Prelude to America’s Downfall: The Stagflation of the 1970s

Abstract

Since the end of the Bretton Woods system and the stagflation of the 1970s, the transatlantic core, under the leadership of the United States of America, has been trying to expand its model of free market capitalism embracing every part of the globe, while addressing its domestic overaccumulation crisis. This article follows a historical methodological perspective and draws from the concept of Uneven and Combined Development (UCD), which helps us consider the structural reasons behind the long and protracted decline of the American economic power. In this respect, according to the UCD concept, there is no global power that can enjoy the privilege for being at the top of the global capitalist system forever in a world which develops unevenly and in a combined way. Power shifts across the world and new powers come to challenge the current hegemonic power and its alliance systems. The novelty of the article is that it locates this decline in the 1970s and considers it as being consubstantial with the state economic policy of neo-liberalism and financialisation (supply-side economics). However the financialised capitalism of the transatlantic assemblage lack industrial base producing, reproducing and recycling real commodity values. Further, the article shows that this attempt to remain at the top of the global capitalist system forever has not been successful, not least because the regime which the recovery of the core had rested upon, that of neo-liberal financialisation represents a major vulnerability of the transatlantic assemblage eroding the primacy of the United States of America in it.