For several decades California has played a leading role in the United States and world capitalism, but things have taken a sudden turn for the worse after a period of brilliant growth. Now, at the end of the millennium, California is a microcosm of the national malaise, the accumulated deadweight of a triumphal epoch bearing down on the present, leaving a misguided economy, a disintegrative social order, a decadent politics and the blinding ideology of an Imperium losing its grip. Chances for success in the wrenching process of economic, political and social restructuring depend on a wider political economy than the putative flexibility of California’s industries or the inspiration of its entrepreneurs. My thesis is simple: that California’s dilemmas have fundamental political and social causes, and the state is ideologically unprepared to cope with the profound tasks of industrial retooling, closing the class divide, or integrating a flood of dark-skinned peoples into the body politic.
The three most obvious and general contradictions facing California are the worst economic crisis since the Great Depression, a massive racial recomposition of the people, and a machinery of state unable to govern.
By the time of the Vietnam war, California had taken over as the principal engine of us economic development. This status was confirmed as industries centred in the Midwest and the Northeast—steel, autos, electrical goods, appliances—folded under the pressure of foreign competition in the early 1980s. Out of the shadow of Fordism, its industries were trumpeted as the way forward for a nation losing its knack in manufacturing. On one side was electronics, in which employment was growing furiously, barrelling right through the 1980–82 recession when us manufacturing was shedding over 2 million workers. Silicon Valley was hailed as the world centre of the new computer-information age and emblem of American innovation and entrepreneurship at its best. On the other side was mighty aerospace, the American trump card for beating back both the Soviets and economic decline. Ronald Reagan’s conquest of the White House sealed the case for America’s state of grace, as defence spending shot up to $300 billion per year, California’s share of prime contracts peaked at 23 per cent, and a new generation of ‘smart war machines’ was ushered in. Orange County avionics became the biggest cluster of electronic manufacturing on earth (while the Bay Area received huge new contracts for satellites, guidance systems and Star Wars lasers). Everyone rushed to study Los Angeles and Silicon Valley, the new technopoles.footnote1
Then there was finance capital: California entered the 1980s with the world’s largest bank (Bank of America) and credit card company (visa), the country’s biggest Savings and Loans (led by Southern California impresario Charles Keating’s Lincoln Savings), and the nerve centre of