Politics and Policies in the 1970s and Early Twenty-first Century

This chapter examines the political economy created by politicians and business leaders in the 1970s and its links to the Great Recession. It argues that the economies of the 1970s and the contemporary world are global. Both contained imbalances among the major trading nations that led to recession. In the 1970s, the most important change that affected workers in the public and private sectors was that the long period of postwar economic growth ended between 1973 and 1975. In the United States, as classic Keynesianism employing macroeconomic techniques and free trade faltered, the labor movement proposed microeconomic industrial policy to address the crisis. A reformed Democratic party, less responsive to labor, was uninterested. Unable to govern effectively, in 1980 Democrats yielded power to a Republican party that promised to restore prosperity. President Ronald Reagan's policies did bring back growth, but they also altered the postwar mixed economy, privileging capital and sacrificing manufacturing for the chimera of high technology, finance, and real estate. This sectoral shift profoundly changed the size and composition of the labor movement. The distortions produced by this recomposition of the economy also led in time to the Great Recession.