since 1945, the American Left has been awaiting the “big bust”. When it came, the trade union movement would supposedly overthrow its moderate leadership and American politics would be transformed. When the economy was bailed out of its first post-war recession by the Korean “police action”, many on the Left said, “the capitalists depend on military adventure to do it. It’s still either depression or war.” The post-Korean recession ended in 1954, and the economy started climbing again—with a built-in stabiliser in the form of defence contracts, but without a shooting war. By the beginning of the third post-war recession in 1957, Left analysts had become cautious in their predictions. And sure enough, the slump turned round in 1958, and in 1959, despite the long steel strike, most previous highs were topped. Though the Democrats and the trade unions see a new recession in the making for 1961, there is almost nowhere fear of a true crisis.

The trick was worked, of course, by applying and improving on Keynes. The government established a full arsenal of national accounts and sensitive indicators. From month to month, quarter to quarter, the economic temperature is taken; monetary and (less frequently) fiscal policies are adjusted accordingly. When Eisenhower took over from Truman, the doubts were soon set at rest: budget deficits continued, set off against high taxes and tight credit. In Truman’s era, Fortune magazine announced the “permanent revolution.” Midway through Ike’s second term, Galbraith was able to proclaim the “affluent society”. Overriding the economic fluctuations, the changing party fortunes in White House and Congress, the unemployed and America’s own “submerged fifth”, is the system: it survives.

Nonetheless, it is worth looking at some of the factors simmering beneath the more orthodox indices. They do not contradict conclusively the viability of the US economy. But they do tend in a common direction, and raise questions on the horizon of the nation’s economy and its politics.

A significant introduction is provided by a study of business cycles conducted by Moses Abramovitz, professor of economics at Stanford University, and commented on in an interesting article by the Editors of Monthly Review (April, 1960). Abramovitz has detected “long swings” of economic fluctuation underlying the conventional boom-bust cycles. His method uncovers dominant long swings in rates of economic change, related to basic factors of “long-term decision and commitment” such as “the movement of people from country to country and place to place, the formation of households and the birth of children, the foundations of business, and the investment of capital in highly durable form”. Abramovitz’ data, carried up to about 1953, indicate that a long swing downward has been in progress since 1939. But, because of the built-in stabilisers, he believes, the US is “happily unlikely to experience (serious) depression. But this does not mean that we may not have a number of years in which unemployment rates are not higher than we would like to see them because our rate of growth is not as rapid as it needs to be in order to absorb the growth in the labour supply.”

Here an examination of post-war unemployment, productivity, and prospective growth of the labour force, is illuminating. Average unemployment during 1949—the trough of the first post-war recession—was 5.5 per cent of the civilian labour force. By 1952, unemployment was down to 2.7 per cent. The 1953–54 recession touched bottom at 5 per cent unemployment for 1954, and by 1956 recovery had decreased this to 3.8 per cent. Unemployment in the third post-war recession bottomed at 6.8 per cent in 1958. Recovery during 1959 restored unemployment only to a level of 5.5 per cent—equalling the depth of the 1949–50 slump. In short, recovery has left an increasing percentage of residual unemployment.

This pattern is associated with trends of increased labour productivity resulting both from automation and from orthodox technological advance. Manufacturing production has consistently touched new highs in each recovery period. At the same time, in manufacturing, the number of workers not directly engaged in production approached and then exceeded the number of workers directly engaged. Net additions to the labour force have averaged less than one million a year in the past decade. But in the next five years this average will be at 1.25 million per year, and in the decade 1966–75, will mount to 1.5 million per year. Employees in the trade, service, financial and governmental sectors have shown continuous gains both as a proportion of the labour force and in absolute numbers.

The implications seem clear: at some point, the trends of an increasing work force, increasing productivity, and the absorptive limits of the nonproduction sectors of the economy will converge, to produce a steeply increasing rate of unemployment.