Pivotal Decade: How the United States Traded Factories for Finance in the Seventies

by Judith Stein

In this fascinating new history, Judith Stein argues that in order to understand our current economic crisis we need to look back to the 1970s and the end of the age of the factory—the era of postwar liberalism, created by the New Deal, whose practices, high wages, and regulated capital produced both robust economic growth and greater income equality. When high oil prices and economic competition from Japan and Germany battered the American economy, new policies—both international and domestic—became necessary. But war was waged against inflation, rather than against unemployment, and the government promoted a balanced budget instead of growth. This, says Stein, marked the beginning of the age of finance and subsequent deregulation, free trade, low taxation, and weak unions that has fostered inequality and now the worst recession in sixty years. Drawing on extensive archival research and covering the economic, intellectual, political, and labor history of the decade, Stein provides a wealth of information on the 1970s. She also shows that to restore prosperity today, America needs a new model: more factories and fewer financial houses.

Genres: History, Economics, Politics, Nonfiction, American History, American, Labor

384 pages, Hardcover

First published March 13, 2010

Reviews

[Mehrsa · Rating 3 out of 5]

This was a frustrating read because it's all just events and facts and just when you think there's going to be some analysis or conclusion, the book moves on to the next thing. And when there is analysis, it's just too simplistic and doesn't really provide any new info.

[Tobias · Rating 4 out of 5]

Excellent if at times slanted history of US political economy in the '70s (with a coda that brings the story through the Reagan years and up to the 2008 Great Recession). Stein documents the decline of US manufacturing and the rise of finance. Her argument is that this process was far from inevitable - it wasn't simply the result of globalization or technological change. Essentially successive administrations refused to shift from the policies of the early cold war, when access to the US market was a critical tool for promoting reconstruction in postwar Europe and Asia, even as Japan, Germany, and other economies recovered and caught up with the United States. She is particularly critical of the new left and the post-1968 Democratic Party for abandoning labor and for an utter lack of original economic ideas. This is an important contribution to the usual story of the rise of the financial services industry, which usually focuses on the free market revolution in economics that preceded and precipitated the Reagan and Thatcher revolutions. Stein's contribution shows that it wasn't just the new (old) ideas on the right that mattered - their victory was as much the product of the intellectual failures of the Democratic Party, which, after failing to counter the right in the 1970s, quickly jumped on board the neoliberal bandwagon during the Clinton years.

[Ben · Rating 4 out of 5]

Excellent overview of the 1970s - political and economic history. Stein blames the transformation of the US economy from industrial production driven by Keynesian demand to financialization and monetarism on, essentially the mediocrity at the top during the 1970s and 1980s. Nixon, Ford, and Carter all prejudiced geo-politics over economics, in large part because the Keynesian consensus was so accepted (we're all Keynesians now), that it seemed like a secondary concern to things like, going to China (Nixon) or the Panama Canal Treaty (Carter). Also a good corrective to the idea that Carter was ineffectual due to being an aw-shucks nice-guy, rather than being an unfortunate combination of extremely ambitious and under-qualified. Read it why don't ya.

In her book Pivotal Decade: How the United States Traded Factories for Finance in the 1970s, Judith Stein surveys the political realignment and economic restructuring that brought the “Age of Compression” to a close in 1973, and began the “Age of Inequality.” Pivotal Decade is largely a story of presidential administrations—Nixon’s, Ford’s, and Carter’s—that were simply not up to the challenges before them, insisting on placing global events into previous analytic categories, rather than developing new ways of engaging with a rapidly changing geo-political order. For Stein, the crucial moments come at the end of the decade, when Jimmy Carter “chose in vain to battle inflation, not unemployment, and promote a balanced budget, not growth.” When Carter and the Democrats failed to win the election, or to “restore prosperity,” Reagan and the Republicans were able to “[claim] their victory [as] a rejection of the ideas and practices of the Age of Compression.”

