US: From the New Deal to the Age of Diminishing Expectations (1933 to 1979)
The third part of the US chapter
It was only during the New Deal Era of the 1930s, which arose from the urgent need to stabilize society during the Great Depression that had significantly delegitimized laissez faire capitalism, that labor gained full rights to organize and effectively challenge management power through the Wagner Act of 1935. In addition, the state took an active role in the economy through such things as public works to offer employment to the many millions of those unemployed. The nation had tottered in the depths of the Great Depression between the possibility of a working-class revolt and a fascist coup (Denton 2012), although the resulting labor-business compromise was only partially due to extensive labor pressure and the need to stabilize society. Ferguson (1991) proposes that the internationally oriented and capital-intensive segment of the economic elite were also instrumental in such changes as they were, “not seriously jeopardized by the epochal welfare measures that they and the administration collaborated in preparing. And because they were internationally oriented, these enterprises were the primary beneficiaries of the administration's historic turn to free trade after 1934” (Ibid., p. 494). A turn facilitated by US industrial dominance, and accompanied by a rapid forgetting of America’s Protectionist Takeoff (Hudson 2010); in the same way that an industrially dominant Britain had rapidly forgotten the high tariff protections, slave-produced cotton, war disruptions of its European competitors and dominance over India that so benefitted its fledgling textile industry (Chang 2002 & 2010; James 2012). The mixture of a liberalized trade Open Door combined with a limited business-labor compromise would continue for another four decades, during which business interests would strive to undermine the latter compromise.
Attempts to roll back the labor-business compromise by economic elites started in the mid-1930s and quickly gained momentum (Domhoff 2013), with the ill-fated reactionary American Liberty League being one of the examples; with the du Pont family at the forefront. There were repeated moves, some successful, to remove New Deal officials based upon their political beliefs and affiliations; a precursor of McCarthyism. A major step was the Democratic National Convention machinations of 1944 (“shutting down the convention with Wallace on the verge of victory” [Nichols 2020, p. 99]) that chose the unknown and inexperienced Truman as the vice presidential candidate instead of the in-place and extremely popular and progressive Vice President, Henry Wallace. With Roosevelt in serious physical decline, this was a choice of the next US President. The highly supportive environment for union organization lasted for only 12 years, as the post-WW2 Taft Hartley Act of 1947 (passed with a bipartisan rejection of a presidential veto) removed many of the previous legislation’s benefits to labor. With the support of the state, union density had trebled, peaking at about 36% during the 12-year period. It stayed at around that level for the next decade, before starting the six-decade decline that would take union density below its pre-WW1 level (Cowie 2016). Government spending was still under 5% of GDP in 1930; during the depression it jumped above 10%, and then stayed in the mid to high teens in the post-war period until 1960 (Mauro et al 2015).
Grandin (2006) proposes that during the inter-war years the US moved away from an expansionary policy based upon military intervention and occupation toward one based more upon economic, political, financial, cultural and covert methods together with the support of comprador elites; much of this was the usage of the soft power later coined by Nye (1990 & 2009):
By the late 1920s, then, the United States had apprenticed itself as a fledgling empire in Latin America, investing capital, establishing control over crucial raw materials and transit routes, gaining military expertise, and rehearsing many of the ideas that to this day justify American power in the world. But the experience in Latin America, both during the initial ‘drive toward hegemony’ and then during the Good Neighbor policy of the 1930s and 1940s, also pushed US leaders to develop a coherently sophisticated imperial project, one better suited for a world in which rising nationalism was making formal colonialism of the kind European nations practiced unworkable. (Grandin, p. 22)
The Mexican revolution (1910-1920), “which destroyed massive amounts of U.S.-owned property” (Ibid., p. 28), had shown the force of Latin American nationalism. The Nicaraguan geurillas (1927-1933) had also fought US troops to a standstill, in spite of the US military’s overwhelming advantage in firepower; an outcome to be repeated a few decades later in Vietnam; and a few decades later again in Afghanistan. Instead of direct intervention, “friendly ‘strong men’ who promised to respect American interests and establish stable self-government” (Foglesong 1995, Intro. Para. 9), would be supported. The Great Depression also significantly reduced US power and precipitated a greater domestic focus. A leading member of the elite, Nelson Rockefeller, had witnessed firsthand “widespread poverty and labor unrest in Venezuela, Bolivia and Mexico” (Ibid., p.30) and proposed that US corporations work with local states to pre-empt nationalist revolutions through improving local living standards. In 1933 President Franklin D. Roosevelt established the Good Neighbor policy, withdrawing US occupation troops from the Caribbean, asserting a non-interventionist stance, and actively supported Latin American development, including the nationalization of some US company holdings. The Open-Door orientation, focused on the international free flow of US goods and capital, was operationalized through numerous bilateral trade and investment treaties.
