Blog post

Can Capitalism Survive?

Molly Osberg23 October 2012

Given all the framing of other countries as "opportunities" on both sides of last night's presidential debate, it may be difficult to remember a time before the rhetoric of global capitalism dictated our country's political language. But as late as 1975, a Time magazine cover asked: "Can Capitalism Survive?"

This week, Aaron Leonard interviews Leo Panitch and Sam Gindin on the subject of their recently released book The Making of Global Capitalism, in which they recount these moments of weakness and explain how the U.S.pushed past them to create the global economy as we  know it.  In the first installation of this three-part series, the two authors go back to World War II to trace the construction of the U.S. empire, moving from the context of a post-war nationalistic interest in free enterprise to the systematic push for an open global market, a market friendliest to multinational corporations and big banks.

Gindin and Panitch, drawing on years of research, propose an alternative periodization for the construction of global capitalism, focusing on the awareness within the American state that in order to progress and strengthen the U.S economy it would be necessary to push countries to accept capitalism on a global scale. Take, for example, the American response to a cultural disenchantment with the capitalist dream in the '70s:

AL: The period in the wake of the U.S. defeat in Vietnam was a troubled and critical one. The depths of the crisis were such that, as you note, there was a Time magazine cover of 1975, asking, "Can capitalism survive?" For all the complex mix of things going on, your conclusion is that it was indicative of "neither decline nor moderation but restructuring." What do you mean by that?

LP: I do think the context for that was not so much Vietnam. It was rather these increased expropriations from nationalist regimes. In 1974 the UN General Assembly overwhelmingly voted for a charter of economic rights of states, which included the provision that they could expropriate foreign capital, even without compensation. To some extent, Wall Street discounted this as rhetoric because they knew that while Saudis had taken over the operations of foreign oil companies they paid them for this, and they were investing their surpluses on Wall Street. But the wording of the UN economic rights charter still did sound very shocking. And this rather militant sounding economic nationalism abroad came was all the more frightening in that it coincided with a lot of labour militancy at home.

The inflation of the 1970s stemmed from the inability to quell that militancy in the advanced capitalist countries. To top it all off, the breakdown of Bretton Woods, itself a product of such inflationary tendencies, had created consequent uncertainty about the impact on trade, just as Japan and Germany had become major exporters to the U.S., and as the United States was by this point starting to import a lot of capital from these countries as well. In other words, there were a whole number of things coming together at the time Time magazine asked whether capitalism could survive. Things looked quite frightening -- but if the U.S. initially responded shock and horror, it soon took more practical steps that Sam calls restructuring.

SG: The restructuring was mainly about coping with the profit squeeze of the 1970s that was produced by many of the above factors. Mainstream economists, describing the period from the 1980s through the 1990s refer to it as a period of moderation. Basically after '83, apart from the brief recession at the turn of the 1990s was the longest period of uninterrupted U.S. growth in the postwar era. Yet at the time both the left and the right saw this period as one of U.S. decline, arguing first that Japan and then that Europe were going to replace the U.S. as the dominant capitalist force in the face of was a 'hollowing out' of American economic strength. We've argued that it wasn't hollowing out, it was restructuring.

In fact American capital came through that period very successfully. That doesn't mean working people did well. It was obviously a period of great inequality and insecurity, with stagnating wages, etc. But for the corporations, the period included a major restructuring of workplaces, new technologies, changes in the relative importance of specific industries, and dramatic shifts between manufacturing and services, consumer services like retail, and business services like engineering, consulting, accountancy, legal become very important at home and internationally. There were also regional shifts in economic activity (Detroit vs. the American South) and major geographic shifts such as the integration of Eastern Europe and then China. This has to be seen as a major period in which American capital, having defeated labour, was left with more autonomy to do what it felt needed to be done to revive capital and restructured, establishing the material base for the revival of the American empire.

Visit Rabble to read parts one, two, and three of the interview in full.