The Cybernetic Revolution and the Crisis of Capitalism (page 2 of 11)
By Jerry Harris and Carl Davidson
The Chicago Third Wave Study Group

• The second factor was a tremendous demand for both consumer goods and basic industrial equipment and plants. There was a 15-year pent-up demand for homes, cars, refrigerators, and much more as a result of the depression and war. The organization of basic industry by the CIO leads to a large-scale post war labor offensive which won significant gains in wages and benefits. This set the social conditions for accumulation, laying the foundation for the post-war boom, the creation of the suburbs and the growth of the blue collar "middle class."

• Third, alongside the demand for consumer goods, went the intensified demand for capital goods--the need for new factories and heavy equipment, not only in America but also throughout Europe and Japan. This meant further expansion and the profitability that allowed the liberal social contract with key sectors of unionized labor.

• Fourth and last was the development of new technologies, which produced large-scale industries and jobs. Jet airplanes, electronics, and the chemical industries surged forward with resulting spin-off economic activity spreading throughout society.

These strengths also increased the power of international financial institutions. The Breton Woods agreement set the gold standard to the U.S. dollar, which then became the sole international currency. And the International Monetary Fund and World Bank were established as arms of U.S. finance capital.

A vital part of this growth was the state's expanded role in reproducing the conditions of production. O’Connor defines this as the second contradiction of capitalism. He describes it as "everything is treated as if it is a commodity even though it is not produced as a commodity with the law of value, or law of markets". (The Second Contradiction of Capitalism: Causes and Consequences, page 1) This includes land and nature, urban space and labor power itself in the form of the next generation of workers.

It became the state's role to assume the cost and regulation of these conditions through policies on education, health care, welfare, transport, zoning, water, air, forest and many other examples. The Great Depression made this possible when the New Deal redefined the role of the state as an important and direct economic player. To help save capitalism from its own cyclical crises of overprotection, the state began to regulate more and more aspects of the market, and assume greater cost in maintaining the economy. This was particularly important in the postwar recovery period.

All these factors gave new life to industrial capitalism, and the ensuing economic boom lasted about 25 years. But the underlying contradiction of overprotection reasserted itself. Living standards could not keep pace with production. The tensions between wages and profits emerged in full force creating permanent economic stagnation.