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How Pivotal were tHe SeventieS?

Charles l. Ponce de leon Judith Stein. Pivotal Decade: How the United States Traded Factories for Finance in the Seventies. New Haven and London: Yale University Press, 2010. xvi + 367 pages. Illustrations, notes, and index. $32.50. Jefferson Cowie. Stayin Alive: The 1970s and the Last Days of the Working Class. New York: The New Press, 2010. 446 pages. Illustrations, notes, and index. $27.95. Once dismissed as the backwash of the tumultuous 1960s, an era of kitsch, self-indulgence, and cultural malaise, the 1970s have undergone a dramatic reassessment. Sparked by Bruce Schulmans cheekily revisionist The Seventies, numerous journalists and academics have explored its political, social, and cultural history. The portrait that has emerged from this work has recast our understanding of the period, illuminating not only its links to the 1960s but its role as perhaps the pivotal decade of the entire post-1945 era. Like a swelling chorus, these writers have provided Schulman with extensive support for his claim that the 1970s were the most significant watershed of modern US history, the beginning of our own time.1 Much of the recent work done on the 1970s has been in political history and has focused on the rise of conservatism. However, scholars have approached that subject from a variety of interesting perspectives, and some have ventured more widely, examining a number of the fascinating cross-currents that make the decade difficult to characterize.2 One area that has begun to attract more attention is the economy and, in particular, the vexing economic problems that confronted the Nixon, Ford, and Carter administrations. This is something that is mentionedat least in passingin virtually all works on the decade; only now, however, has it become the focal point of research. The books under review here are prime examples of this new line of inquiry, and they suggest that the economic changes the U.S. went through in the 1970s might have been the most important ones of all. For it was in the 1970s that the U.S. assumed a new role in the global economy, a development that had a decisive and largely baleful effect on the majority of its citizens and paved the way for a new age of inequality that has persisted to this day.
Reviews in American History 40 (2012) 128138 2012 by The Johns Hopkins University Press

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Judith Steins Pivotal Decade is advertised as a revisionist account of the 1970s that challenges the backlash thesis that informs so many other books. And, indeed, it dutifully avoids the social and cultural battles that roiled the era. Instead Stein focuses on economic policy, expanding on themes that she discussed in her earlier book, Running Steel, Running America. This is a useful lens with which to examine the 1970s and makes Pivotal Decade an important addition to the literature. But it is not quite the breakthrough suggested by the blurbs on the dust jacket. While opening up our understanding of the decade, it neglects crucial parts of the story and leaves us with a portrait that is compelling but ultimately incomplete. Stein begins by reviewing the policies that made possible what economists now call the Great Compression, when economic growth, progressive taxation, and Keynesian management of the economy produced rising living standards, and the gap between the rich and poor markedly decreased. Beginning in World War II, this economic golden age lasted until the early 1970s and indelibly shaped the attitudes and expectations of both policymakers and the public. It was during this period that Americans of virtually all political persuasions came to worship at the altar of growth, and the Democratic Party committed itself to what Robert M. Collins has called growth liberalism. This influential variant of modern liberalism, which Stein ignores, offered Democrats the best of both worlds. It allowed them to hitch their wagon to economic growth and legitimized policies that, at the time, were virtually certain to stimulate investment, production, and new job creation. Meanwhile, by producing high rates of growth, it held out the prospect of increasing tax revenues that might be used for public investment and the redistributionist policies of the Great Societyand, not incidentally, the high rates of military spending necessary for waging the Cold War.3 She then reviews the economic policies of the Nixon and Ford administrations, especially their often-frustrated efforts to deal with the growing problem of inflation. But the heart of her book is her analysis of the Carter administrations tragic failure to deal with the economic challenges of the era. For Stein, this was the crucial turning point, and she suggests that Carter and the Democrats bear considerable responsibility for the decline of American manufacturing and its myriad consequences. By turning attention away from the social and cultural backlash that swelled the ranks of the New Right, the focus of so many other articles and books, Stein has brought the economy and economic policy back to center stage. Better still, she has yoked them to foreign policy and global developments that, aside from the oil shocks, are rarely discussed in other books on the 1970s. As she did in Running Steel, Running America, Stein never lets us forget that domestic economic policy in the U.S. was always linked to foreign policy and often subordinated to the need to shore up support among Americas Cold

