It is not too great an exaggeration to say that there was a time, in the decades immediately following the Second World War, when across the advanced capitalist world as a whole the vast majority of people looked to the United States as a model economy and society – one to whose affluence, freedoms and stability so many of them then aspired. It is also not too much to say that, in the decades since, America has continued to enjoy that status in the eyes of at least the more conservative sections of the electorate in each major industrial economy with which the United States now competes. But even in those circles, America’s reputation abroad is now no longer what it once was. There are flaws in the contemporary character and performance of the US economy – and in the society which that economy sustains – which are now too visible to be easily ignored. And because they are, if we are ever fully to grasp the contemporary Anglo-American condition and its resolution, it is essential that we begin with a careful examination of exactly why the American economy was once so untarnished a model, and why it is untarnished no longer.

The rise and fall of the initial postwar settlement

As we have just noted, the American economy in the immediate post-Civil War period was a catch-up one, industrializing behind a substantial tariff wall as it borrowed technology and capital from the United Kingdom and a labour force drawn from primarily Europe.