That Seventies Show
The abstraction Marxists call "capital" got straight to work imagining new strategies and stories to re-establish its hegemony. The subtitle of Stein's book promises an account of how that happened. In the first half of the book we learn where the factories went. The other half of the book, however, has nothing to say on the finance. Her rage gets in the way of the story she claims she wants to tell and takes it in another direction, one bearing the futile geriatric aroma of baby boomer ideological scores being settled.
The villains are 1960s-style New Politics liberals, Democrats who offered no compelling way out of the morass. Worse than ignoring the collapse of the industrial working class, she finds, they welcomed it. Postmaterialists, inspired by New Left concerns about "the extra-economic goals of 'self-direction, self-understanding, creativity, and human independence,'" they saw in the decline of industrialism "new possibilities for 'non-productive' or social tasks to help the needy and improve the quality of life." Obsessed with the moral enormity of the Vietnam War, increasingly disposed to thinking of it as the "inevitable result of basic flaws of the United States—racism, militarism, and capitalism," they learned to ignore more prosaic, but imminently looming flaws: the economic social contract was under strain. How bad did it get? Well, she unearths a stunningly condescending remark from Murray Kempton, an older liberal, to be sure, but one who by the 1970s was very much on the New Politics bandwagon: "the AFL-CIO has lived happily in a society which, more lavishly than any in history, has managed the care and feeding of incompetent white people."
I'm pretty sure Versailles under Louis XIV was worse. Kempton was not alone in being driven a little hysterical by the 1960s. But now it is forty years later, and one hopes tempers have cooled. Stein's has not, and so her account of the Democrats' failed responses to the political and economic crises of the 1970s ends up being not false but not particularly useful, burying what is sharp and original under what is derivative, reductionist and sour.
The hero of her story is Hubert Humphrey, which is fascinating: Humphrey's trashing at the hands of aesthetically derisive chroniclers like Hunter S. Thompson and the sheer unfocused rage that antiwar activists subjected him to on the campaign trail in 1968 represented 1960s radicalism at its most childish and uncouth. Stein reconsiders Humphrey as a prophet without honor, struggling mightily and unceasingly through the 1970s to craft legislative solutions to the burning of America's industrial base while other Democrats fiddled with identity politics and post-Watergate procedural reformism. In cooler hands such a reconsideration of Humphrey might have made for a worthy historiographic intervention. Stein is too hepped up to make it work.
Her account of the 1972 presidential campaign begins with the unobjectionable insight that "Democrats felt free to fight for control of what they believed was the nation's governing party, cast out temporarily in 1968 by the public disgust of Lyndon Johnson's war in Vietnam," but it ends up seeming as if it could have been written by Fox News Democrat Lanny Davis or a neoconservative like Jeane Kirkpatrick, both of whom told much the same story long, long ago. It is full of cheap shots. ("The New Deal, once a badge of honor, was now a hurdle to be transcended.") You wouldn't know from this book that HHH had had his bite at the apple in 1968 running precisely the sort of economically nationalist, AFL-CIO–centered campaign Stein thinks was the obvious play for 1972. He lost. Her conclusion that McGovern's victory over Humphrey for the nomination was "not especially potent" because the campaign "cherry-picked the states it would contest" is more sour grapes than sound historical analysis. Most crucially, her account is jumbled by a lack of contextual empathy for a historical actor's partial view of his or her times.
Stein's account of the Democrats from 1976 onward is especially ungenerous. Again, the animating insight is sound. "The critical moments occurred in 1979 and 1980," she concludes, "when a Democratic president chose in vain to battle inflation, not unemployment, and promote a balanced budget, not growth." (Democrats never, ever get political credit for dousing inflation at the risk of unemployment: man, do you ever want to bash Barack Obama's economic team over the head with that particular truism!) She argues as if there were some magic bullet Democrats should have pursued instead, and that this course should have been self-evident to them. She assumes that it would be neither Keynesian nor neoliberal, but the specifics of the play this Monday morning quarterback would have called never quite come into focus. "Generals were fighting the last war," she writes. Well, yes: they were only human, doing the best they could with the limited understanding available to them at the time. Instead, with an ahistorical gracelessness, Stein seeks to court-martial them.
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So how and why did the United States trade factories for finance in the 1970s? The young scholars collected in The Shock of the Global anthology have many more answers. Louis Hyman, a 2007 Harvard history PhD who landed at McKinsey & Co., gives us a groundbreaking account of how a new financial instrument called the "mortgage-backed security" emerged, irony of ironies, from the embers of the urban riots of the 1960s. It was intended as a safe way for industrial unions to invest their pension funds but ended up as the turbo-charged vehicle of choice for go-go hot-money investment banks seeking to "evade geographic and state boundary restrictions on lending."
Vernie Oliveiro, a graduate student in the same department, uncovers how Democratic mandarins like George Ball (who pronounced before the International Chamber of Commerce in 1967 that national boundaries only "impede the fulfillment of the world corporation's full potential as the best means yet devised for using world resources") and Fortune magazine (whose managing editor the next year heralded the rise of the "Business Internationale") were joined in the yeoman work of propagating the notion that divesting themselves of American factories actually improved the lot of American workers. (From the archives of a business museum in Delaware, for example, Oliveiro excavated "Your Job Is Bigger Than You Think," a pamphlet 3M distributed to its employees explaining that unless they were "able to operate in those countries as a local business employing local people and giving local service, not as a foreign"—well, that local people in America would somehow lose their jobs.) Oliveiro's dissertation promises to be an outstanding addition to the crucial story of how big business organized to crush liberalism in the 1970s. Daniel Sargent, an assistant professor at the University of California, Berkeley, narrates how, by the time of the Carter administration, the very notion of Congress legislating in the national economic interest—instead of an abstract "global economy"—was beginning to seem anathema.
America was being remade in the 1970s. But what these younger scholars much more effectively grasp was that this transformation—including the remaking of the country from a headquarters of factories to a headquarters for finance—cannot be understood as an exclusively or even predominantly economic process. It was also a cultural one. I was especially fascinated by Matthew Connelly's contribution to The Shock of the Global, an article about the 1970s obsession with predicting the future. The trend, he points out, joined evangelical Christians, environmental doomsayers, "Team B" neocons predicting imminent Soviet military dominance and even, yes, the psychics hired by the CIA and the Defense Intelligence Agency. "The different forms it assumed," he argues convincingly, "cannot easily be disaggregated." What they shared was a sense of apocalypse.
What induced this shared dread? The experience of inflation, for one thing. Inflation was supposed to be a nugatory consideration in the brave new world of the Great Compression. The wizardly Keynesian economists who were the era's priests were fond of scything remarks. Here's Paul Samuelson in the 1950s: "By the proper choice of monetary and fiscal policy we as the artists, mixing the colors of our palette, can have the capital formation and rate of current consumption that we desire." If prices started going up, that means you had painted the economy in hues a bit too hot; cool it down, and the inflation would go away. Too cool, just add some heat. But then came something called "stagflation": the coexistence of a high inflation and stagnant unemployment. Stagflation was supposed to have been impossible, yet there it was. Its emergence, Samuelson sheepishly admitted, amounted to "a sad reflection on my generation of economists that we're not the Merlins that can solve the problem." It deflated not just economists' but an entire nation's ego. As Connelly points out, "Of all economic phenomena, inflation is particularly pernicious in stoking anxiety about the future. It forces people to readjust their expectations continuously, since their wages are worth less every day, while the goods they need cost more all the time."