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War allies. Even during the era of the Great Compression, U.S. officials were concerned about the economic vitality of allies in Europe and Asia, especially West Germany and Japan. This was the reason American diplomats and politicians allowed these nations to develop vibrant export-oriented economies and tolerated their restrictions on U.S. imports. The practice of allowing its allies to flout the principles of free trade, which the U.S. alone observed, continued in the 1960s and 1970s, even when the U.S. began running trade deficits and the Nixon, Ford, and Carter administrations realized that this was imperiling American economy supremacy. In the 1970s, in response to U.S. complaints and their own economic problems, many industrial capitalist nations revamped these protectionist practices and developed more subtle methods of protecting their economies. Among these methods, notes Stein, were new industrial policies that nurtured key industries and placed their U.S. competitors at no less a disadvantage. An equally daunting challenge arose from OPEC and other commodityproducing nations, a trend Stein calls, quite perceptively, the trade unionism of the developing world. The first OPEC embargo not only prompted the Europeans and the Japanese to cut separate deals with oil-producing nations and use exports to offset oil-derived trade deficits produced by the price increase; it led other commodity producers to attempt to organize similar cartels. To prevent this and keep such nations within the orbit of U.S. interests, American policymakers offered them additional financial support and expanded a program, launched in the 1960s, that allowed developing countries duty-free access to the U.S. market. At the same time, U.S. banks, which had loaned huge sums to businesses and governments in newly industrializing nations like Taiwan, South Korea, Brazil, and Mexico, pressured U.S. officials to allow manufacturers in these nations to sell their goods in the U.S. The new policies, Stein observes wryly, were taken from the old playbook. Strategic interests had once again trumped . . . domestic ones (p. 100). Policies that had worked well for all parties during the golden age, however, had very different consequences in the 1970s, and it is arguable that the U.S. was the biggest loser. One long-term problem that U.S. officials lacked the courage to reverse resulted from decisions made during the 1950s and 1960s. By tolerating protectionism and a variety of nontariff trade barriers by its European and Japanese allies, American officials gave U.S. manufacturers what they perceived as little recourse but to set up shop overseas, often by establishing foreign subsidiaries or joint ventures with foreign firms. This allowed them to get around walls that the Europeans in particular used to protect their industries from U.S. competition. But it also resulted in a shift in investment capital away from the U.S., particularly in manufacturing, and contributed to a more general decline in the productivity of U.S. industry. Sagging productivity, in turn, put U.S. firms at a disadvantage during the global

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slump of the mid-1970s, when our major allies and rising export-oriented industrial nations flooded world markets with goods and increased global competition in a variety of industries that firms in the U.S. had formerly dominated, a flood subsidized in part by the largesse of U.S. investment banks. Low rates of productivity also contributed to the terrible inflation that became the most important issue for voters in the second half of the 1970s. Together, these developments paved the way for permanent trade deficits, the decline of U.S. manufacturing, and an erosion of the income and living standards of the majority of Americans. All the major capitalist nations were confronted with these problems, but Stein argues that the U.S. response was particularly ineffectual. This was because President Carter and his economic advisors mistakenly concluded that the stagnant American economy of the late 1970s was suffering an ordinary cyclical downturn, and that inflation posed the more potent threat. In fact, she insists, the problem was structural, not cyclical, and the medicine Carter and Federal Reserve head Paul Volcker administered to the economy to bring down inflation not only produced a severe recession and hurt the working classa constituency that was already becoming alienated from the Democratic Partybut did nothing to reverse the transformation of the U.S. into a nation of consumers, the market of first and last resort for every export-producing nation in the world. The simultaneous plagues of inflation and economic stagnationwhich defied conventional macroeconomic theoryshould have made this clear, but Carter and most Democrats were unwilling or unable to see this. Their failures opened the door for Ronald Reagan, conservative Republicans, and most of the business community to offer a seemingly more logical diagnosis of the economys ills. Here is where political history enters the picture. As Stein observes, by the mid-1970s the Democratic Party had undergone a significant transformation, as a new generation of politicians and activists, many veterans of the social movements of the 1960s and early 1970s, joined its ranks and pushed it to embrace new causes. Many of these reform Democrats were from growing suburban and exurban areas and had cut their teeth in the New Politics and consumer-rights movements. They were wary of organized labor and suspicious of the old guards commitment to orthodox Keynesianism and the New Deal. Nor were they supportive when elements within the labor movement and their political allies began calling for the Carter administration to develop a comprehensive industrial policy for the U.S. economya course, Stein argues, that was successful in other countries and might have worked in America as well. Carter himself shared the misgivings of most reform Democrats about moving in this direction, and he and his advisors were convinced that such extreme measures were unnecessary. In the end, divisions within the Democratic Party and the rise of groups that were indifferent to Americas

