Stabilization Politics in the Twentieth-Century United States: Corporatism, Democracy, and Economic Planning, 1945-1980

• Main Author: Elrod, Andrew Yamakawa
• Other Authors: Lichtenstein, Nelson
• Format: Other/Unknown Material
• Language: English
• Published: eScholarship, University of California 2021
• Subjects: American history; Political science; Sociology; History of Economic Thought; History of Inflation; History of Price Controls; History of Public Policy; Labor History; Political Economy; North Atlantic
• Online Access: https://escholarship.org/uc/item/4184v0c8

Historians of ideas have long considered the mixed economies established after World War II to be characterized by a form of “commercial Keynesianism” in which the shape of growth was left to the “indirect” controls of government budgets and credit policy. In this history, the political conflict between organized workers and business cartels that defined the North-Atlantic world during the period between the world wars is said to have given way to the consensual management of national economies characterized by a “postcapitalist” debates over social, racial, and gender inclusion. Considerable scholarship argues that the politics of the era that followed World War II were conditional on the rapid economic growth of postwar reconstruction and expanding world trade. The collapse of North Atlantic growth rates after 1973 thus explains the fate of post-World War II social, political, and economic history, as demands for inclusion in a political economy in which employment and incomes rose more slowly than before became increasingly difficult for institutions to mediate.But what explains the collapse of North Atlantic growth during the 1970s? There are two dominate explanations: the expansion of national budgets to accommodate the social-democratic responsibilities of postwar welfare states and the overcapacity of industrial manufacturing. Neither explanation acknowledges the national experiments in income planning that emerged within the OECD nations during the early 1960s, when the difficulties of maintaining full employment in a world of liberal trade and capital movements first appeared. In the US, such income planning represents a continuity with the interwar struggle over the “problem of monopoly” and “structural reform” that characterized the New Deal. Rather than departing from these efforts at “direct” controls over centers of accumulation and employment, the guiding concepts of the US political-economy after World War II accelerated their orbit around a set of ideas about the role of the state in guiding and structuring economic life, ideas that had emerged earlier during the 1930s. Price manipulation and wage restraint were necessary accoutrements of fiscal-monetary stabilization policy in these postwar decades. This domain of policymaking is entirely absent from existing histories of post-World War II economic policy in the US. This pattern was the particular manifestation in the US of what scholars of comparative political economy describe as “corporatism.” The first half of this dissertation explores the development of this North American corporatism between World War II and the Korean War. It argues that the fusion of corporatism in the US with military mobilization complicated the politics of macroeconomic stabilization, hiving off fiscal policy from wider democratic control over the composition of demand. In the scale of values associated with this order, fiscal expansion and high employment were tied to military production, price-and-wage control to social sacrifice necessary to constrain civilian consumption. This order produced the racial politics of the US South and the migration of African Americans to industrial cities, as the wing of the Democratic party dominate in the legislature came to oppose expansions of social insurance and employment that jeopardized the Jim Crow society of their home states and the social order of the nation’s largest cities. This historically variegated political economy created large wage differentials that threated to destabilize production costs in times of rising employment. As employment expanded and wages increased in the unorganized service sector during the Vietnam-war boom of 1965-73, organized workers in the industrial and construction industries fought to maintain historic income differences, raising production costs and turning the inflationary wage-price spiral. Thus, the imperative of stabilization exacerbated the instability of the managed economy. At the OECD, the understanding that effective national planning of wages and profits required renewed democratic legitimacy produced two decades of experiments in “incomes policy” to reconcile the imperatives of economic stability and high employment. The second half of this dissertation examines the fate of the idea of an “incomes policy” in the US context. During the Vietnam War, the Johnson and Nixon administrations vacillated between informal guidelines and compulsory controls over corporation profits and union-negotiated wages. As continued international payments imbalances threatened the role of the dollar as world reserve asset, and as the geopolitical and ideological motivation for military production waned, so did the legitimacy of the US stabilization apparatus. US industrial-relations thinking formed in the era of military Keynesianism failed to adapt to the era of détente. The consequences for the development of the US mixed economy were profound.