Was Carter’s Flawed Presidency, the Best the US Can Expect?

Jimmy Carter’s body has been interned after a century of energetic engagement on the earth’s surface. But his legacy remains debated as observed in legions of overviews on his legacy published this past week. Some see him as an idealist lacking humanity’s foibles nonetheless necessary to properly govern people less earnest than himself. Many on the left see him inaugurating the neoliberal era with his deregulatory economic agenda, while conservatives view him as the harbinger of massive inflation and economic malaise. Meanwhile, on foreign policy front, liberals saw him as re-introducing values into foreign policy, while those on the right thought him soft and failing to use the US’s iron fist to advance American interests. Instead, we might view his actions through a Black Swan set of economic events only radical solutions could have addressed while succumbing to pressure from Cold War Democrat hawks that shifted foreign policy in ways creating geopolitical instability up to the present.

Running the world in the Cold War was not for the pure of heart. From the “scientific management” of war meted out in Vietnam by former Ford Motor’s President Robert McNamara as Secretary of State, to the assassinations and overthrow of democracies by the CIA as exposed by Senator Frank Church’s Commission, to the deviousness of power exposed by the Watergate hearings on the Nixon Administration shown daily on television in 1973, it was an ugly ride. Many Americans wished for renewal following this period. And it seemed to arrive, as it only could in the US, by calling up Frank Capra’s central casting for a Norman Rockwell figure coming to full immerse Baptize America anew and to wish away its sins. In short, Jimmy Carter, the Plains, Georgia engineer, farmer, intellectual and preacher, but no snob, arrived on the “set” in 1976.

Labor wanted a reboot of the New Deal from Carter, but instead got a raw deal. The 1970s were the opposite side of the long economic cycle that began a half-century earlier in the 1920s that culminated in the New Deal. The interwar period, out of which the New Deal was born, was marked by under-consumption by workers. In the 1970s, the opposite, as post-WW II gains for labor shifted in the post-WW II era to more of the economy’s output going from wealth to income (wages). This period saw workers getting roughly 10 percent more of the economy’s output as labor does now. In short, there was much room in the 1930s to address the economic crisis through boosting wages and increasing industrial investment. By the 1970s, this was no longer the case. This time saw manufacturing over-capacity and the Black Swan stagflation event of the energy crisis. Under these 1970’s conditions, an expanded New Deal like industrial policy could not be accomplished with Keynesianism (government spending that also retained capitalist profits).  

The Brits were the first to offer the alternative of doubling down on infrastructural investment/modernization before Carter was even elected. The United Kingdom’s Prime Minister, James Callaghan, argued for this in 1976. The AFL-CIO suggested it for the US in 1979 but were rebuked by Carter. It might have worked, but it would have required crossing the line from Keynesianism to socialism, or quite close to it (which I support), given the erosion of profit levels that would have ensued. As smart as Carter was, he was not equipped by training nor inclination nor class background to go that route.

James Callaghan, as referenced above, however, was going to try this more radical fix to the then crisis that would have arguably crossed from Keynesianism into socialism. Callaghan was going to launch a massive modernization of industry program to escape the crisis through increasing productivity. Problem was how to pay for it? The new burdens of a 300% increase in oil from 1973 were budget-busting. The answer was to get the International Monetary Fund (IMF) money. William Simon, President Gerald Ford’s Treasury Secretary, paid PM Simon a visit to say, paraphrasing, “No way, Jose. Your investment solution will exacerbate the already existing crisis of manufacturing overcapacity thus worsening the already existing crisis of corporate profitability. Return to your ‘comparative advantage’ of banking (especially offshore), or you get no IMF money to pay for oil this winter.” Callahan folded. What choice did he have?

In 1979, Lane Kirkland of the AFL-CIO proposed an industrial policy similar in direction to Callaghan’s. This was the Reindustrialization Financing Corporation that would combine private and public money with union pension funds to modernize US industry. Labor’s proposal was nixed, however, by Carter’s economic advisors that already settled into their deregulatory path and were keen on keeping government budgets going too far into the red. Francois Mitterrand in France was the last to this pivot to investment direction but was crushed by a capital strike (when big business withholds money and starves the economy).