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metamorphosis into a postindustrial economy kept the U.S. from adopting an industrial policy that would have protected manufacturing and the incomes and living standards of the working classand possibly prevented our present age of inequality. This is a fascinating and, in many ways, persuasive story. But it leaves some key players out of the picture and can be evasive at crucial points. Steins book is essentially an illumination of high-level economic policy, including meetings of the Federal Reserves Open Market Committee; and by casting some muchneeded light on the deliberations of this important body, she has provided a great service. Her interest in the links between foreign and domestic policy is also extremely valuable, adding a dimension to her analysis that is woefully lacking in most other books on the 1970s. Her rendering of the larger global economic context, however, is unclear and potentially misleading. For example, she provides little background on the roots of the global slump of the 1970s or the causes of inflationespecially compared to literate economists like Paul Krugman or Jeffry Frieden.4 To be sure, there are significant disagreements among economists on the subject of inflation in particular, as she notes. Yet I think her neglect of this subject may also be a result of her political beliefs and her fear that a greater focus on inflation might have undermined the point of her bookthat federal policymakers obsession with inflation, in the 1970s and more recently, is at least partially to blame for stagnating incomes and the perpetuation of economic inequality. Inflation created a conundrum for liberals and progressives in the 1970s; and, as even the staunchly liberal Krugman has conceded, policies that elevated working-class incomes and living standards during capitalisms golden ageespecially cost-of-living adjustments and programs that guaranteed that employees of companies doing business with the government be compensated at prevailing wagescontributed in the long run to the decline in productivity that produced inflation. They may not have been the most important causes, but they were certainly significant, and any story of the American economy in the 1970sand the dilemma that faced policymakersmust come to grips with this fact.5 More serious is her neglect of American businessa hazard common to any history that focuses on policymakers. From her account, it is hard to appreciate the predicament in which many U.S. firms found themselves during the 1970s, and her book would have been much better if she had paid more attention to the new strategies they adopted to meet the challenges posed by global competition. How were these strategies encouraged or abetted by the new government policies that she so ably details? And how did they play out during the painful recession of the late 1970s and early 1980s, when rising unemployment gradually overtook inflation as the most pressing economic issue affecting the working class? As important as government policymakers

