist economy grow and through that
growth more social programs could be added.
o
Liberals were committed to global capitalist expansion and
to gradual expansion of benefits that
both aided people in need and helped to stabilize the American economic and
social system.
o
Liberals by 1950
didn’t raise much objection to the military spending and indeed, many openly
embraced it. While they continued to argue for the expansion of the public
sphere, they accepted high military spending without much debate. Those who did
question it were easily labeled as “soft on communism.” Liberals identified
with the goal of stopping communism abroad. While they were dismayed by the
ways that domestic anticommunism undermined their commitment to the expansion
of the welfare state, they continued to acquiesce to a large military budget
which diminished the possibilities for that expansion. As more and more of the
GNP and the budget was committed to military, this eroded the possibility of
domestic spending that might address capitalist inequities.
·
A significant portion of the economy is directed toward
military spending rather than social spending with the dawn of the Cold War.
The Cold War bridged the interests of conservatives (who for example, might
refused to spend for full-employment bill, but would spend on military
preparedness) with liberals who committed themselves to worldwide fight against
communism. The combination is powerful.
·
Whereas in 1940 less than 16% of the federal budget was for
defense, by 1950 military spending takes up 50% of the budget, and by 1969, it
had grown to 56%. U.S. News and
World Report acknowledged this when in 1950 they wrote: “Government
planners figure that they have found the magic formula for almost endless good
times…the Cold War is an automatic pump primer” (Pump priming refers to
government spending when the economy seems to be in doldrums)
·
Cold War supposedly over, but affects us today in ways that
go unnoticed but are profound
·
has aided the militarization of U.S. and other economies across the globe, expensive
military madness that has been brilliantly depicted in classics like the movie Dr. Strangelove (1964); national security
assumed permanent and paramount importance in American life, so that much of
the nation’s treasury was devoted to it.
·
U.S. armed forces spread over much of the globe, and U.S.
science and industry were profoundly reoriented. War and national security
became consuming anxieties and provided the memories, models and metaphors that
shaped broad areas of national life.
·
Traditional view: U.S. thrust into
contention with Soviet Union, to counter Soviet aggression--Soviets determined
to conquer the world, bring Soviet-style socialism by force to the entire
planet
·
most historians understand that it was much more complicated
than this, and some have concluded that the U.S. bears much of the
responsibility for escalating the arms race and the “hot wars” in the third
world that took place during the cold war
George Kennan and the “secrets” of the National Security
State:
·
Containment of Soviet Unionfirst announced by George
Kennan in 1947, who argued that the
policy would force the Soviet Union to collapse.
·
Kennan famous for this, but in 1948 he also articulated,
privately, another aspect of U.S. foreign policy as a member of the State
Department: (from “top secret” Policy Planning Study 23):
“We have about 50% of the
world’s wealth, but only 6.3% of its population...In this situation, we cannot
fail to be the object of envy and resentment. Our real task in the coming period
is to devise a pattern of relationships which will permit us to maintain this
position of disparity...To do so, we will have to dispense with all
sentimentality and day-dreaming; and our attention will have to be concentrated
everywhere on our immediate national objectives...We should cease to talk about
vague and ...unreal objectives such as human rights, the raising of living
standards, and democratization. The day is not far off when we are going to
have to deal in straight power concepts. The less we are then hampered by
idealistic slogans, the better.”
need to recognize
that agenda of U.S. was bound up with an ideological commitment to
expanding capitalism as well as
democracy across the globe, but also a continuation of U.S. involvement in
imperialist policies begun earlier in the century. In the case of the third
world, very little commitment to democracy is recognizable, as the U.S. helped
to overthrow democratic regimes and replace them with dictatorships that served
U.S. interests
Need to acknowledge
that the U.S. trade had expansionist goals in postwar, agenda regarding trade
favorable to U.S. and to capitalism.
·
Leading Defense Dept. personnel were former heads of
large corporations or banking interests, came into government during
W.W.II.
·
During war, came to accept government role in sustaining
capitalist system, saw the benefits of government. Feared collapse of
capitalism if government was not used to support it.
·
These businessmen dominated foreign policy after the war.
Felt that economic growth couldn’t take place without US government role
dominant at home and abroad.
·
Needed to expand
trade to sell surplus products abroad and get raw materials for great
industrial capacity of US built during war. By end of W.W.II US dependent on
imports for all important minerals except coal and oil.
·
These businessmen
feared the collapse of colonial empires built in the previous century by
European powers.
·
Urged an active government abroad with the aim of bolstering
trade and warding off the socialist and communist threat to the former colonial
empires as well as in Europe.
·
This was the context for the establishment of 1944 Bretton Woods meeting, where
business and government put together the workings of the postwar economy.
·
BW established the dollar as the basis of international
currency, established what would become the World Bank and International
Monetary Fund
·
--all structured on the basis of one dollar, one vote--since
US economy not devastated, had control of money, Assumed US business would dominate
in postwar.
·
WB and IMF would offer money on terms that would necessitate
development on US terms--not self-sufficient economies, but economies based on
trading with US.
