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I'd say that government working in conjunction with capital
And then we had to go through a period where that newfound wealth needed a more just system of social distribution. That change in the social contract mostly happened because of UNIONISM and FEDERALISM.
The combination of new wealth and a new way of distributing that wealth, created a vibrant middle class whose consuming power actually launched even more new wealth as capital was invested to respond to the growing market that the middle class created.
CAPITAL and LABOR when working in harmony, can create enormous wealth
Very well said. There was a consensus which ran from the progressives through the liberals and moderate Republicans about striking a compromise between labor and capital. The consensus took shape as a dense tapestry of laws, programs, and regulations which gave hard working Americans the financial solvency to consume.
In exchange for this compromise, the economy was loaded with the goose that laid the golden egg: demand. This demand (i.e., money in middle class pockets), lead to massive investment, innovation, and job growth, i.e., the point of capital is to capture demand. [When there is no demand - because you've repealed all the programs which protected that demand - capital invests in questionable derivatives, oil futures, and insanely complex hedge funds, that is, the real economy of manufacturing and innovation is replaced by the phantom one of financialization]
Regardless, Reagan asked us to abandon the tenuous compact between capital and labor - he told us not to worry about middle class demand, or the way said demand drove the consumption economy for decades. He said that the efficiency gains of letting the market price labor would result in a cornucopia of jobs, innovation, and cheap prices - the multiplier effect of all these things would lift boats to unseen heights... and create demand live never before.
But there was a catch. Reagan's big gamble (i.e., unwinding the postwar compromise between capital and labor) depended on the truth of trickle down economics.
When the money failed to trickle down as promised; when the middle class steadily lost wages, benefits, and standard-of-living support; when the country's vital organs were sold off to mega-merger-monopolies; when the middle class started to lose their affordable education and health care - when capital flew to 3rd world labor markets instead - a deep structural flaw emerged: the greatest consumption economy on earth did not have sufficient domestic demand. The middle class progressively lost their ability to consume as the owners of capital began to narrowly accumulate all the gains of economic growth - gains which turned into centralized power over markets, political outcomes, and media. (Yes Virginia, the government can be bought)
What did the Reagan Revolution do to make up for this demand shortfall? It sent every American - regardless of income - 3 credit card offers a week. America would spend 30 years fueling consumption with debt.
(Tragically, the money that was supposed to trickle down to middle class pockets actually arrived in the form of high interest loans; the real money trickled into the pockets of politicians so they would [do things like] crush energy and drug competition (thus setting up anti-competitive monopolies over the once-affordable living standard of the middle class). Indeed, Movement Conservatism set up a well-oiled machine that directed Reagan's famous "Trickle Down" NOT into middle class pockets, but into think tanks, talk radio, and TV for the purpose of convincing a generation of Americans that this wealth grab and centralization of power stood for freedom. In short, the money that was supposed to lift all boats (like during the postwar years) was instead converted into the political and market power of a small group of Americans.)
FYI: when your economy is driven by middle class consumption, one thing is certain: the middle class is too big to fail. The 30 year project of transferring wealth out of the middle class has destroyed this country.
America swallowed poison in 1980.