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were in establishing the rules and laying out the dimensions of the playing field on which firms large and small operated, firms and entrepreneurs were the most pivotal economic agents of the era, the players whose actions mattered the mostespecially to their employees. Stein might have made room for this by omitting her, at times, digressive account of domestic political developmentsor her breathless and unsatisfying final chapter, no doubt included at her editors request, that attempts to bring the story up to the financial crisis of 2008. I am also troubled by the implications of the subtitle of her book, that the U.S. traded factories for finance. This too might have been an editorial suggestion made to increase the books marketability, but it grossly oversimplifies Steins argument and makes it seem as if developments that took twenty or thirty years occurred in less than a decade and were inexorable once Carter and the Democrats rejected the industrial policy option. What we need to explain this important trend is not a policy history or even a business history but a sweeping social historyactually, severalof Americas transformation into a postindustrial society, an account that focuses on business and workers and that examines the ways in which American communities were altered by deindustrialization, the movement to the Sun Belt, and the emergence of new industries in the 1980s and especially the 1990s. The rise of the financial industry is a part of this story, and so is the real estate boombut so are Wal-Mart and Microsoft and the many small start-ups that grew to become substantial employers in many parts of the U.S. It was this kind of postindustrial economic growth that appealed to New Democrats like Gary Hart, Bill Clinton, and Al Gore. Of course, we now know that this brand of growth was unable to produce secure, well-paying jobs for the majority of Americansin large part because the production of what Robert Reich calls high-value goods and services is not labor-intensive and can occur wherever there are pockets of highly educated and motivated workers.6 But this was not clear in the 1970s and 1980s when people, including many liberal Democrats, were enticed by this vision and supported policies that would make it a reality. As Howard Brick has reminded us, the notion of a postindustrial society was a decidedly utopian ideal; and, in the 1970s, the prospect of trading factoriesand especially the drudgery of factory laborfor work that was potentially more fulfilling seemed very attractive. Only in recent years have the factories and secure blue-collar employment of the Fordist era begun to look good.7 One of the many virtues of Jefferson Cowies Stayin Alive is that it reminds us of this and vividly captures the hopes as well as the anxieties of the era. Cowies book is nicely written and remarkably thought-provokingand it is hard to categorize. Part labor history, part political history, and part cultural history, it moves across the decade with confidence and panache. At the books heart, however, is the wide range of men and women who comprised

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the American working classa group that was far more diverse than the standard images of the era and that included increasing numbers of women and people of color as well as the disaffected young of the baby boom. Stayin Alive is about their struggles in a decade when their economic fortunes took a turn for the worse. But it is also about our nations collective fantasies about the working class and about how conservative Republicans, beginning with Richard Nixon, employed a manipulative symbolic politics to make whites believe that they alone were the real working class and that their interests were best served by a pseudo-populist GOP. Cowies book is divided into two parts, which neatly divide the decade. This stratagem not only makes editorial sense but captures the profound change in the mood of the nation that occurred in the mid-1970s. The first half covers developments between 1968 and 1974. Cowie begins by examining the new insurgencies among workers that upset labor relations and resulted in a record number of strikes. Winning the support of large numbers of younger workers, these insurgencies were inspired by issues like automation and speed-up, draconian workplace rules, and feelings of alienation and powerlessness. Exploding into public view at places like Lordstown, Ohio, where a predominantly young, multiracial workforce was struggling to cope with the inhuman pace of the worlds fastest automobile assembly line, this wave of unrest upset corporate managers and angered many union leaders, who were happy with the existing system of collective bargaining and resented the disruptive actions of their younger comrades. It was accompanied by efforts within some unions to break the stranglehold on power enjoyed by the old guard and to make the labor movement more democratic. Cowie reveals that some of these insurgencies were inspired by, and at times allied with, civil rights organizations; and these had the potential to unite the labor-liberalism of the AFL-CIO with the rights-consciousness of the new social movements of the 1960s to create a new class politics in America. This activism among workers was accompanied by important political changes, especially in the Democratic Party. Embarrassed by the 1968 convention, a commission led by Senator George McGovern changed the rules governing the delegate-selection process. This change enabled young people, women, homosexuals, and African-Americans and other racial minorities to play a larger role in the party, and it marginalized the interest group that had been at the very center of the party in previous yearsorganized labor. These changes were vital in propelling McGovern to the Democratic nomination in 1972 and in encouraging a powerful infusion of new blood into the party at both the grass-roots level and in positions of leadership. Even though McGovern was trounced in the general election, the influence of Democratic politicians committed to the New Politics continued to increase, particularly after 1974, when many were elected to Congress and state legislatures. As Cowie