In November 1940, as with Wilson in 1916, President Roosevelt was re-elected with a promise that he would not involve the US in foreign wars. He had already supplied fifty destroyers to the UK in return for leases on military bases, and US industry was supplying whatever the UK could afford to buy. In March 1941, with UK liquid financial resources running low, the US Lend Lease Act was passed which allowed the US to provide aid to third countries at no cost; which evaded restrictions on the lending of money to belligerent nations. As in WW1, the US had stepped in once UK financial resources were seen to be reaching their limitations. In addition, US destroyers were escorting US supply ships bound for the UK, and other nations’ ships within an expanded Pan-American Security Zone, while the UK was maintaining a naval blockade of Germany and Italy; the US was not acting as a neutral in the war. As Utley (1985, p. 138) states, by “February [1941], a 159-ship Atlantic Fleet was conducting increasingly aggressive ‘neutrality patrols’”, only four months after Roosevelt had promised not to involve the US in foreign wars. To the “Chief of Naval Operations Stark ‘the question of [the US] entry into the war now seems to be when and not whether’” (Ibid.). As Wertheim (2020, page 3) notes, with the fall of France in May 1940 US elites had already decided to enter the war and achieve global dominance:
Even before Pearl Harbor, then, US officials and intellectuals planned not only to enter the war but also to achieve global dominance long afterward
With a still small US state foreign policy apparatus, the planning for US post-war dominance was carried out by the Council for Foreign Relations (CFR) funded by the Rockefeller Foundation, and the “projects roster read like a cross section of [the US foreign policy elite]” (Wertheim 2020, p. 17). The assumed exceptionalism of the US, and its anointed role to bring its version of “freedom and democracy” to the world was asserted in Roosevelt’s speech given six days after his election where he asserted that the US was the only Western nation that had “led the world in spreading the gospel of democracy among peoples, great and small” that was “truly and fundamentally … a new order” (Ibid., p. 73); the Amerindians, Mexicans, Filipinos, Nicaraguans, Cubans, African-Americans and many others would disagree.
The US had already been drifting toward war with Japan, as US colonial interests were threatened by Japan’s drive to fulfil its own colonial ambitions in China and elsewhere (the envisaged Japan-dominated Greater East-Asia Co-Prosperity Sphere that would exclude the Western powers); a drive which also threatened the empires of Britain, France and Holland. A Eurasia dominated by Germany and Japan threatened to close much of the world to the profit making and exploitation of US elites. From 1938, the US had imposed increasingly harsh trade restrictions upon Japan, culminating in an oil embargo in August 1941 and was also providing financial and material support to China. With more than 80% of Japan’s oil supplies coming from the US, this provided Japan with only two options; accede to US demands to retreat from China and French Indochina or invade South East Asia for its resources. An invasion which would require an attack on US forces in the Philippines to protect the flank of the invasion forces. Prior to Pearl Harbour, the US had already been set on a path to war with both Germany and Japan to protect its ability to open up other nations to US elite interests.
The United States emerged unscathed from WW2, its productive capacity and corporate profits having grown substantially during the war, and war deaths numbering just over 400,000 from a population of 133 million in 1941. With the Axis Powers defeated and Europe, the USSR and Asia economically and socially devastated, it was the preeminent global power. Its economy represented approximately half of global GDP, and the previous leading power, the UK, was to all intents and purposes financially bankrupt (Barnett 1972 & 2014). Taking the lessons of the inter-war years and the work of the CFR to heart, the US imposed an international order that was structurally beneficial to itself and the international expansion of US corporations, while at the same time maintaining an overwhelming military capability and global network of military bases (Vine 2015) with which to police that order. The Open-Door orientation, embedded within the Bretton Woods system, facilitated the outward expansion of US corporations. The Marshall Plan provided external demand for the demobilizing US economy, facilitated the much greater entry of US corporations into European markets, and supported the efficacy of capitalism against the arguments of left-wing groups that had played large roles in the wartime resistance movements.