[Noah · Rating 1 out of 5]

This book would be, at best, a mediocre polemic in The Nation. Stein's basic premise is that the U.S. is exactly as strong as its basic industries -- so we should be focused on producing steel, coal, automobiles, and even shoes and apparel. Therefore, she says, we need industrial policy to support these industries. To argue this, she marshals all the evidence for one side and ignores any downside -- a cheap dollar boosts exports, she will note, but you'd never hear that a strong dollar means cheaper imports for consumers. I put it down after two chapters, so maybe it gets better, but I doubt it.

[Mitchel · Rating 5 out of 5]

An exceedingly well-researched historical study of the politics of the American economy from the 1960s to the present, with a in-depth examination of the 1970s. While some reviewers find the book to be "all just events and facts," one perhaps has to read the more famous books on neoliberalism (Harvey's and Gerstle's) to really appreciate the text's breadth of detail. Contrary to other reviewers, Stein's analysis does cohere into a thesis: that American politicians and economists consistently put foreign policy concerns over domestic economic ones, and never figured out how to adapt Keynesian ideas to the increasingly global economy. While countering more socialist impulses (such as central planning or industrial policy) from the left, the Democratic Party created an intellectual vacuum that was filled by Reagan's wrongheaded monetarist policies. For people wanting a more nuanced understanding of the postwar US economy's collapse of productivity, Stein's text is, as they say, "pivotal."

[Graham Latham · Rating 3 out of 5]

I guess this is sort of a pre-history of what we now call the neoliberal era? Stein is trying to re-frame that history a bit, redistributing some of the blame for the disaster usually laid on Reagan and like "resurgent right wing ideology" or whatever in the 60s and 70s, and lay a bunch of it at the feet of Jimmy Carter, for being just utterly inept at addressing the mounting economic problems created by a half-century of trade deficits and increasing concentration of capital investment abroad. Good stuff, but pretty fuckin impenetrable without a fairly robust pre-knowledge of macroeconomic theory – which is to say I finished reading feeling like I'd missed a lot...

[Gwen · Rating 4 out of 5]

Well-researched and interesting explanation of America's monetary policy since WW II with special focus on the 1970s. I had never before thought about the challenge and ramifications of continuing with world-wide nation building after helping Germany and Japan recover. I wished I had my Econ textbook nearby - it is a little dry. And it will definitely make you extremely irritated with Jimmy Carter and his inaction and/or indecision. I wished she'd also talked more about voodoo economics, gold standard, and trickle down economics (which she mentioned briefly). I would have liked to read her take.

[Donald Whale · Rating 5 out of 5]

Undoubtedly one of the greatest history books of the American economy ever written. Some of the criticisms you see in the other reviews here are legitimate, in the sense that the book is detail-heavy, and at various points trades narrative style for analytical precision. You need to do that though, at least for certain types of historical interventions, and we desperately needed the type of intervention for the 1970s. It reconstructs the kinds of economic worldviews people operated from as these events happened, and it gives no quarter to the lazy abstractions we've used to characterize culture and politics from the 1950s-70s.

[Sam Rubinstein · Rating 4 out of 5]

Overall I learned much from this about how the Keynesianism gave way to neoliberalism through the long 1970s. It does feels a bit hasty throughout and at times rushed, particularly the whirlwind 40 page history of Reagan through Obama which is the book's concluding chapter. Instead of this superficial treatment, I would have appreciated more depth on the mechanics of how the topics explored (trade deficits, the demise of Bretton Woods, and oil shocks) combined to produce stagflation and slash the ethos of the old order. Still, some brevity is warranted in such a short treatment of such a complicated topic.

[Paige McLoughlin · Rating 4 out of 5]

https://youtu.be/oXK0Z-9ntEQ


This decade was pivotal to bringing us the world that we have at present it is the formation of the current neoliberal order. This decade is fascinating to me not only For the pivotal economic history but also I am a child of this decade and it's a statics are my default (God help me.) The author seems to approve of the arrangements that came out of the 1970s I emphatically don't. I will leave a link of the video there is 8 minutes long the explains the way I had pretty much see it.

