POTTED POLITICAL ECONOMY.

Robert Freeman draws the wrong lessons from the loss of the postwar industrial monopoly the U.S. enjoyed.

At the end of World War II, the U.S. bestrode the world like a colossus. Its only industrial rival, Europe, had blown its brains out 30 years before, in World War I. And it did it again, in World War II, with Japan joining in. In the history of the world, there has never been such asymmetry in power between one country and all the rest.

It was U.S. capital that rebuilt its allies’ economies, through the Marshall Plan in Europe, and through military spending in Asia. U.S. factories boomed, to service not only its own vast and ravenous market, but those of all the rest of the world. All the equipment (and much of the food) to rebuild the industrial world came from America.

It was truly the Golden Age. There was enough wealth so that capital, labor, and government could all drink deeply from the seemingly inexhaustible spring of capitalism.

But by the 1960s something began to go wrong. Our allies’ economies had by then been rebuilt, and with the newest equipment and technologies. Theirs were more efficient than ours. The Volkswagens and Toyotas that would later become a tsunami began to trickle in. Same with the Sonys and Panasonics in consumer electronics. Shipbuilding, steel, machine tools, industrial electronics and other major industries began to migrate out of the U.S. and into the hands of foreign companies.

At the same time, the then-99% began to place serious claims on national resources, and to insist on being a player in major national decisions.

It's interesting how the political economy of the late 1950s and early 1960s changes to suit observers' prejudices.  In the article, evidently that part of the 99% who had union contracts with Big Steel and the Detroit car-makers or a Machinists shop or the cartelized railroads and trucking companies were simultaneously drinking from the "inexhaustible spring of capitalism" and beginning "to place serious claims on national resources".  The notion that oligopolies might be dissipating some of their rents to secure a more productive work force at the expense of consumers is an alien notion, except when it's not.

It's bad history, however, to invert cause and effect in describing the rise of the counterculture.

[President Lyndon] Johnson launched the Great Society program with the goal of eradicating poverty. The women’s rights movement, the civil rights movement, the anti-Vietnam War movement, and the environmental movement all proved dramatically effective in redirecting national priorities and resources away from those favored by the wealthy elites and toward those of the rest of the people.

In other words, at exactly the time the profits of corporations were under assault by growing international competition, the people began to claim a greater share of society’s fruits. It couldn’t square. There was not enough output from the faltering economy to both satisfy people’s expectations of middle class affluence and economic security and capital’s demands for higher and higher returns. Something had to give.

Equally, the elites who had run the country for decades were indignant at the presumption of a mangy mob of un-bathed, pot-smoking, long-haired, bra-less, draft card-burning, tree-hugging hooligans who didn’t even have a job but wanted a seat at the table of national decision-making (sound familiar?). They were certainly never again going to allow such a scabrous cabal to decide that the country should not fight a major war (Vietnam) that was so enriching to the elites who had lied the country into it.

So the elites decided to take “their” country back.

It's true that the various so-called liberation movements (taking a page from the National Liberation Front, perhaps?) drew parallels between their situation and the situation of blacks under Jim Crow or de facto segregation.  Some of these causes drew some of their inspiration from the Vietnam protests, as it became evident that the national economy could not produce larger amounts of guns and of butter, and at the same time allowing The Best and The Brightest to allocate human and material capital in The Best Way.  (There's a reason the military draft is called Selective Service, and it, like Model Cities and the National Endowments, is a way for people who see their calling as ordering others around to justify it in the name of Progress.)

As far as capital demanding higher returns, wouldn't it be easier for that capital to simply go on strike, or build factories in China, than attempt to sell the voting public the bill of goods that Mr Freeman goes on to suggest it did?