[at Bretton Woods] American officials set up institutions designed to open up free trade around the world … These institutions would be largely funded and controlled by Americans; and they formulated precisely to establish a new economic order to replace the previous one associated with European imperialism … By accepting these plans, London quietly transferred the mantle of hegemonic control to the United States. (Craig & Logevall 2009, Ch. 1, sub-sect. Distant Allies, para. 14)
Widespread clandestine US political and paramilitary interventions in countries such as Italy and France, as well the military intervention in Greece (Francovich 1980 & 1992; Ganser 2005 & 2006; Weiner 2007; O’Rourke 2018), also made sure that the more radical left-wing interests would not gain political power. “From 1945 to 1975, U.S. government agencies gave an estimated $75 million to right-wing organizations in Italy, including some with close ties to the neofascist Moviments Sociale Italiano (MSI)” (Parenti 1997, p. 30); this “covert financing of the far right fueled a failed neofascist coup in 1970” (Weiner 2007, chapter 28, sub-sect. The Only Way To Go Was The Old Way, para. 10). The occupying forces in Japan instigated a post-war Red Scare, selected both Japan’s Prime Minister and “number one gangster” (Weiner 2007, chapter 12, para. 2), repurposed the wartime Japanese intelligence services for its own covert operations (Morris-Suzuki 2014), and then after the end of the US occupation the CIA “spent millions of dollars to support the conservative party that dominated Japan's politics for a generation” (Weiner 1994). In Germany and Austria, extensive use was made of ex-Nazi officials to staff the administration and the intelligence services (Beste et al 2012; Simpson 2014). The USA actively guided the politics and economics of Europe and Japan toward the capitalist camp, supported with military and trade arrangements (The Bretton Woods Institutions, North American Treaty Organization (NATO), the US-Japan Treaty of Mutual Cooperation and Security etc.,), financial incentives and military bases. The discoursal construction of an expansionist communist threat inherent in the creation of NATO and the Truman Doctrine also aided group cohesion. A post-WW2 system was constructed whereby “the plutocracy that dominates the system is centered in the United States, but has powerful allied branches in Western Europe and Japan especially” (Shoup 2015, preface, para. 2).
As noted in chapter 2, this “liberal international order” order was in fact neither liberal nor international, as it excluded the Soviet bloc and China, included numerous military and covert interventions across the globe, and actively supported autocratic governments. The US also acted as a sovereign that deemed itself above the law, as with its 1946 acceptance of the World Court that was conditioned “with very broad reservations which some regarded as virtually nullifying [US] acceptance” (Bidler 1991). The use of the “Soviet threat” as a cover for the real motives for many US interventions is stated clearly by Huntington, “If you draw from that analysis the conclusion that you have to intervene or take some action, however, you may have to sell it in such a way as to create the misimpression that it is the Soviet Union that you are fighting. That is what the United States has been doing since the Truman Doctrine” (Hoffman et al 1981, p. 14). Kennan (1948, sec. VII) captured the fundamental economic drive behind post-WW2 US foreign policy:
Furthermore, we have about 50% of the world’s wealth but only 6.3% of its population … Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity … our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.
The US view of the USSR had been a generally negative one driven by the latter country’s post-revolutionary exit from WW1 hostilities, and the ideological threat of communism. After the failed US and European interventions in the Russian Civil War on the side of the Mensheviks (Foglesong 1995), diplomatic relations between the US and USSR were not established until 1933. The rapid Soviet industrialization of the 1930s also turned it into a much stronger ideological competitor. Stalin’s pact with Germany in 1939, together with the USSR’s invasion of neighboring Finland, only added to the generally negative view of it held by the US. This was put aside with the German invasion of the USSR in mid 1941, although even after that time there was still much domestic opposition to sending aid to the USSR (Fischer 1950); the dread of a separate German-Soviet peace overrode ideological concerns. After being allies with the USSR during the war, the animus of the US returned with the end of hostilities and the Soviet bloc identified as an existential threat to US interests; a move partially triggered by the “loss” of China to its own communist revolution and the USSR’s imposition of friendly regimes in Eastern Europe (as agreed at the Tehran meeting [Kitchen 1987, p. 427]).