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perceptively notes, many of the class of 74were middle-class professionals and former activists distrustful of government and with simplistic views of organized labor and the working class. These political changes further upset leaders of major unionsand many rank-and-file workersand opened the door for Richard Nixon to launch his own version of class struggle. Cowies discussion of Nixons efforts to win the support of working-class whites is fascinating. Convinced that they shared his valuesand especially his visceral hatred for well-educated cultural elitistsNixon sought to attract them through appeals to patriotism, family, and the work ethic, crafting a symbolic politics of recognition that quite consciously ignored the pressing material needs of many working-class families. In a brazenly cynical move that was audacious even for the congenitally cynical Nixon, he even tried to gain the endorsement of George Meany and the AFL-CIO. When his economic policiesespecially his imposition of wage and price controls, which disproportionately affected wagesmade this impossible, he redoubled his efforts to win over individual workers and detach them from their unions. The votes of working-class whites, in the North as well as the South, were essential to Nixons re-election in the 1972. More ominously, it was the first sign that the new class politics suggested by the labor insurgencies of the late 1960s and early 1970 would never materialize and that the American working class, never particularly unified, would continue to splinter. The second half of the book picks up the story in the mid-1970s and takes it into the early 1980s. In this period, Cowie writes, a collective sadness overtook the nation. This sadness was a result of several developments, including the disillusionment produced by Watergate and the humiliation of Americas withdrawal from Vietnam. But its most important cause was economic, the rise of stagflation, which hit working-class people and their communities especially hard. By this time, the labor insurgencies that had aroused such hope earlier in the decade had collapsed, and the political divisions among Democrats that Nixon had sought to exploit had grown into gaping chasms. And looming over the nation was a growing sense that the boom was really over and the U.S. had entered a new era of limits. Relying on a wide array of sources, Cowie does an excellent job of evoking this mood and suggesting how it encouraged a new ethos of survival that doomed the political hopes of the liberal-left and drew more and more workers to the conservative populism espoused by Ronald Reagan. The business communitys response to the stagflation of the 1970s was swift and expertly organized. Led by lobbying groups like the Business Roundtable and new political action committees (PACs) created in the wake of campaign finance legislation, it launched an aggressive campaign to win congressional support for tax cuts and the deregulation of industry. More important, business groups stepped up their efforts to influence public opinion and convince

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voters that the real problem was big government. Cowies account of this is cogent and perceptive. But the highlight of the second half of the book is his detailed narrative of the Democrats muddled response. This was ironic since, after Carters election in 1976, the Democrats controlled both houses of Congress as well as the presidency, and the left wing of the party had an ambitious agenda that included a full-employment bill and labor law reform. These were important initiatives. As originally conceived, the full-employment bill was an ingenious effort to overcome the zero-sum politics of affirmative action and defuse the anger that many white workers felt toward their African American comrades, while labor law reform might have enabled unions to reverse losses in membership they had experienced since the 1960s. But divisions within the Democratic Party, a lack of support by President Carter, and a fierce lobbying and public relations campaign by business derailed these efforts. The full-employment bill was gutted and the version that finally passed was toothlessnot the proverbial half a loaf, but the merest of crumbs. Laborlaw reform fared even worse; it was strangled to death by a Senate filibuster. It was the New Deal that never happened. This story complements the business and labor history that Cowie gave us in Capital Moves, his illuminating account of RCAs persistent efforts to relocate its manufacturing operations to more congenial locales. But it is also far more ambitious. By focusing on workers, Cowie explains how conservative appeals influenced working-class communities, and he reminds us that these appeals struck a chord among many workers because of the economy and the ways in which the twin evils of inflation and recession eroded hope and made Americans receptive to Ronald Reagans optimistic bromides. Deeply divided and led by a president with an unappealing Puritanical streak, the Democrats found themselves in a terrible bind. And by 1979, when Carter gave the Fed the go-ahead to suppress inflation though austerity measures, there was little reason for Americans workers to believe that the party largely responsible for the policies that had produced the postwar boom knew how to manage the economy. This compelling political and labor history is accompanied by two long chaptersone in each sectionon 1970s popular culture, especially forms of it that appealed to or claimed to speak for the working class. This material is extremely insightful and enjoyable to read. But, with a few notable exceptionshis discussion of the popularity of Merle Haggards song Okie from Muskogee, his analysis of the film Saturday Night Fever, and his provocative reading of Bruce Springsteens song Born in the U.S.A.Cowies chapters on popular culture are digressive and undermine the propulsive thrust of the narrative. His larger pointthat the working class as a collective entity faded from public discourse and was replaced by images that emphasized individual survival and upward mobilityis a good one, but he might have said it in a short epilogue rather than in exhaustive detail.

