 So, this is a loss of surplus value on the left-hand side via a struggle over super-profits that we discussed in this course, and I gave you a couple of tables on that, okay? So here, American capitalists are losing what? They're losing the surplus in the TV industry to the competitive Japanese, and the United States, eventually, as this has become very severe, is going to lose, the TV industry is going to disappear from the United States. That which was a very key important industry in the U.S., and the firms producing it disappears. And so the surplus value is lost to the more competitive Japanese. Automobile industry is coming under increased pressure. The Big Three, Ford, General Motors, and Chrysler comes under increasing pressure by these competitive German, Italian, and Japanese producers. They're losing surplus value via super-profit to the competitors. Electronics industry in general, okay? Rubber industry, steel industry, it just goes on and on and on. So across the major industries in which there's a good deal of monopoly power, the capitalists are getting hit by competition on the left-hand side, while simultaneously they have to pay higher wages to the workers, sometimes and often in those same industries, higher corporate taxes to the state. And now they get hit with this oil shock from OPEC. So this is a looming crisis, which becomes an actual crisis as the 70s continue. People talk about the end of American capitalism, just like the British. Capitalism started to decay after the 1870s. They talk about now the decay of American capitalism, who won't be able to compete with the super-efficient Japanese. And it's a crisis. The crisis helps to produce a solution, which is that a man arrives upon the scene in the late 1970s, gets elected to office in 1981, it's President Ronald Reagan. And President Ronald Reagan comes into office in, I should be before that, President Reagan mounts a campaign in which he says American capitalism is being threatened by special interest groups. And he names them. The special interest groups are the unions, the strong unions, the state itself, and of course OPEC. These special interest groups, which are working in their own interests, are threatening the survival for American. And unless we do something about that, American capitalism will disappear. So he mounts this kind of campaign. He's very articulate. As you all know, he's a former movie star, so he knows how to speak well, very, very persuasive. He looks the part and to make a long story short, this guy gets elected President of the United States. And what he does do is deliver on his campaign promises. He goes to work on the right-hand side and the left-hand side. So I want to take that through, because that's going to take us through the 1980s, right up to the present. First, these events happen. The air controllers go on strike in the United States. And the air controllers go on strike. That's a major industry, as you all know. And to make a very long story short, President Reagan goes after those workers. He replaces the air controllers with federal employees and the airports. And to make a long story short, he breaks that strike. That's a very important strike. It's broken by the president. He's very clear in terms of what he's doing. The strike would still have been affected, even when the air controllers were replaced by federal air controllers, if the trucks that deliver gasoline to airplanes did not do so. What happened was that the teamsters still delivered their oil. They crossed the picket line in the airports and delivered their oil to the airports across the United States, which enabled those airplanes to take off. And some people claim that there was some kind of deal that was struck between President Reagan and this particular union. And that may be or may not be. I don't know. But the point being is that there was a change circumstances during this moment in time. And President Reagan was certainly consistent on this, which is to go after these unions. And that set in chain a whole new environment in the United States, in which, in a very short period of time, those unions, which had been very strong, as I said to you, which had the heritage of FDR behind them and Harry Truman and so forth, became understood in the United States, a new culture kind of emerged in the United States, and new laws were passed in Congress in the United States, in which they became a special interest group working for their own interests against America. To make a long story short, this undermined the power of unions to charge a higher price for their labor power than the unit value. So this political, cultural, and indeed economic new environment that emerged in the United States helped to reduce, what's right here, reduce the price of labor power. That's not the only reason the price of labor power fell. But what I'm arguing here is the following, on the supply of labor power and the demand for labor power, price of labor power. This is what unions, that's what their power, their monopoly power allowed. To charge a higher price than the so-called competitive price. I think what President Reagan started, in which Congress adopted, was to remove this constraint, remove that or erode that power on the part of unions. And then over the next several years, the price of labor power started to fall because unions no longer could do this, and