I'd say that this was _part_ of the reason. One other reason was that such advanced countries as Japan and Germany still had skilled labor forces, despite the destruction visited upon them. Another was that the US hegemony stabilized the international political situation, avoiding both the rivalry that helped produce World Wars I and II and the Depression but also revolutions (in France, Italy). Given the Cold War, the US wanted to make sure that capitalism succeeded on the frontiers of the evil empire (Germany, S. Korea, etc.) The Vietnam war also boosted world aggregate demand, which created a fertile field for other capitalist countries beside the US to prosper. On top of that was domination of raw material supplies in the third world. (Have I left anything out?)
Part of the reason for the success of social democracy in W. Europe was that the labor movements still had some power left over from before WW2. The labor movement and other progressive forces were relatively weak in the US, and were less successful. Another factor allowing wage increases is the relatively limited scope for capital mobility for the first 30 years of so after WW2; it is only relatively recently that manufacturing started looking for low-wage havens (the internationalization of productive capital).
>2.) Somewhere around the early 70s, the golden age was over. Europe and
Japan had recovered fully from the War, they started challanging the US for
supremacy, and (more importantly) increasing industrial capacity caused the
rate of profit to begin a long, slow decent. Capitalists responded by a.)
furiously seeking new markets and resources in the third world, and b.)
pushing austerity policies at home.<
The challenge to US hegemony (what I think of as the US "embarrassment of equality" with its fellows in the advanced capitalist world) seems only one part of the decline in the US capitalists' profit rate in the 1970s. Other factors include the rise in raw materials prices, which I think partly reflects the US decline, but also reflects the sustained period of high aggregate demand which characterizes the 1960s (as I argued in a previous missive, on Keynesianism). The latter also allowed wages to get too high (for capitalist comfort) and for a short-circuiting of the normal purgative process of the business cycle. [For some reason, my missive is labelled "Winning Socialism" and is available in the pen-l archive at csf.colorado.edu.]
The capitalist response also involves an acceleration of capital flight to low-wage and low-environmental-law areas.
>3.) Through the eighties and nineties, even as growth continued to slow,
corporate profits took a larger and larger share of GDP. Stock prices
continued to rise, as the profits were recycled back into the markets,
causing speculative bubbles, first in Japan, then in East Asia, finally in
the U.S.<
sounds plausible.
>4.) With external markets collapsing, and workers already pushed to wall,
the only alternative for capitalism now is another round of destruction of
productive capacity - somehow, some way, some percentage of those useless
(form a profit-making veiwpoint, anyway) factories have to be eliminated.
Thus, deflation, depression, and possibly war - except WWIII (thanks to the
Bomb) is not an option anymore. <
It's perhaps possible to have some sort of global Keynesianism, though I think that the current crisis will have to be extended further and really scare the G-7 leaders before that happens. I think, however, that deflation is quite possible. It goes hand in glove with the destruction of productive capacity.
(that's it for today. I'll stay under quota for two days in a row.)
Jim Devine jdevine at popmail.lmu.edu & http://clawww.lmu.edu/Departments/ECON/jdevine.html "Forgive me when my instincts start stinking; I'm easily led when my little head does the thinking." (Bill's song, lyrics by John Hiatt.)