The re-election of Ronald Reagan will unleash new debate on the causes of the continuing conservative ascendancy in North America and Western Europe. Following in the well-worn grooves of discussions in 1980–1, some will stress the renewed importance of a reactionary-populist social discourse centred on ‘right to life’, family traditionalism and religious obscurantism. Others, particularly sensitive to its impact on the vulnerable minds of the video-game generation, will emphasize the hallucinatory euphoria of the patriotic revival enacted in the Los Angeles Coliseum and on a small Caribbean island. Still others—conscious that the media remain, more than ever, their own message—will place greatest weight on the Hollywoodization of the presidency abetted by a sycophantic news establishment. Each of these optics focuses on an important set of factors. Yet, squatting awkwardly astride all refinements in the analysis of political discourse, is the simple, massive fact of the Reagan ‘boom’ and its mobilization of economic self-interest. All the major pre-election polls, as well as the network ‘exit’ polls on 6 November, revealed the paramount importance of the ‘comfort/discomfort’ index of family economic position in orienting voter affinity. Some 60% of voters who thought the economy was better off than in 1980 landslided to Reagan by a margin of six to one, while, conversely, the 40% who thought the economy, or themselves, worse off swung to Mondale by four to one. The overriding role of the prosperity issue—especially in an election where the Democratic candidate so successfully obfuscated the war-and-peace dimension—was demonstrated by the fact that over a fifth of Reagan voters indicated that they had ‘strong disagreements’ with the incumbent over foreign policy or social issues, but gambled on his continued management of the recovery.footnote1 There remains vulgar irony in the fact that it was Reagan’s lusty embrace of that false god of the Democrats—John Maynard Keynes—that guaranteed his re-election, while Mondale and the afl-cio once again looked like Republicans in their conservative insistence on fiscal probity and restrained growth.footnote2

But the boom did more than re-elect the prophet, it also confirmed his prophecy. The zealots of Reaganomics—from the original supply-side apostles like Jack Kemp and Paul Craig Roberts to the newer, ‘high-tech’ conservatives led by Rep. Newt Gingrich (Georgia)—are busy scouring the gop of disbelievers and deflationists. In spring 1984 the White House officially projected a staggering, 28-quarter-long expansion with cumulative 38% gnp growth and diminishing deficits through the end of fiscal 1989. Embarrassed that Reagan had, so to speak, stolen their underwear, rueful traditional Keynesians like Walter Heller could only rationalize that the ‘supply-side piano’ was playing ‘pure demandside music’.footnote3

Meanwhile, Reaganomics suddenly made enthusiastic conversions in heathen Europe, where, as Business Week gloated at the end of the summer, the French were now in ‘awe’ and erstwhile left-wing papers asked ‘could Reagan be right?’footnote4. Nowhere, of course, was the upswing welcomed with such sheer ideological ecstasy as in Tory Britain, although carefully filtered through a Thatcherite mind-set that censored the contribution of federal deficits in order to emphasize the wonders of America’s de-unionizing labour markets. (At the October Tory conference an ovation was given when a speaker evoked the inspiring example of New York’s entrepreneurial poor operating elevators and performing other servile duties for a dignified pittance.)

However, this adventitious economic upturn, which renewed the domestic mandate of the New Right, provided international cohesion to cold war military escalation and, far more than expected, accelerated the breakup of welfarist political coalitions, is now tottering into its third year, with warning signs of flagging demand and falling profits. As the historically high rates of real interest attest, business confidence has been made qualitatively more precarious and volatile by the experiences of the 1974–5 and 1980–2 recessions: any faltering in the self-proclaimed expansion threatens to trigger financial panic, the fall of the ‘super-dollar’, compensatory increases in interest rates, and a likely collapse of the global debt pyramid. At the same time, the Reaganites are well aware that the long-heralded ‘partisan realignment’ in their direction strictly depends upon the maintenance of a prosperity encompassing, at least, the suburban middle strata and the sunbelt speculators. For all these reasons, it is obvious that the second Reagan administration will go to extraordinary and dangerous lengths to sustain the current expansion and to prevent a precipitate unraveling of its triumphant electoral bloc.

To understand how a new crisis phase may emerge, and what its political consequences might be, it is first necessary to consider how the Reagan boom has been reshaping the domestic and world-market structures of capitalism. In contrast to Ernest Mandel, who has recently argued that debt-fed growth is only restraining a ‘true’ restructuration of the world economy and prolonging the basic tendencies of American decline,footnote5 I will attempt to show how the upturn has dramatically speeded up the transformation of American hegemony away from a ‘Fordist’ or mass-accumulation pattern. Three trends in the current expansion have a particular theoretical interest and salience. First, the general shift that is occurring in the profit-distribution process towards interest incomes, with the resultant strengthening of a neo-rentier bloc reminiscent of the speculative capitalism of the 1920s. Secondly, the striking reorientation of mainline us industrial corporations away from consumer-durable mass markets and towards volatile high-profit sectors like military production and financial services—a trend which is reinforced by the recent merger mania. Thirdly, the virtually systematic dislocation of dominant trade relationships and capital-flows as the locus of accumulation in new technologies has been displaced from Atlantic to Pacific circuits of capital.