He [Roosevelt] accepted Soviet demands for preponderance in the Baltic states and Poland, protesting only that he could not officially accept Soviet domination over the latter for domestic political reasons. (Craig & Logevall 2009, Ch. 1, sub-sect. Distant Allies, para. 11)
A greater reason may have been the inability of Roosevelt to “duplicate with Moscow the relationship he sought with the British – that he could incorporate the Kremlin into a partnership dominated by the United States, not only during the war but after it” (Craig & Logevall 2009, Ch. 1, sub-sect. Stalin Recalcitrant, para. 1). At Bretton Woods the “U.S. negotiators conspicuously sought to secure the Soviet Union involvement, by offering it a vast postwar loan in exchange for its participation in the World Bank and the International Monetary Fund” (Ibid., para. 4) to no avail. At the end of World War 2 the USSR was exhausted, having suffered over 25 million deaths (one in eight of the pre-war population) and countless other casualties fighting the vast majority of the German armed forces, and having had much of its physical infrastructure, agriculture and industry destroyed. Underlining the weakness of the Soviet position, the “USA’s Central Intelligence Agency carried out a study in 1946 which concluded that the shattered Soviet Union would not be in a position to wage a war for fifteen years” (Ibid., Ch. 1, para. 32). The same was true of a devastated China, after fighting the vast majority of the Japanese ground forces for a decade and then being devastated again in a brutal civil war. Although this meant that the US could operate with a relatively free hand in the rest of the world, it could not gain access for its internationalizing corporations to the Soviet bloc and China.
The US was now faced with both a Russia and a China that would not accept its hegemony, and therefore especially after the Russian production of its first nuclear bomb, the communist Other had to be both created and contained. The well founded Russian fear of foreign aggression, based upon two incredibly destructive German invasions, the US and European interventions, the previous century’s Crimean War and Napoleonic march on Moscow, was put down to the “Kremlin’s neurotic view of world affairs” by Kennan (1946); an understanding very different to the one taken by Roosevelt only a couple of years earlier (Craig & Logevall 2009)
there was a puzzling refusal to acknowledge the Soviet claim that two invasions by Germany in twenty-seven years made the control of Eastern Europe essential to Russian security. Truman insisted on seeing the Soviets as a determinedly expansionist enemy of the free world almost from the day he assumed office. (Alexander 2011, Ch. 1, para. 12)
An extensive discourse of Othering is evident in the Kennan Long Telegram (1946), that used descriptions of the Kremlin such as “oriental secretiveness and conspiracy”, and “inaccessible to considerations of reality in its basic reactions” and “Impervious to logic of reason, and it is highly sensitive to logic of force” and stated that the USSR was committed to a belief that “the internal harmony of our society be disrupted, our traditional way of life be destroyed”. Such nightmarish words could have been written about the US Amerindian populations during the time of another Terror Dream (Faludi 2007); those that would not accept the dominion of the The Shining City On The Hill would become a heathen Other and treated as a malevolent source of threat and terror. The Cold War fell into place, producing a discoursal binary between the communist East dominated by the USSR and a “free” West dominated by a benevolent US policeman. The opening up of Soviet archives after the collapse of the USSR has shown that that US military and intelligence entities consistently inflated the military strength of the USSR far above its realities, producing a menacing dark presence from a relatively weak defensive entity. Pressure from the domestic Red Scare, together with the start of the Korean War in 1950, helped the US “hawks” such as Nimitz to get President Truman to approve National Security Council (NSC) 68 – a document that greatly exaggerated the threat from the Soviet Union to justify large increases in US defence expenditures and an active policy of containment. President Truman went on television to tell the nation that “Our homes, our nation, all the things we believe in are in great danger … this danger has been created by the rulers of the Soviet Union” (Truman quoted in Ritter 2020, p. 39). After the near mutual annihilation of the Cuban Missile Crisis of 1962, a more rational relationship was established with the Soviet Union, culminating in the period of détente. The Cold War permanent war economy, the MIC that Eisenhower warned Americans of in 1961 (US National Archives 2020), was unprecedented in peacetime (excepting the short-lived Hamiltonian version) and provided a new subset of the power elite (Mills 2000).
