Preface

This book focuses on the economic challenges which the American economy has had to meet during the post-World War II era, and on the new challenges represented by the competing economies of Japan, Germany, and of the entire European Union which confront it in the perspective of the 21^st century. The book shows how the transformations brought about by challenge and response fit into the long-run processes of economic growth and change with respect to structural mutations, technological development, the role of the government, and the evolution of government-business relations. The book presents a detailed critique of the thesis according to which the American economy had reached its developmental “summit” in the late 1960s / early 1970s, since when supposedly it has been drawn increasingly into a process of decline. This downward slide, which is said to parallel the alleged decline of the United Kingdom in the 19^th century, could, according to the partisans of this thesis, be averted only by a crucial shift of U.S. policies toward more investment, a holistic approach to industrial technological change, and the selective targeting for “absolute advantage” in foreign trade of certain high-tech industries and products. The book demonstrates not only that such a decline has not taken place, but also that the American economy will continue to move forward energetically, enterprisingly, and successfully if growth and change are left to emerge from the impulses and incentives of the private economy.

Before the U.S.’s encounter with the supposedly increasing menace of the triple juggernaut of Japan, Germany, and the European Union competing with it in the contest for industrial technological supremacy in the 21^st century, one should not forget that United States had already successfully met other great challenges. From 1917 until 1991, the world’s main economic, political, and military developments had been deeply impacted, directly or indirectly, by the epochal changes which had taken place in the former empire of the Russian Tsars. Throughout its life span of over 70 years, the anti-Western and anti-capitalist Soviet system exercised a totalitarian dictatorship over the people of the Romanov’s great domain covering one sixth of the surface of the globe. In addition, after World II it commanded a vast allegiance from and an immense influence over the rest of the world, thanks to the illusions it had generated about the nature and the purpose of its rule, as well as about its supposed capacity to harness the “vagaries” of the market and to plan growth and change in an orderly fashion. Soon after World War II Soviet military power reached its apogee. But the Soviet economy, saddled with a growing military burden, was increasingly falling behind that of the rapidly developing United States and its Western allies. Yet the Soviet Union’s mastering of nuclear technologies and the beginning of its space exploration placed that country in a nightmarish balance of terror with the world’s leader, the United States. This paradoxical “bipolar” era lasted until the collapse of the Soviet Union in 1991.