During the postwar era there was a very powerful compact between government and labor, which itself was part of a broader compact between government and the middle class. Out of this compact grew a myriad of programs designed to promote broadly shared prosperity, e.g., middle class compensation was tied to productivity gains: when business did well, so too did the workers. The government also tried to give the middle class an affordable cost of living, which included access to great public universities; access to affordable health care, as well as controlling the price of necessary staples, e.g., speculators were not allowed to drive up the cost of oil; housing bubbles were prevented; Wall Street was not allowed to expose our savings to excessive risk.
And... the middle class had plenty o' spendin' money. Remember: the New Deal gave them higher wages, a low cost of living, social safety nets, and retirement security. This translated into economic security > massive consumer demand. Guess what happens when demand goes up? The capitalist must innovate and add more jobs to capture all dat extra money.
Point is: during the postwar years, the American government invested in the middle class and it paid off, leading to the golden era of mass consumption. Henry Ford's dream was finally realized: the workers could afford to buy what they produced. Leave It To Beaver nation was born -- suburban expansion exploded: new homes, televisions, ski trips, refrigerators, shopping malls, patio furniture, and space-age gadgets trickled down like mana from heaven. Going to college was no longer a luxury. Everybody, it seemed, was in the middle class.
Which is why the 50s & 60s represented the most sustained economic growth in American history. Best of all, America's highly regulated postwar economy was a blessing to conservatism: the family could be sustained on 1 income, leaving the mother to tend to the children, i.e., the nuclear family was king (unlike today, where the mother must work and the children are raised by MTV).
But there was a catch to our postwar prosperity. High taxes. In order to fulfill the social contract with the middle class -- in order to pay for all the infrastructure projects and the high wages & benefits -- business and the wealthy paid higher taxes. And it worked: we put a man on the moon and built the most impressive tapestry of highways, public works, and suburbs known to man. More importantly, the tenuous compromise between capital and labor held steady because there was still a lot of money coming: America, unscathed by the two great wars, was manufacturer to the world.
Enter 1973. Japan and Germany re-industrialized, China and India were growing into industrial powers, OPEC choked energy supplies, and stagflation ended the postwar boom: less money was coming in.
What did capital do when their profit rates began to plummet? They went in search of a political party. Business took over the New Right quicker than Germany took over France. [The left was still too beholden to labor to enjoy the immense advantage of Lockheed] The new federation between the GOP and business resulted in a machine which seamlessly funneled money into politics. The machine also poured money into think tanks, publishing groups, PACs, and every manner of mass media. They would spend the next 30 years remaking government (destroying regulatory agencies, lowering taxes, gutting laws that benefited the middle class, and making it easier for business to craft their own legislation). On the media front, their plan was brilliant: use conservative social issues -- mostly centered around religion, tradition, and patriotism -- to recapture the south and heartland. Divide the country into two groups: good Americans (conservatives) versus evil anti-Americans (liberals). [This "divide and conquer" strategy by business was a brilliant way of balkanizing the cross-party coalitions that united under the New Deal] By the 90s, with the birth of talk radio, the GOP was in charge of an army of "identity Republicans" -- who were strategically agitated by wedge issues from abortion & gay marriage, to gun control & hollywood indecency. Men like Reagan successfully shifted populist ire from the cigar smoking fat cat to the incompetent bureaucrat. To top it off: the old Red Scare was reborn, only this time it was the liberals who had supposedly infiltrated American institutionally to the core.
The new Republican voter was now part of an epic holy war to save America from evil.
Having successfully branded half the country, the machine now began to reformat public opinion with ruthless efficiency. In short, business (aka capital) finally had the power to repeal all the gains given to labor during the postwar years. Everything done for the middle class would now be called socialism. Everything done for business would be called freedom. Profit would finally be unhinged from any obligation to the public good. It would buy all elections and, through a series of mass mergers made possible by Reagan's destruction of the Sherman Act, consolidate control over mass media.
Welcome to it.. Corporations are richer than ever and the country is bankrupt. This is the final phase of neoliberal capitalism: the pure concentration of wealth. Capital's victory over labor is complete. When money is made in this country, it goes overwhelmingly into fewer and fewer hands. Game over.
