There could not be a sharper analytical difference between Andrew Kliman and I on how we understand the trajectory of US capital and US labor over the quarter century leading to the Great Financial Crisis. He sees it as a period of “secular stagnation [and] protracted low growth&rdquo — while I argue, along with my co-author Leo Panitch, that it has been one of the most dynamic eras for capital in American history. He views the alleged stagnation of that period as rooted in a profitability crisis that was temporarily masked by a credit bubble, which allowed the US economy to limp on until it burst. We argue that corporate profits have in general not been squeezed and that the role of finance in creating the conditions for the crisis went far beyond advancing credit. He sees labor as largely holding its own over this period; we understand labor as having suffered a most profound defeat.

For Kliman, the crisis of the 1970s never ended. As a crisis of overaccumulation (overcapacity), it could only have been overcome by the destruction of a significant proportion of the economy’s capital stock (its factories, offices and equipment) — that is, by a deeper and longer recession. This was, he argues, avoided by state policies, low interest rates in particular, that only postponed the day of reckoning. We in contrast argue that the crisis of the 1970s was successfully resolved and that the present crisis reflects a new set of contradictions embedded in a fundamentally different context.

The crisis of the 1970s was rooted in a strong working class, the present crisis has emerged in the context of a weak working class; the crisis of the seventies had to deal with inflation and a threat to the dollar, while inflation was non-existent in the recent crisis and the dollar became stronger; and in the seventies, global finance in anywhere near its present form was only a gleam in someone’s eye.