workings of the American economic system.” It was the culmination of the “stagnationist tendenciesinherent in monopoly capitalism,” and far from being a deviation from economic normality was “therealization in practice of the theoretical norm toward which the system is always tending.”
Fortunately for corporate capitalism, World War Two postponed the crises for a generation or so, by blowing up most of the plant and equipment in the world outside the United States. William Waddelland Norman Bodek, in
The Rebirth of American Industry
, describe the wide-open field left for theAmerican mass-production model:
General Motors, Ford, General Electric and the rest converted to war production and were kept busy, if not prosperous, for the next four years. When the war ended, they had vast, fully functional factories filled withmachine tools. They also had plenty of cash, or at least a pocket full of government IOUs. More important,they also had the entire world market to themselves. The other emerging automobile makers, electric product innovators, consumer product companies, and machine tool builders of Europe and Asia were inruins.
The neo-Marxists Harry Magdoff and Paul Sweezy describe it, in similar terms, as a virtual rebirthof American capitalism.
The Great Depression was ended, not by a spontaneous resurgence of the accumulation process but bythe Second World War. And... the war itself brought about vast changes in almost every aspect of the worldcapitalist system. Much capital was destroyed; the diversion of production to wartime needs left a huge backlog of unfilled consumer demand; both producers and consumers were able to pay off debts and build upunprecedented reserves of cash and borrowing power; important new industries (e.g., jet planes) grew frommilitary technologies; drastically changed power relations between and among victorious and defeatednations gave rise to new patterns of trade and capital flows. In a real sense, world capitalism was reborn onnew foundations and entered a period in important respects similar to that of its early childhood.
Even so, the normal tendency was toward stagnation even during the early postwar “Golden Age.”In the period after WWII, “actual GNP has equaled or exceeded potential” in only ten years. And eightof those were during the Korean and Vietnam conflicts. The only two peacetime years in which theeconomy reached its potential, 1956 and 1973, had notably worse levels of employment than 1929.
The tendency postwar, as before it, was for the productive capacity of the economy to far outstripthe ability of normal consumption to absorb. The difference:
Whereas in the earlier period this tendency worked itself out in a catastrophic collapse of production— during the 1930s as a whole, unemployment and utilization of productive capacity averaged 18 percent and63 percent respectively—in the postwar period economic energies, instead of lying dormant, haveincreasingly been channelled into a variety of wasteful, parasitic, and generally unproductive uses.... [T]he point to be emphasized here is that far from having eliminated the stagnationist tendencies inherent in today'smature monopoly capitalist economy, this process has forced these tendencies to take on new forms and
1 Paul Baran and Paul Sweezy,
Monopoly Capital: An Essay in the American Economic and Social Order
(New York:Monthly Review Press, 1966) p. 240.2 William Waddell and Norman Bodek,
Rebirth of American Industry: A Study of Lean Management
(Vancouver, WA: PCSPress, 2005) p. 94.3 Harry Magdoff and Paul M. Sweezy, “Capitalism and the Distribution of Income and Wealth,” Magdoff and Sweezy,
The Irreversible Crisis: Five Essays by Harry Magdoff and Paul M. Sweezy
(New York: Monthly Review Press, 1988), p. 384 John F. Walker and Harold G. Vattner, “Stagnation—Performance and Policy: A Comparison of the Depression Decadewith 1973-1974,”
Journal of Post Keynesian Economics
, Summer 1986, in Magdoff and Sweezy, “Stagnation and theFinancial Explosion,” Magdoff and Sweezy,
The Irreversible Crisis
, pp. 12-13.