Within the US, corporate power remained preeminent but the legacy of the New Deal, together with the experience of successful wartime central planning and the scale of the citizenry’s patriotic exertions during WW2, led to the compact of Fordism; mass production, high wages for white males, mass consumption, and politically docile unions; with the latter even working with the CIA on covert foreign operations abroad (Wilford 2008). The second Red Scare (the first occurring after the Bolshevik revolution), through such things as the infamous McCarthy Hearings (1954) and extensive investigations of government employees, significantly restricted what was deemed to be acceptable political beliefs, both in society in general and within the state apparatus (Finan 2007; Storrs 2013). There was also a coordinated effort by the CIA to directly manipulate the media, academia and citizen groups (Bernstein 1977; Saunders 2000; Wilford 2009). As shown by the Church Committee hearings of the mid 1970s, these efforts were paralleled with extensive covert FBI political activities, such as the Counter Intelligence Program (COINTELPRO) that was started in 1953, against those deemed to be too politically “radical” (US Senate Church Committee 1976/2009 & 1976/2010; Cunningham 2004; Weiner 2007; Blackstock 2020). Additionally, there was extensive propagandizing in support of the “free market system” by business interests, both within their own establishments and throughout society (Fones-Wolf 1995). In parallel, the US at least tacitly supported, and in many cases actively participated in, the subjugation of progressive democratic movements in Central and Southern America. Within the latter, coup d’etats established dictatorships in many nations (Paraguay 1954, Brazil 1964, Bolivia 1971, Uruguay 1973, Chile 1973, Argentina 1976). This facilitated the cooperation between the US state and South American military intelligence agencies that grew into an Operation Condor that involved the extensive surveillance, torture and murder of progressive regime opponents in the name of “combating communism” (McSherry 2002, 2005 & 2019; Zanchetta 2016). A multinational COINTELPRO with no institutional limits on the actions of the security forces, many of the members of which were trained and armed by the US.
The post-war period has been dubbed The Great Compression, as income inequalities were significantly reduced; a process that lasted into the 1970s. The heavy regulation of the financial sector that stemmed from the Great Depression reduced economic volatility and rentier capitalism, the post-war labor-capital Fordist compact facilitated an extensive (white) middle class consumer economy, and highly progressive taxation rates were carried over from wartime. With even factory workers becoming “middle class”, mainstream sociology could envisage the Embourgeoisement of the working class. This was a period of a racially specific and partial Embedded Liberalism (Polanyi 1944; Ruggie 1982) at home (within strict limits set by an ever-present anti-communism and widespread state covert political actions) and between the Western nations, counterposed with Cold War conservatism with respect to the rest. This was still a white-dominated nation, with 87.5% of the population being white, and 11.1% Black in 1970. With the move away from racial quotas in immigration in the 1960s this was to substantially change over the next fifty years.
The Second World War had led to the extensive funding of military-relevant scientific research, much of which could be commercialized to facilitate economic growth. In the post-war years a significant development state was “hidden” within the military, through such things as the Defense Advanced Research Projects Agency (DARPA), the Controlled Thermonuclear Research Computing Center (now known as the National Energy Research Scientific Computing Center – NERSC) and the Lawrence Radiation Laboratory (now known as the Lawrence Berkeley National Laboratory and the spin-off Lawrence Livermore National Laboratory). Together with other military research, the North Aeronautics and Space Administration (NASA) space program, and much increased research funding for the National Institutes of Health (NIH), this hidden development state was responsible for much of the US dominance in areas such as computing, communications and pharmaceuticals (Mazzucato 2015). As Chang (2010, p. 55) notes:
Between the 1950s and the mid 1990s, US federal government funding accounted for 50-70% of the country’s total R&D spending, which is far above the figure of around 20%, found in such ‘government-led’ countries as Japan and Korea. Without federal government funding for R&D, the US would not have been able to maintain its technological lead over the rest of the world in key industries like computers, semiconductors, life sciences, the Internet and aerospace.
