The Barbaric Counter-Revolution: Cause and Cure PDF
Preview The Barbaric Counter-Revolution: Cause and Cure
THE BARBARIC COUNTER-REVOLUTION The Barbaric Counter-Revolution Cause and Cure by W. W. Rostow M MACMILLAN © W. W. Rostow 1983, 1984 All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission. First published in the USA (University of Texas Press) 1983 First published in Great Britain 1984 by THE MACMILLAN PRESS London and Basingstoke Companies and representatives throughout the world British Library Cataloguing in Publication Data Rostow, W. W. The barbaric counter-revolution. 1. United States-Economic policy-1981- 1. Title 330.973'0927 HC106.8 ISBN 978-0-333-37342-2 ISBN 978-1-349-17447-8 (eBook) DOI 10.1007/978-1-349-17447-8 For Elspeth Contents Preface ix Introduction to the Macmillan Edition xii 1. The Central Theme 1 2. How We Got Here: 1951-1981 4 3. The Theory of the Counter-Revolution and Its Fatal Flaw 26 4. The Counter-Revolutionaries at Work: 1981-1983 39 5. Concepts for a Civilized Synthesis 52 6. What Is To Be Done? 77 A. Installing a Long-Term Policy for the Control of Inflation B. Nurturing the Fourth Industrial Revolution C. Rehabilitating the Older Basic Industries D. Coping with the Fifth Kondratieff Upswing E. Rebuilding the Nation's Infrastructure 7. A Conclusion 124 TABLES 1. Growth of Output (GoP at Constant Prices) per Head of Population, 1700-1979 5 2. The Course of the U.S. Economy, 1979-1983 40 3. Sectors with High Employment Growth Prospects 58 4. Relative Distribution of High-Technology Jobs by Selected States, 1979 and 1975 93 5. Estimate of Employment Reduction Associated with a Decline of $1 Billion in U.S. Automobile Sales, 1973- 1974 97 viii CONTENTS 6. Total (Residential and Nonresidential) Public Works Investment, Gross and Net, and Depreciation, 1957- 1977 119 CHARTS 1. Relative Prices, 1951-1982 9 2. U.S. Terms of Trade (Export Divided by Import Prices), 1933-1982 11 3. The Core Inflation Rate (Nonfarm Business Sector), 1951-1982 4. Defense Outlays as Percent of GNP, 1950-1987 (Projected) 15 5. Real Rate of Interest, 1950-1982 34 6. The U.S. Motor Vehicle Industry, 1895-1982 98 7. Calculated Relationship between Stell Consumption and GNP, 1960-1981 101 8. The Real Oil Price: Two Versions 103 9. Lead Times in Domestic Energy Development 107 10. Construction Spending as Percent of Total State and Local Purchases, 1955-1982 117 Preface At 3:oo on the morning of December 15, 1982, when sleep was light, I got up and outlined this book in just about the form that it now appears. It responds to a deepening concern with the cumulative human, national, and international damage done by the economic policies pursued by the United States over the past four years-a concern that by no means ended with the coming of an economic revival in early 1983. This book is evidently a tract for the times, a fact reflected in its lack of footnotes and the other paraphernalia of academic writing. But it is rooted in my work over the past decade on the history, problems, and prospects of the world economy incor porated in How It All Began, The World Economy: History and Prospect, Getting from Here to There, and Why the Poor Get Richer and the Rich Slow Down. It reflects also a quite different enterprise. I have been writ ing a series of short books around the theme Ideas and Action. The books focus retrospectively on the role of abstract con cepts in specific key decisions along with all the other more mundane forces in play; they attempt to trace out the conse quences of the decision and reflect on both the substance of the decision and the process which led to it. Although this book looks forward as well as backward, it belongs with the Ideas and Action Series. One of its central themes is that the macroeconomic concepts of mainstream eco nomics, Keynesian and monetarist-generated in the 1930S, elaborated and applied from 1945 to 1972-are grossly inade quate for the world that emerged in the 1970s and for the fore seeable problems of the 198os and 1990s. We are, in a sense, repeating the tragedy of the interwar years. Then economists X PREFACE and the politicians who depended on them were so imprisoned by the concepts and policies that worked before 1914 that they could not understand or come to grips with the problems that emerged after 1920. By the time they began to get a handle on economic affairs, the world economy was irretrievably frag mented, the Japanese military and Hitler were in power. The time lag in the minds and concepts of economists and in the public policies which flowed from them must be reckoned among the causes of the Second World War. There is no need for history to repeat itself; and, of course, it never repeats exactly. Nevertheless, what happened between 1920 and 1939 should remind us of the possible cost of applying ideas from the past to situations where they do not adequately apply. Several readers of the book in draft noted that the use of the word "barbaric" in the title might appear to impugn the motives of those who have conducted the counter-revolution with which it deals. There is, of course, no such attack on the motives of those with whom I disagree in the text. Neverthe less, I gave the matter considerable thought. I concluded that the title is just. In the long sweep of history, barbaric results have often flowed from the actions of men seeking goals they judged to be good. I am indebted to a number of colleagues, in Austin and elsewhere, who generously helped as critics and in mobilizing data and judgments on the evolution of the economy in recent years, notably, Victor Arnold, Francis Bator, Elizabeth Bossong, William Fisher, James Galbraith, John Kenneth Galbraith, Dan iel Garnick, David Kendrick, Michael Kennedy, George Koz metsky, Leonard H. Marks, Ray Marshall, George Perry, Felix Rohatyn, and Susan Walter. Pedro Fraile helped me exploit the facilities of Project Mulhall, the computerized economic his tory data base at the University of Texas at Austin, to generate the materials for most of the charts. I should acknowledge another debt. In my last meeting with Sir Michael Postan before his death in December 1981, he raised with me the likelihood of substantial chronic unemploy ment. He judged that the new technologies being diffused throughout the advanced industrial world, combined with the erosion of the old basic industries, would render a large num- PREFACE Xi her of unskilled and semiskilled workers unemployable. Re specting his insight, as I had for more than forty years, I set about trying to test his hypothesis as it might apply to the American economy. From that exercise emerged the broad ar gument outlined in chapter 5 which sets the framework for the more detailed prescriptions of chapter 6. I wish to thank, once again, Frances Knape, who typed the manuscript, and Lois Nivens, who, as so many times in the past, helped as sharp-eyed editor, spotter of relevant materials, and in many other indispensable ways. I wish, finally, to thank my wife, Elspeth Davies Rostow, to whom this book is dedicated. For quite a long time now she has, at every time of decision, urged me to go forward, to set down such insights as my work has generated, and then supported my efforts in every way, including, as in this case, the role of acute but constructive critic. APRIL 1983 W. W. ROSTOW AUSTIN, TEXAS
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