Kemp - The climax of capitalism : the US economy in the twentieth century

THE CLIMAX OF CAPITALISM

Also available from Longman by Tom Kemp:

Historical Patterns of Industrialization (1978)
Industrialization in Nineteenth-Century Europe (second edition 1985)
Industrialization in the Non-Western World (second edition 1989)

Tom Kemp

First published 1990 by Pearson Education Limited

Published 2013 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 Third Avenue, New York, NY 10017, USA

Routledge is an imprint of the Taylor & Francis Group, an informa business

Copyright 1990, Taylor & Francis.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Notices
Knowledge and best practice in this field are constantly changing. As new research and experience broaden our understanding, changes in research methods, professional practices, or medical treatment may become necessary.

Practitioners and researchers must always rely on their own experience and knowledge in evaluating and using any information, methods, compounds, or experiments described herein. In using such information or methods they should be mindful of their own safety and the safety of others, including parties for whom they have a professional responsibility.

To the fullest extent of the law, neither the Publisher nor the authors, contributors, or editors, assume any liability for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions, or ideas contained in the material herein.

ISBN 13: 978-0-582-49423-7 (pbk)

British Library Cataloguing in Publication Data

Kemp, Tom

The climax of capitalism: the U.S. economy in the twentieth century.
1. United States. Capitalism
I. Title
330.1220973

Library of Congress Cataloging-in-Publication Data

Kemp, Tom.

The climax of capitalism: the US economy in the twentieth century /Tom kemp.

p. cm.

Includes bibliographical references.
ISBN 0-582-06616-6. ISBN 0-582-4923-0 (pbk.)

1. United States Economic conditions 1945 2. United States Economic conditions19181945. 3. United StatesEconomic policy. 4. Capitalism United StatesHistory20th century. I. Title.

HC106.5.K415 1990
330.973' 09dc20

89-13783
CIP

Set in Linotron 202 10/12 Bembo Roman

We are reminded every day of the way in which developments in the United States and its role as a superpower in a troubled world affect our lives. Day and night American bombers based in Britain are ready to deliver a deadly nuclear cargo on Eastern Europe or the Soviet Union. The military and strategic power of the American colossus is a tangible thing to people throughout the world. But the influence of America is not only visible in its military form. Throughout the world, television viewers are served a daily diet of American programmes. In the supermarkets of Frankfurt, Tokyo or South Africa it is difficult to shop without buying American brands of cereals, soaps and canned foods. What street or town in the 'civilized' world does not have its McDonalds, Dunking Do'nuts or Kentucky Fried Chicken, or an indigenous imitation? Lifestyles, consumer tastes and ways of thought are moulded more than we realize by the American model. While there is much talk of American 'decline', the Americanization of the world continues its irresistible march even into the society of the Cold War adversary.

The upsurge of American power in the twentieth century coincided with the decline of Europe, speeded as it was by two internecine wars. American military intervention in these wars tipped the scale, making the United States first a world power and then, after 1945, a (or perhaps the only) superpower, economic, political and military, with an incredible nuclear weapon stockpile as well as massive conventional naval and land weaponry. Economic strength was demonstrated in the First, and even more in the Second, World War, especially in the weight and variety of military equipment. 'Quel matriel!' was the general comment as the liberating armies marched into Europe in 1945.

After 1918 the Americans had over-hastily withdrawn from Europe, leaving chaos behind and a successful, anti-capitalist revolutionary regime in power in Russia, formerly a bedrock of the status quo. Policy-makers in Washington considered that they had learned the lesson: Europeans could not be left to their own devices, the European market was too valuable and the threat from the supposedly expansionist drive of the Soviet Union too potent to permit it. There began the quasi-permanent military presence of the United States in Europe, which first of all had to be put back on its feet economically. There came the Truman Doctrine and the Marshall Plan, without which capitalism might not have survived in Western Europe. Likewise, on the other side of the Pacific, the occupation of Japan, intended at first to make it incapable of again waging an aggressive war, served to re-build the economy and thus, unintentionally, to begin the process which made Japan a formidable economic power. As it happened, the obsession with the threat from the Soviets resulted in the rapid reconstruction and recovery of West Germany and Japan which, by the 1960s, were to become America's principal economic competitors. The dollar, once the hard currency par excellence, is at the mercy of speculators in Tokyo or Frankfurt.

The weaknesses and vulnerability of the American economy have also been amply demonstrated in the twentieth century. Even to this day, the traumatic experience of the 1930s' Depression has left its impression (in the same way that German fear of inflation goes back to the monetary collapse of 1923), recalled whenever Wall Street experiences an abnormal fall, as happened in October 1987. Everyone at once made the comparison with 1929 and feared, or assumed, that the fall-out would be similar. Although through the 1950s and 1960s it seemed that the trade cycle had been tamed, and graduate students in economics were advised to find more urgent subjects for research, in 19745 and in 1980-2 it came back with a vengeance. While not comparable with the early 1930s, these severe recessions (or mild depressions) reproduced some of the same features: lines of unemployed, depressed areas, bankrupt farmers and small businessmen, increased poverty. The assurances that it could not happen again seemed to have less conviction, and monetary authorities in the United States and outside over-reacted to the crash of 1987 as a result.

If, to understand the present-day world, it is necessary to understand the roots of American economic power, then it is to history that we must look both for an explanation of that overreaching power as well as its limitations, now so apparent that it is widely assumed that the United States is in decline. There is renewed interest in the reasons for Britain's loss of world leadership, as well as a plethora of writing about America's lost hegemony. Meanwhile, not only is no part of the world immune from the influence of the United States, but the worldwide operations of the giant multi-nationals bring back into the United States the problems of other countries. In these days of 'globalization', isolation is impossible. The United States is interested also in opening up, or keeping open, the doors to the markets and investment fields of the entire world. The drive for the global open door, though couched in the vocabulary of liberalism and free trade, is palpably in the interests of the United States' corporations, with their worldwide interests, though it may harm other sections of the economy. There are periodic signs of a protectionist backlash when America's trading partners (notably Japan, but at times the European Community), are seen not to be playing the game.