A new progressive era emerged in the 1960s, around such issues as Black voting repression, women’s rights, corporate malfeasance and environmental pollution. The Voting Rights Act of 1965, the 1960’s Great Society extension of the welfare state, Roe vs. Wade in 1973, and the establishment of the Environmental Protection Agency (EPA) in 1970 are some of the accomplishments of this era. The majority of these dealt with social issues and none directly challenged business dominance – paralleling the previous progressive era. Those that more directly challenged the fundamental status quo, such as the Black Panthers, the Nation of Islam, anti-war protestors and draft resisters such as Muhammad Ali, Martin Luther King toward the end of his life, and student demonstrators in the early 1970s, were the subject of widespread state espionage, infiltration, propaganda, and violence (including the murder of Fred Hampton [Haas 2019]). With the implementation of the Great Society, together with spending related to the Vietnam War, government expenditure increased to over 30% of GDP by 1970. It then continued to increase to over 40% by the mid-1980s (Mauro et al 2015).
Domestic politics became increasingly turbulent, driven heavily by racist violence, civil rights agitation, and then growing resistance to the war in Vietnam. The eight-year period from 1962 to 1970 was especially convulsive; the Cuban missile crisis, two Kennedys, Martin Luther King, Malcolm X and Fred Hampton assassinated, the violence of the voting rights campaigns, and the escalating protests against the Vietnam War culminating in the Kent State shooting of students in 1970. The next five years brought the US retreat from Vietnam, the US repudiation of fixed exchange rates, and the undermining of the Keynesian Consensus by a stagflation triggered by the first oil shock. State authority was further reduced by the indictment and resignation of a sitting US President, together with a series of congressional hearings into extensive CIA, NSA and FBI post-WW2 abuses that served to delegitimize major parts of a coercive state apparatus that had already been heavily undermined by the Vietnam debacle. The general feeling of decline continued as the government rescued Chrysler in the face of intensified European and Japanese trade competition, the US dollar became chronically weak, and the Iranian hostage crisis dragged embarrassingly on for 444 days. The nearly farcical US rescue attempt of the hostages in Iran, Operation Eagle Claw, of 1980 “was a disaster that ended with American deaths, ruined military planes, and the hostages no closer to freedom” (Kamarck 2019); in brutal contrast to the successful Israeli raid on Entebbe four years earlier. The Others of Vietnam and Iran had defeated, divided and bewildered the forces of the Shining City On A Hill; a city more perceived to be in sad decline than serving as a beacon for the “free world”.
The legitimacy of the US state was being assailed, from both within and without, and for the first time a major war had to be ended in the face of widespread popular opposition (together with extensive insubordination among enlisted military personnel in Vietnam). US corporations were also being delegitimized by their failures against foreign competition, together with the revelations of corporate misdeeds by consumer rights activists such as Nader (1965 & 1976) and environmental activists such as Carson (1962) (Vogel 1983). They were also being subject to greater levels of regulation, as with the new EPA and Occupational Safety and Health Administration (OSHA). In addition, early in the “1970s, antiwar activists pioneered a new kind of protest, one hinged on exposing the corporate role in the war” (Phillips-Fein 2009, Ch. 7, para. 4) and which transformed into a general opposition to the rule of “a violent minority” (Ibid., Ch 7., para. 5) establishment. “A study done by Oklahoma Christian University in 1973 found that undergraduates gave businessmen the lowest rankings for ethical standards (Ralph Nader was at the top). Half of all seniors identified themselves as leftists, compared to one third of all freshmen” (Ibid., Ch. 7, para. 7) and only a minority of the general public expressed confidence in business leaders. Calls for limits to economic growth (Meadows et al 1972) in the name of environmental sustainability also challenged the growth that supported corporate profits.