[Timothy · Rating 4 out of 5]

Judith Stein’s brilliant study of the policy decisions that shaped the current age of inequality. After forty years of gains by the working and middle class that led to the great compression of income the Democratic Party made decisions that aided Wall Street at the expense blue collar workers. Stein is especially critical of Carter who allowed Paul Volcker to fight inflation by creating a recession (exactly what Biden is doing) and undercut a generation of gains to help the investment community. A must read!

[Brendan · Rating 4 out of 5]

Exceptionally dry, but an excellent book to read if you want to understand why US politics are where they are. Stein lays out the neoliberal turn with exacting detail, and this book is a good calmative if you're driven nuts by people praising Jimmy Carter.

[Nicky · Rating 4 out of 5]

It was a little hard to follow at points, but I know much more about the 1970s than I should.

[Ian Fletcher · Rating 5 out of 5]

Not exactly a page turner, but if you want the real score on how we screwed up our economy, you really should read this one. She's the rare historian who actually understands economics.

[Joe · Rating 5 out of 5]

Dry but essential

[Stephen]

Tedious reading. I was hoping to get a better understanding of what precipitated the current financial catastrophe and I do. I think.
A year-by-year economic and political analysis that I basically says and proves that the financial abyss the global economy was looking at was put in place by the US during the 70s and brought to full fruition by Ronald Wilson Reagen. Why he laid-in-state when he died is beyond me. Manufacturing and the middle class were eliminated by policies of the federal government and to quote Paul Krugman: "Americans now make their livings by selling houses to each other with money borrowed from China." it is not going to work anymore. And I am going to go back to reading fiction.

[Thomas · Rating 3 out of 5]

This book is an unbelievably confusing study of US industrial policy in the late 20th century. Starting in the 1950's, the US put their geopolitical goals of ahead of domestic industrial needs. In order to prop up the fledgling manufacturing sector in post-war Europe and Japan, and therefore limit Soviet influence, the US essentially eliminated tariffs and ignored GATT violations such as dumping on the US market. This contributed to the decline of the US manufacturing sector while Asia experienced unprecedented export-led industrial growth. Meanwhile, the erosion of the Democratic blue collar base and the party's "policy vacuum" surrounding economics helped destroy the old New Deal consensus for good.

[Piker7977 · Rating 4 out of 5]

Interesting overview of American macroeconomic policy and presidential administrations centered around Nixon, Ford, Carter, and Reagan. Pivotal Decade portrays recent economic policy as leaving labor and manufacturing in the dust while embracing globalization and financial enterprises. One standout section was Stein's treatment of Paul Volcker. Her study challenges his wisdom and asserts that his monetary policy was one of folly rather than a Keynesian approach to snuffing out inflation. The Clinton years and first two years of the Obama administration also receive similar treatment. These criticisms enforce her points about lost American economic strength based on abandoning national industry in favor of global commerce, and for me makes this study politically objective.

[Jeremy Conley · Rating 2 out of 5]

The premise, how the US switched from manufacturing to finance during the 70's while no one was looking, is really interesting. Unfortunately, Stein's actual telling of that story is mindmeltingly boring. She seems to have thought a blow by blow account of US macroeconomic decisions and outcomes was the best way to get her thesis across, which it was not. This book did nothing to counter my feeling that most published history is just analysis without a filter, which is to say, not very compelling analysis.

[Pallav Sharda · Rating 2 out of 5]

I've been curious about this decade , so bought the only audiobook I could find. It has turned out to be okay - a bit stretched but had a lot of great facts and situational anecdotes. Around half way... it got boring. I couldn't get myself to finish it. Too many facts and dates.. was very hard to enjoy.

[Harry · Rating 3 out of 5]

Interesting mix of history, economics, and politics.

[Joseph N · Rating 3 out of 5]

Really engaging look at some big political and cultural currents in 1970s America. Well written, interesting and I learned a lot.

[Arvind · Rating 4 out of 5]

Quoting one of my favourite characters Frank Sobotka - "You know what the trouble is, Brucey? We used to make shit in this country, build shit. Now we just put our hand in the next guy's pocket."