During this 1970s crisis the Trilateral Commission (TC) exercised their influence on policy directions as they formed a new consensus among capital. The TC represented figures making up the faction of elites that previously backed FDR; capital-intensive industries whose profits came from investments more than from labor-intensive older industries (e.g., National Association of Manufacturer types) where low wages and low taxes delivered profits. By 1975, the TC decided, contra failed Democratic Party candidate Al Smith’s 1928 maxim that the “cure for the ills democracy was more democracy” had reached its limits as an instrument for maximizing stability. Elite opinion in the TC now argued (activism and electoral) by the 1970s we had overdosed on democracy and it now generated instability that had to be rolled back. Samuel Huntington’s TC work group concluded this in their 1975 report entitled The Crisis of Democracy claiming democracy needed “downsizing.”

But there was not yet consensus in the TC on how to deal with the economic crisis as it unfolded in the early 1970s . Carter in the first half of his presidency tried a Keynesian “locomotive” strategy where US spending would pull it and West Europe out of the slump. This failed. By 1978 this pushed elite opinion toward the direction of restoring macro-economic stability, or austerity rather than investment to restore the economy. The massive 1978 oil shock added further fuel to implement this austerity solution. As we know, labor was expected to pay most of the cost and under Reagan following Carter, workers paid all the freight of the economic rebalancing under their supply-side austerity policies.

Carter was, in essence, a friendlier/nicer version of Margaret Thatcher, with the economic outlook of them both shaped by the small business environment out of which they emerged (the grocer’s daughter and peanut farmer). Carter differed from the Iron Lady in also being a “Naderist” (Ralph), thinking that anti-corruption and halting price gouging and rent-seeking of various types were needed for restoring economic vitality. Of course, Naderist reforms were helpful (and normatively good), but insufficient for achieving this policy goal of fixing the 1970’s crisis. Carter’s paternalistic outlook as a protestant preacher linking sacrifice (austerity) and piety were also unhelpful. Labor was shafted and handed the first bar tab for system reform, for which fully developed neoliberalism would dump even more bills for workers to pay.

Where Carter exercised real agency, rather than being pushed by the underlying logic of late-stage Keynesianism matched by the Black Swan event of the oils shock, was on foreign policy. The critical event was his pressure to appease Cold War hawk Democrats by appointing Zbigniew Brzezinski (ZB) as National Security Advisor. ZB was frequently sidelined in the first half of Carter’s Administration with Cyrus Vance as Secretary of State mostly shaping a more liberal and less interventionist foreign policy. Carter, however, finally bowed to right-wing pressure and permitted ZB in 1979 to implement his Afghani scheme in support of the Mujahideen. This was transformative. Designed to get the Soviet Union to invade Afghanistan to give the Soviets “their own Vietnam” (as ZB put it), it set the table for radical Islamic terrorism to flourish up to the present, while also working to break up the Soviet and then Russian “empires.” This policy echoes into the present in our renewed Cold War. Permitting Brzezinski to take the reins of foreign policy in 1979 was nothing short of the difference that history might have taken if Henry Wallace had been allowed to remain FDR’s VP, rather than his replacement by Truman and the influence that hawk Secretary of State James Byrnes exercised over US foreign policy shaping the Cold War.

In short, Carter had little agency to fix the 1970’s economic crisis. He could have chosen the massive investment drive that would have in effect made the US a near socialist economy (a choice your author would support). That, however, was risky and would not comport with Carter’s outlook or grasp of economics. By contrast, Carter had greater latitude to constrain Zbigniew Brzezinski’s foreign policy adventures but bowed to political pressures late in his presidency to shift right and with it delivering a legacy of geopolitical instability that remains with us today.

Marxist historian and first Prime Minister of Trinidad and Tobago, Eric Williams, argued that anti-slavery really wasn’t much of “thing” among Europe’s ruling and middle classes before 1800. While imperfect as an analogy, before the 19^thcentury one might as a slave prefer living under the rule by the most enlightened slave owner rather than the worst sadists among those presiding over that institution. Given the prevailing class relations of the 1970s, Carter’s small business farming background and being a pastor, his actions on policy were both predictable and one can argue his intentions noble and as observed, better than what followed him even if he opened the path for neoliberalism.

Future policy progressive change by policymakers will require an intellectual anchoring in political economy. While Carter’s undeniable (to my mind) extraordinary humanity is admirable, and qualities we should seek for officeholders, absent a command of political economy and grasp of class relations, we should not expect better outcomes than obtained by Carter’s rule in his four years as President during the crisis of the 1970s.

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