The student demonstrations of Columbia University, the University of Chicago, and Kent State, the bombs at the Bank of America, the accusations of Ralph Nader, the new government regulations, the sudden new working-class militancy, the activists invading corporate offices – all of it seemed a single continuum, one discordant challenge rising against American businessmen. In 1972, Business Week reported on ‘America’s growing antibusiness mood’. (Ibid., Ch. 7, para. 9)
In retrospect, the post-war “miracle” years can be seen as a period of exception in US history (Cowie 2016), facilitated by the lingering effects of the New Deal, wartime planning, popular expectations after wartime patriotic exertions and a Fordist economic structure supported by US post-war economic and military dominance. Another factor may also have been the need to maintain the myth of the Shining City On A Hill in ideological competition with the Communist Other. The confluence of military defeat, economic and political crisis and more radical domestic populism brought forth a coordinated response from the economic and political elites. The New Deal coalition had also been weakened through religious, cultural and racial cleavages opened up by the success of the new social movements, providing exploitable social and cultural divisions (Domhoff 2013); as was exploited with the Republican Southern Strategy (Lopez 2014; McAdam & Kloos 2014; Maxwell & Shields 2019). Much of the working class may have been economically leftist, but it was much more socially conservative than the left elites – a difference open to political exploitation. The increasingly non-Caucasian share of immigration, together with the civil-rights movements and residual racism, also provided avenues for scapegoating and “dog-whistle” political tactics. In addition, the ire of the progressives was heavily directed at the government, greatly reducing its legitimacy in the eyes of citizens.
This allowed for a coalition of elite interests with socially conservative citizens (including the highly religious), which served the economic interests of the former while pandering to the cultural conservatism of the latter (e.g. racism, homophobia, opposition to Roe vs. Wade and the feminist movement) and taking aim at “Big Government”. The “’grand bargain’ of white supremacy, buttressed by paternalism and evangelism, whereby the southern white masses relinquished political power to the few in exchange for maintaining their social status as better than the black man” (Smith quoted in Maxwell & Shields 2019. p. 1), and now Latinos, together with the sanctity of the “traditional family” and “life”, had been rejected by a Democratic party that was shedding its interest in the economic welfare of the working class. In this way, a substantial share of the American populace was brought to vote against its own economic interests, with a false consciousness facilitated by such things as a Prosperity Gospel that conflates US capitalism and religion (Bowler 2013). This was also aided by the move away from criticisms of big business and the diminution of the influence of the unions within the Democratic party; the Republican party would now fill the role of protecting “mainstream” white “values”. A core part of this was a carefully constructed synonymy between
crime and blackness … The point longtime aide John Ehrlichman explained, was to present a position on crime, education, or public housing in such a way that the voter could “avoid admitting to himself that that he was attracted by a racist appeal” (Anderson, 2016, p. 104).
The Nixon administration, together with a Supreme Court with four new conservative appointees, facilitated the ongoing segregation and unequal funding of the school system “by eviscerating the constitutional right of black children to an education and then some” (Ibid., p. 110). The Supreme Court then followed up later in the decade with the undermining of positive discrimination based on race for university admissions, while leaving discrimination based on alumni funding and connections in place.
From the late-1970s onwards the US economy and society was returned to the structure of the late nineteenth century, through waves of corporate consolidation, financial deregulation, the restriction and outsourcing of government services, massively reduced taxation for the rich, and the destruction of much of the labor movement; facilitated by what constituted an elite funded and organized neoliberal counter-revolution (Harvey 2005; Phillips-Fein 2009; Hacker & Pierson 2010; MacLean 2017; Mayer 2017). The formation of the large-corporation dominated Business Roundtable in 1972, the Lewis Powell Memorandum (1971) to the US Chambers of Commerce, entitled “Attack On The American Free Enterprise System” and the “Crisis of Democracy” report (Crozier, Huntington & Watanuki 1975) for the recently established Trilateral Commission (founded by David Rockefeller) exemplified this period of economic elite coalition building. The elite reaction was able to build upon the work of some of its more radical elements who had opposed the New Deal through such things as the American Liberty League (1934: heavily supported by the Du Ponts), the American Enterprise Institute (1938: Eli Lilly, General Mills, Bristol-Myers, Chemical Bank, Chrysler, Paine Webber), the Mount Pelerin Society (1947), and over “the course of the 1950s, dozens of new organizations devoted to the defence of free enterprise and the struggle against labor unions and the welfare-state” (Philips-Fein 2009, Ch. 3, para. 7). The discoursal and ideological weaponry was greatly enhanced in the 1970s, through a new raft of elite-funded organizations, such as the Heritage Foundation and the Cato Institute (and its spin-off the Ludwig von Mises Institute). A more recent addition has been the highly influential Center for American Progress in 2003.