WTF happened in 1971? Answer: the privatisation capitalism needed to survive
WTF (What The Fuck!) happened in 1971? asks that website which lists dozens of charts showing how most things, from wages to housing costs and so on, have gotten worse since 1971. (I don’t much care for some of the inclusions, such as ones showing that beef consumption per capita has stagnated.)
The year is arbitrality picked — you could pick 1968 or 1973 or 1979, for example, and see the same trends intensifying in the following decades — by right-wing libertarians. They blame what followed on Nixon’s decision in August 1971 to quit the gold standard (when the value of the US dollar was based on a fixed quantity of gold). For them, this ‘state intervention’ (rather than the demands of capital accumulation) is to blame for allowing excessive money printing and therefore the accelerating devaluation of money and purchasing power.
They want to reinstate a gold standard (a form of state intervention) so that fictitious money/debt cannot be used to prop up unprofitable capitalists. Which is rather ‘amusing’ since that would accelerate the monopolisation (mergers and acquisitions) of private enterprise that they claim to oppose.
What actually happened in or around 1971 was the inevitable build up of overaccumulated capital that meant large portions of capital formed an unprofitable surplus glut disincentivising investment and productivity growth.
This means that capital’s theft of labour’s labour time — the one general thing that all commodities contain in common, making them exchangeable — was insufficient to reproduce and expand the value of capital. With the expansion of production, partly through innovation, the amount of labour used in the production process declines (at least relatively) and the average commodity (including the money-commodity!) contains less labour time/exchange value.
WWII had temporarily resolved this problem by destroying vast proportions of surplus capital, creating new profitable opportunities (a bit like how sufficiently breaking down muscle through weight-lifting stimulates muscle to grow back larger).
But by the mid-1960s a new and seriously high overaccumulation had emerged, sparking relatively high inflation as productivity could not keep up with demand (from both investors and consumers). The gold standard became a fetter (restraint) on investment and productivity growth since the capitalist state was therefore limited in how much subsidisation it could provide capital. It also made it more difficult to attack the value of wages/labour power, which needed to be cheapened to raise low profitability — the bigger the outlay on wages, the thinner the profit margins.
This was also around the time of the digital revolution, part of the automation revolution, since when, mainly through rapidly compounding computing power, absolute rising productivity, essential for capital accumulation, has grown exponentially, doubling roughly every 25 years. The gold standard would have prevented this growth. But right-wing libertarians live in a fantasy world of stasis where little has to change and the capitalist economy does not have to grow.
The main thing that has led to all the deepening social ills in the wake of ‘1971’ is privatisation (‘neoliberalism’/’Reaganism’/’Thatcherism’). By reprivatising the fraction of the economy that had been nationalised in order to cheapen the post-war rebuild (which made the demand for labour high, emboldening unions and social democrats), commodity production and exploited labour time were massively expanded. (Only 14% of capital stock was nationalised at the peak of British social democracy. Reprivatisation, however, extended to destroying the Soviet Union, which the end of the gold standard also enabled by devaluing the USSR’s foreign currency reserves, which were needed for imports.)
The libertarians don’t talk about that, because they have investments in private enterprise (however small — many of them are semi-proltarians who supplement their wages on the stock market). But every recession since has been met with more privatisation and then more debt, slower (relative) economic growth, higher house prices, more austerity, and so on.
To reiterate: ‘despite’ ‘more capitalism’ — making more of the economy privately owned — economic growth has tended to slow down every decade. But the libertarians blame taxes and state welfare (which rises absolutely despite being cut relatively with the unemployment that arises alongside surplus capital, forming a ‘reserve army of labour’, weakening labour’s bargaining power). Many of them are semi-proletarian victims of a ponzi scheme called capitalism, but like all varieties of non-Marxists they’ve been trained to treat symptoms as root causes and blame individuals and ideologies instead of analysing things systematically and historically.
I would reproduce the charts with Reagan’s sitting above the pivotal period of change, but I don’t want to give the impression that we just need to renationalise 15% of the economy and return to Keynesian social democracy (and I can’t think of an alternative indicating clearly that ‘capitalism capitalism’d’). In the age of automation, we need to take all of it under public ownership.
