 argues the following. Again, it's very complicated. I just want to summarize this. President Reagan and the Republicans and many economists argued at the time what we have to do is deregulate markets. Remember where I started? It's a regulated capitalism and so the shift was to a more deregulated capitalism. We've got to get the state out of the business of trying to regulate various kinds of markets. One of the markets that was regulated at the time was the oil and gas market in the United States because we are a major producer of oil and gas. We still import a lot, but we're still a major producer. But the price of gas and oil was more or less fixed by the state. We set a price floor higher than the equilibrium price and we wouldn't allow that price to, I'm sorry, we set a price ceiling in the United States and we didn't allow the market price to rise above that. Meanwhile, because of OPEC, world prices were rising but they were being held steady in the United States and that's an impossible situation. So the argument was starting with this industry but then the airlines and a variety of other industries besides oil and gas, get rid of these price regulations for oil and gas, if I might just very simply do that one, the price of oil and gas of energy in the United States, we were over here. So the government was setting this particular price ceiling and not allowing the prices to rise above that, creating thereby an excess demand whereas world prices were rising. So the argument was get rid of this, let the world prices, this is the new demand, let the world price rise, so that's what happened in the airline industry, oil and gas and a variety of other industries across the United States which had been regulated. So let the prices of these things rise and then the argument there was which comes from neoclassical economic theory which in a sense was elected to office with President Reagan. So the Keynesian theory which had been hegemonic started to erode the neoclassical theory, the theory of markets started to become hegemonic and near the argument has always been that if you allow the prices to rise in the short run then hopefully that will stimulate two things, it'll stimulate existing firms to expand their supply and new firms to enter the industry because of the higher potential profits that they can earn or profit rate that they can earn and that will then shift the supply curve to the right for those two reasons and the price will fall as the short run turns into the intermediate and the long run and in fact that's what happened I think in the oil industry by getting rid of the regulation allowing the price in the United States to rise that gave an incentive to US firms to discover new oil fields in you know Alaska and the Gulf of Mexico to re-drill in all field older fields and the supply probably the supply curve did become more elastic in the long run so there was a good deal of increased supply of oil and that put tremendous pressure on OPEC so in real terms the price of oil well these this if I can use a strong term this attack this war on these special interest groups in these different ways likely enabled the the industrial capitalists to redistribute more of their surplus from what they have been giving to workers what they have been giving to the state and corporate taxes what they have been given to OPEC to now increase capital accumulation to spend more and research and development for new kinds of products which would embody more surplus value they had more also for mergers they could buy one by each other up and become larger and with the idea that they would it be able to increase their productivity in so doing and the productivity of labor did rise in the United States I think that's an argument they could easily be sustained new technologies that were developed that's the computer revolution to make a long story short the United States stopped losing as much super profit as it did before as there was a recovery in the automobile industry recovery in the steel industry and new industries arose why because in part the United States was a place in which the price of labor power in real terms had fallen okay so corporate taxes had fallen it became a favorable place to produce precisely because of this attack so let me give you an example of this over here one of the remember if you go we go back we did average cost was very important remember this average cost was C plus V divided by UV one of the variables that became very important in terms of discussions in the United States was something called unit labor costs which was the price of labor power divided by the productivity of labor in our terms so you take the price of labor power and the argument was that this was too high in the United States in the 19 after World War two okay that the price of labor power was high and the productivity was low the reason for the high numerator was precisely the workers having this these strong unions and able to get a price higher than the value the reason for a low denominator because the capitalist didn't have the way with all to accumulate new machines and body new technology and hence the productivity was too low the automobile companies had to pay higher prices to the UAW workers because of the strong union there and the productivity of those automobile workers was too low okay because the capitalist in the automobile industry didn't have sufficient left to invest in new kinds of plant and equipment because they were being hammered by these three demands added to their other subsume glass payments so the idea was you could reduce unit labor costs in the United States by getting rid of the strong unions in the numerator and freeing up more of the the surplus to be distributed to capital accumulation of body embodying new technology that's robots to increase this whilst simultaneously you decrease this that would bring down unit labor costs to produce a car in the United States and that might allow the United States to then become competitive and stop losing super profits to its competitors make a long story short the United States would become a location in which the Japanese would stop producing the Honda Accord and perhaps even some of those Accords could be produced in the US and shipped to Japan because the unit labor costs had been driven down in in the United States I want to continue this story and finish up next time about what happened to American capitalism by telling you about a number of consequences on US capitalism and I shall stop there