Harry Targ
Economic
History
The United States burst forward as the superpower
after World War II. At that time, 1945, the United States had ¾ of the world’s
industrial capacity and 2/3 of its invested capital. The problem for the United
States in 1945 was not the dynamism of its economy coming out of the war but
whether it could be sustained. What each presidential administration did from
the 1940s until the election of Ronald Reagan in 1980 was to support a
political and economic system that coupled promotion of super-sized corporations
and banks, the globalization of capital, and the provision of a modest safety
net for workers and wages that allowed the increase of mass consumption of the
goods and services produced by the 200 corporations that accounted for 1/3 of
all that was produced on the face of the earth.
But beginning in the late 1960s, however, the
“golden age” of the US economy evaporated. Corporations sought to reverse
declining profit rates. Public services were seen as too expensive. Worker
rights were challenging profit rates. And as a result of the threat to more and
more profits for big corporations and banks, the economy began its shift from
investment in manufacturing (with attendant higher paying jobs) to financial
speculation. The whole world shifted from prosperity for some to a system of
accumulating debt, challenging the rights of workers to form unions, and
reducing low cost access to education, health care, and transportation. The US
economy, which had led to an income distribution in which there was a broadening
middle sector from the 1940s to the 1960s, began its steady transformation to a
two-tiered economy based on a tiny percentage of the super-rich and a
broadening marginalization of almost everyone else. And during every period
from the Golden Age until now inequalities in wealth and income between whites
and people of color and men and women continued or grew.
Politics
In the United States, the long tradition of economic
populism and socialist movements, inspired by post-civil war reconstruction,
came to fruition in the 1930s when millions of heretofore manufacturing workers
successfully organized an industrial labor movement (the Congress of Industrial
Organizations or CIO) that demanded a New Deal for them and for the millions
more who were unemployed, living on the streets, and traveling across the
country to desperately find work in the agricultural fields of California. The
New Deal, for all its limitations, brought jobs, Social Security, worker
rights, support for the arts, and a codification of peoples’ culture. Perhaps
most importantly a vision emerged across the land that the nation was (or
should be) a community. This vision was based on the fundamental proposition
that human development only occurs when people live, work, and respect each
other. Unions were about workers but the idea of union was also about human
community. And the struggles for workers’ rights in many locales were
paralleled by the movement for racial justice. And after the World War the
vision of economic and social justice was greatly expanded and inspired by the
Southern civil rights movement. Dr. Martin Luther King became the metaphorical
embodiment of the fusion of economic and racial justice and the pursuit of
peace.
But, in reaction to a half century of peoples’
struggles for justice, a counter-offensive was launched by market
fundamentalists to reverse the gains achieved by workers and people of color.
The Goldwater candidacy for president in 1964 was not an aberration but rather
a launch pad for a movement to reverse the modestly progressive economic and
social policies adopted by the Roosevelt, Kennedy, Johnson, and even the Nixon
administration. The old Social Darwinian vision of each against all in the
social and economic world, the magic of the marketplace, the belief that
government is not the solution but rather it is the problem became common
currency in political discourse. The hero of this historic force was Ronald
Reagan, elected president in 1980. Many liberals in both parties, with ties to
banks and corporations, articulated a softer message, paid homage to the
problems of the needy, and were more sympathetic to some women’s, African
American, and gay/lesbian rights. But they also supported the dramatic reversal
of economic policy embedded in the so-called “Reagan Revolution.”
The radical right supporters of Reagan built their
campaigns around so-called social issues. And the centrists of both the
Republican and Democratic Party pursued an economic transformation designed to
preserve and enhance profits while sometimes opposing the most egregious
recommendations of the radical right. While centrists and the radical right
differed on many issues they shared a common commitment to reverse the economic
gains workers, people of color, and women had achieved in the prior years.
From the late 1970s until today, both political
parties pursued “neoliberal” international and domestic policies. Neoliberal
policies included; down-sizing government
(except for the military), privatizing public institutions, deregulating
economic activity, opposing workers’ rights to form trade unions, revising tax
laws to reward the rich and shift the burden of public spending to the
economically marginalized, and developing policies that enticed greater
investment and financial speculation at the expense of ordinary citizens. These
policies have been supported by international financial institutions, banks,
and governments all across the globe. In the United States every presidential
administration from Reagan through Obama has backed these policies. Both
parties, most politicians, leading advocacy groups, corporate and financial
cabals such as those organized by the Koch Brothers, and the handful of media
conglomerates who control at least half of what we read, watch, and listen to,
all have worked to fully institutionalize the neoliberal agenda at home as well
as overseas. And importantly, the neoliberal agenda has been most enforced at
the level of state government.
Part
2 will examine the political economy of neoliberalism in one state, Indiana.