·
Raw materials to
fuel US industries, and later establishment of industry on US terms too.
·
The unwritten goal of the WB and IMF--one that has been
enforced with a vengeance--has been to integrate countries into the capitalist
world economy
·
--Policies of WB and IMF are designed to facilitate the
repayment of debt: in the end this has resulted in the steady transfer of
wealth out of the Third World countries to the bankers and wealthy of
industrial countries--continuation of imperialist policies.
·
Role of U.S. government is to facilitate world trade with US
financial and corporate dominance secure.
·
It was not the
“invisible hand of the marketplace” that produced U.S. global dominance, but
government activities on behalf of business.
·
In the postwar, a new global order came into being.
U.S. was the dominant world power in the capitalist world, and acted as a kind
of “global policeman” for capitalism:
·
Bretton Woods agreement US controlled the value of money
across the globe. The dollar was pegged to gold. The International Monetary Fund and the World Bank began to
develop the third world on capitalist terms. Economic and military commitments
protected US business interest abroad. The US was able to dictate terms to
other countries that ensured it has access to raw materials and markets.
·
US corporate and bankers and government officials envisioned
its role as director of rebuilding Europe, in ways that helped expand and
sustain capitalist markets.
·
Postwar economic growth was built on low-cost energy, from a
steady supply of cheap oil from the third world, where US oil companies
interests were protected by US government foreign policy and even CIA secret
overthrow of governments.
·
U.S. corporations were able to pass along higher wage costs
to consumers because in many cases they were able to set their prices without
concern about competition.
·
US businesses did not vigorously contest government
intervention in the economy, and recognized some degree of social
responsibility that went with that intervention.
·
Major US corporations accepted an unprecedented degree of
unionization as long as unions didn’t interfere with management’s right to
direct their operations and make all production and investment decisions such
as plant location decisions, automation of operations, etc.
·
Overall workers benefited from increased productivity,
though corporations profits rose more than workers’ wages
·
The period 1945-1970 in world history had been notable
for corporations’ acceptance of social
responsibility and benefits, at least for a significant percentage of people.
However, when coupled with the non-universal nature of distribution of fruits
of the system, a significant portion of the American population did not share
in these benefits (see Harrington)
·
American corporations tied their fortunes to the ascending
military star--lobbied furiously for bigger Pentagon contracts--staffed their
hierarchies w/ unprecedented #s of military officers
·
The Defense Dept became practically a state within the
state.
· In 1968, the Pentagon alone contracted for
more than $44 billion of goods and services.
Gen.
Dynamics--leading defense contractor 1957-1960--186 retired officers in
Pentagon
·
reinforces economic dominance by large corporations in the
entire economy
·
largest companies get 2/3 of post-1951 military
spending--Defense-related industries and the scientists and engineers they
employed entered into a long term relationship with he federal government.;
·
70 of 91 defense
secys and undersecys, secys of 3 military services, directors of CIA from
1940-1960 from ranks of big business and finance
·
1958-military purchased 100% of nation's ordnance
production,94% of aircraft, 61% of ships and boats, 21% electronic equipment, 13% of primary metals; 1954 profits as % of net worth: 139% for
General Dynamics 93% Boeing ; 81% Douglas, etc.
Example of system: Boeing-
·
After the war, Fortune magazine explained "the
aircraft industry today cannot satisfactorily exist in a pure, uncompetitive,
unsubsidized "free enterprise" economy" and that the
"government is its only possible savior". The Pentagon system
sustained and expanded the industry along with steel and metals, etc. that went
into building the aircraft;
·
First Secretary of the Air Force, Stuart Symington, was the
industry's representative in Washington. He regularly demanded enough
procurement funds in the military budget to, as he put it, "meet the
requirements of the aircraft industry."; Symington, January 1948:
"the word to talk was not 'subsidy'; the word to talk was
'security.".
·
these developments called the
Military Industrial Complex--phrase coined by
Eisenhower--January 1961, before leaving office—warned of the dangers to
democracy of these relationships. U.S. had always reduced military capacities
after war, now a permanent military capacity and structure might lead U.S. into
future wars
·
Military spending and a disproportionate share of domestic
spending is directed toward the south and the west. The south and the west in
turn become a point of relocation for unionized northern and Midwestern
corporations, who begin to migrate to the non-union south and west starting in
the 1940s. This further erodes the power of unions in the Democratic Party.
·
While there continues to be expansion of spending on
domestic programs, the nature of most of
these programs can be described as “publicly-funded, privately
controlled”. For example, there is major spending on hospitals, but the
government allows private control of much of the decision-making. This does not
result necessarily in better health care for all citizens. In fact, in many
poor areas, there is less access to health care than before the government
spending because the hospitals used the money to build new hospitals in the
suburbs.
·
Postwar order results in a business-government
partnership—federal money underwrites costs of much research and growth. System
demands consumers, and the 33% of unionized workers creates a new middle class
able to buy back the products of the system. Domestically, government subsidizes
mobility and suburbanization for the white middle class