We might begin by remembering that the miracle years of the previous golden age (roughly 1950-1973) depended not only on a world war and an enormous uptick in state spending, but also on an historically unprecedented transfer of population from agriculture to industry. Agricultural populations proved to be a potent weapon in the quest for “modernisation”, since they provided a source of cheap labour for a new wave of industrialisation. In 1950, 23 percent of the German workforce was employed in agriculture, in France 31, in Italy 44 and in Japan 49 percent — by 2000, all had agricultural populations of under 5 percent. In the 19th and early 20th centuries, capital dealt with mass unemployment, when it occurred, by expelling urban proletarians back to the land, as well as by exporting them to colonies. By eliminating the peasantry in the traditional core at the same time as it came up against the limits of colonial expansion, capital eliminated its own traditional mechanisms of recovery. Endnotes, Misery and Debt, On the Logic and History of Surplus Population and Surplus Capital, Endnotes #2 (2010), https://endnotes.org.uk/articles/misery-and-debt

Despite the complexity of its results, capital has only one essential precondition: people must lack direct access to the goods they deem necessary for life, finding that access instead only through the mediation of the market. Hence the very term “proletariat”, referring originally to landless citizens living in Roman cities. Lacking work, they were pacified first by state provision of bread and circuses, and ultimately by employment as mercenaries. However, the proletarian condition is historically uncommon: the global peasantry have, throughout history, mostly had direct access to land as self-sufficient farmers or herders, even if they were almost always coerced into giving a portion of their product to ruling elites. Thus the need for “primitive accumulation”: separating people from land, their most basic means of reproduction, and generating an all-round dependence on commodity exchange. In Europe, this process was completed in the 50s and 60s. On a global scale it is only now – with the exceptions of sub-Saharan Africa, parts of South Asia, and China – beginning to approach completion. The initial separation of people from the land, once achieved, is never enough. It has to be perpetually repeated in order for capital and “free” labour to meet in the market time after time. On the one hand, capital requires, already present in the labour market, a mass of people lacking direct access to means of production, looking to exchange work for wages. On the other hand, it requires, already present in the commodity market, a mass of people who have already acquired wages, looking to exchange their money for goods. Absent those two conditions, capital is limited in its ability to accumulate: it can neither produce nor sell on a mass scale. Outside of the US and UK before 1950, the scope for mass production was limited precisely because of the limitation of the size of the market, that is, because of the existence of a large, somewhat self-sufficient peasantry not living primarily by the wage. The story of the post-war period is that of the tendential abolition of the remaining global peasantry, first as self-sufficient, and second as peasants at all, owning the land on which they work. Endnotes, Misery and Debt, On the Logic and History of Surplus Population and Surplus Capital, Endnotes #2 (2010), https://endnotes.org.uk/articles/misery-and-debt

In the early post-war period, many countries turned to “Fordism” — that is to say, the import of methods of mass production, made possible by government-sponsored “technology transfers” from high-GDP countries. Fordism is often taken to be a national economic-development policy, based on an “agreement” between capital and workers to share the gains of productivity increases. But Fordism was, almost from the beginning, predicated on an internationalisation of trade in manufactures. Europe and Japan benefited the most from the resurgence of international trade in the 1950s and 60s: capitals in these countries were able to achieve massive economies of scale by producing for international trade, thereby overcoming the limits of their own domestic markets. By the mid-60s, capitals in low-GDP countries like Brazil and South Korea were doing the same thing: even if they could capture only a small portion of the rapidly expanding international export market, they would still grow far beyond what was possible in their home markets. Thus, in the period before 1973, the internationalisation of trade was associated with high rates of growth in all industrialising countries. Endnotes, Misery and Debt, On the Logic and History of Surplus Population and Surplus Capital, Endnotes #2 (2010), https://endnotes.org.uk/articles/misery-and-debt

While during the post-war boom the export of dollars via foreign direct investment had enabled rapid growth in deficit countries, this phase change meant that US capital exports became increasingly inflationary. [37] The spiralling US budget deficits of the Vietnam war only intensified this problem of inflation, as the seemingly inevitable devaluation of the dollar threatened to undermine the reserves, and hence the balance of payments, of all nations, straining the fixed exchange rate system to its limits. The result was that on the one hand many central banks began to cash in their dollars for gold (forcing the US to effectively end convertibility in 1968), while on the other hand surplus dollars accumulated in Eurodollar markets began to put speculative pressure on the currencies of export-based economies who were most at risk from the effects of dollar devaluation. These included both those developing countries which had pegged their currencies to the dollar, and thus risked seeing their primary commodity exports fall in value relative to the manufactured imports on which their development depended, as well as developed nations whose export markets risked being undermined by the revaluation of their currencies relative to the dollar. In its subsequent abandonment of Bretton Woods and its policy of “benign neglect” of the deficit, the US used this threat of dollar devaluation to impose a new flexible dollar reserve currency standard on the rest of the world, effectively delegating the job of stabilizing the dollar to foreign central banks who would be compelled to spend their surplus dollars on US securities in order to maintain the dollar value of their own currencies. This to all intents and purposes removed budgetary constraints from the US, allowing it to run up deficits and issue dollars at will, knowing that foreign nations would have no choice but to recycle them back to US financial markets, particularly into US government debt which quickly replaced gold as the global reserve currency. [37]: Most Marxists attribute inflation in this period either to the exploding US budget deficit (due in large part to the Vietnam war) or to the rising strength of labour. Yet Anwar Shaikh convincingly argues that the restricted supply in relation to which inflation is the index of excess demand is not full employment or labour recalcitrance, but rather the maximum level of accumulation, or the maximum capacity profit rate – whose decline during this period is the leading factor behind stagflation. Anwar Shaikh, ‘Explaining Inflation and Unemployment’ in Andriana Vachlou, ed., Contemporary Economic Theory (Macmillan 1999). Endnotes, Misery and Debt, On the Logic and History of Surplus Population and Surplus Capital, Endnotes #2 (2010), https://endnotes.org.uk/articles/misery-and-debt

The US emerged unscathed from World War II as the most advanced capitalist country, with the largest domestic market, the smallest agricultural population (as a percentage of employment), and the most advanced industrial technologies. By some estimates it was responsible for more than half of the world’s output.36 It also emerged from the war as the global creditor par excellence, owning two thirds of global gold reserves and with most allied powers owing it tremendous sums of money. Under these conditions, the US was able to reconstruct the international monetary order, in a shambles since the Great Depression, on its own terms. At Bretton Woods, the dollar was established as the international reserve currency, the only one to be directly backed by gold, and all other currencies were pegged to the dollar (creating a fixed exchange rate system, which nevertheless allowed for periodic adjustments). On the one hand, by fixing their own currencies to the dollar, European powers were given temporary relief from balancing their budgets during reconstruction. On the other hand, the US, by facilitating reconstruction, was assured of markets for its capital exports, which in turn facilitated the European purchase of American goods. In this way European budget deficits were funded by US capital exports, and a persistent trans-Atlantic trade imbalance was effectively written into the Bretton Woods agreements. Endnotes, Misery and Debt, On the Logic and History of Surplus Population and Surplus Capital, Endnotes #2 (2010), https://endnotes.org.uk/articles/misery-and-debt