more and more the market determined the price of labor power. And because of market changes, which I'm going to explain, the price of labor power in real terms started to fall. The real wage in the United States started to fall. And part of that fall was contributed with the erosion of workers. And that was a deliberate campaign promise of President Reagan. Secondly, I'm going to march through these, one, two, three, four. So the second one, so this is being eroded. The second one was that corporate taxes were reduced. So the second one is another kind of campaign. And the campaign here was that the state is too large. The state is interfering with market incentives, is taking too much of the profits of corporations to support all kinds of government expenditures. And the argument was that the federal government should reduce the corporate tax, which would allow corporations to invest more. And if they could invest more, that would raise the productivity of labor, and that would help to solve the left-hand side. It was a very strong argument that was mounted at the time. So in fact, we had the beginning of a reduction of taxes, federal taxes, on corporations. But it's very difficult to get to that through Congress, unless you're going to cut personal taxes on everybody else. And so what emerged is a kind of, a new kind of culture in the United States, in which the tax rates on corporations and the tax rates on individuals started to fall, okay, and fall rather dramatically. It's probably the biggest tax cuts we've ever had in our history. First under President Reagan, then under President Bush number two, okay? So we had dramatic cuts in taxes, which tax rates, which are with us today in the United States, to solve this problem. And the idea here, the strategy was if you lower the taxes on corporations, they could, what? They could increase, especially the subsumed class payments for capital accumulation, that we discussed previously in this course. So that's one component that would increase. You cut the PLP to workers, you cut the corporate taxes, and then you can boost this. Notice this. Don't forget this. This is the Delta C. That's the investment in new means of production, which would raise the productivity. Remember, this is an increase in C over C plus V. That'll raise the productivity of workers. That'll allow our industrial capitalists then to lower their average costs and compete effectively with the Germans, the Italians, the Japanese, the Brazilians, and so forth. Secondly, this will increase employment here times the number of hours. So even if the hours stay the same, you'll increase employment here because you'll be hiring more people, okay? More jobs. So the argument was a cut in taxes will enable higher productivity and more jobs, okay? In other words, you put them together. It'll encourage growth, and that was part of the argument then and today by many in the Republican Party. So by reducing these subsume class payments, you encourage capital accumulation and you get these two tremendous benefits, okay? Next. The next kind of argument is that, let me, you know, I should go back to this corporate taxes. I don't want to lose it. So the good side for the capitalist is this, is being reduced. There's another good side for the capitalist under President Reagan's platform, which was we're going to reduce corporate taxes, but we're also going to increase defense expenditures in order to, let me just sum it up, in order to engage and defeat the evil empire, which is that of the Soviet Union, which at that time was still, the Soviet Union was communist country or claimed to be a communist country. So there was two parts to this. You reduce taxes, both corporate and personal taxes, and you raise government expenditures in terms of defense expenditures. So I just want to jump for a moment. For the state, it's got revenues, it's got expenditures. These are revenues and these are expenditures in the state. You're reducing revenues by cutting the taxes, starting with President Reagan, both corporate and personal. You're raising expenditures on military. Well, it's not, you can see from the equation, you're going to get this. That is, the state's going to start running deficits, which it did. And so this began a process of cutting taxes left hand side, raising or maintaining government expenditures on raising them for defense, maintaining them for as much as possible for everything else. And hence, deficits were looming in the United States, were growing and growing to this day. And that too will have consequences on the economy because, you know, if you're running deficits, then the government is going to issue bonds to help finance this deficit. Increasing the supply of bonds is going to drop the price of bonds, or another way of saying the same thing is going to raise the interest rate. And an increased interest rate is going to cause havoc on consumers and industrial capitalists. So it's another kind of contradiction. So to make a long story short, and I shall come back to it, solving this problem creates a crisis for the state. You can say in psychological terms that the problem for industrial capitalists has been displaced onto the state in terms of state deficits. Let me take another third one. Third one is also very interesting. The third one argues the following. Again, it's very complicated. I just want to summarize this.