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So what, in the end, can we say about the 1970s? First, claims that this was a pivotal decade are looking better all the time, especially when we consider the economic changes that occurred in the period. Steins and Cowies books have deepened our recognition of this, and Cowies focus on the working class adds an important dimension to the voluminous literature on the conservative backlash. Second, a central development of the decade, as Schulman first suggested and these books underscore, was social, political, and cultural fragmentation and the emergence of discrete subcultures and consumption communities. Stayin Alive is especially good at addressing this issue and making us aware of the varied forces that vied for the support, attention, and discretionary dollars of ordinary Americans. By the 1970s, members of the working class were not only demographically diverse. They were also culturally diverse, devotees of assorted pastimes that often influenced their identities and outlook on the world. This is a theme that deserves more attention, particularly from social and cultural historians who can place consumer choice and the spread of expressive individualism at the center of their narratives. And, finally, the 1970s witnessed a profound change in the national mood, a development that is hard to prove but must be taken into account if we are to make sense of the decade and acknowledge its place in the larger narrative of post-1945 America. Central to that new mood were the expectations produced by inflation, a subject that cries out for more detailed examination. Conservative writers have long insisted that the inflation of the 1960s and 1970s encouraged a host of pernicious trends. But historians and other scholars have been reluctant to wade into this potential morassperhaps out of fear of lending unintentional support to such unscrupulous partisans.8 Now is the time to take up the challenge and assess the impact that inflation had on the actions and attitudes of Americans at all levels. Inflation may have played a decisive role in the rise of expressive individualism and cultural fragmentation; at the very least, it encouraged short-term thinking among businesspeople and consumers that had important consequences. It is also certain to have been a factor in increasing public support for tax cuts and making ordinary Americans more aware than ever of their status as taxpayers as opposed to workers. The 1970s were the decade of inflation, and we need works that put this at the center of the story. As these valuable books remind us, the 1970s were also when the postwar economic boom came to an end, and the latter years of the decade were plagued by slow growth and relatively high rates of unemployment, a disturbing phenomenon for Americans raised during the boom. It was in hopes of rekindling economic growth that much of the public, including many workingclass Americans, placed their faith in the economic program of Reagan and the Republicans, a program that became the new orthodoxy in the 1980s and 1990s. What they didnt realizebut we can appreciate in hindsightis that the growth sparked by this program would produce quite different results.

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Charles L. Ponce de Leon teaches history and American studies at California State University, Long Beach, and is completing a history of television news in the U.S.
1. Bruce J. Schulman, The Seventies (2001), xii. 2. See, for example, Bruce J. Schulman and Julian E. Zelizer, eds., Rightward Bound: Making America Conservative in the 1970s (2008); and Beth L. Bailey and David Farber, eds., America in the Seventies (2004). 3. Robert M. Collins, More: The Politics of Economic Growth in Postwar America (2002). 4. Jeffry Friedens Global Capitalism (2006) is especially good at discussing these issues. 5. See Robert J. Samuelson, The Great Inflation and Its Aftermath (2008). 6. Robert B. Reich, The Work of Nations (1991). 7. See Howard Brick, Transcending Capitalism (2006). 8. For example, see David Frum, How We Got Here: The 70sThe Decade That Brought You Modern LifeFor Better or Worse (2000).

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