This seems to explain the well known stagnation of labour productivity in the US in the 1970s-the value of the machinery on which labour worked was originally reckoned in terms of how much it cost to produce or replace inside the US, but with rising international trade, what mattered was the lower figure that would have been obtained if world comparisons were used.44
In any case, the feature described by Galbraith, of firms being able to downplay the importance of profit in the interests of growth, was undermined. And this was not only a very significant change for the state monopoly capitalism of the US. It was to have devastating consequences for those countries which had gone much further in the direction of full blooded state capitalism in the Eastern bloc and the Third World. They too were to enter into a new period of crises.
The end of the Stalinist model
The assumption of conventional thinking on the right as well as the left was that the Soviet-type economies displayed a very different dynamic to that of the West. It was assumed, with very little dissent45 until the 1970s and sometimes the 1980s, that they could sustain high levels of growth indefinitely, even if they were also marked by major inefficiencies and tended to produce low quality goods. Typical of the attitude on the left, even from people who were scathing about the denial of workers' rights in such societies, was the position Ernest Mandel held. He wrote in 1956:
The Soviet Union maintains a more or less even rhythm of economic growth, plan after plan, decade after decade, without the progress of the past weighing on the possibilities of the future . . . All the laws of development of the capitalist economy which provoke a slowdown in the speed of economic growth are eliminated . . . 46
Mandel still argued in the mid-70s, that "while the recession is hitting all the capitalist economies, the countries with non-capitalist economies are escaping the overall effects of the recession" .47
Such attitudes received a rude shock in the late 1980s when Mikhail Gorbachev, recently appointed as general secretary of the Communist Party of the USSR, revealed that the economy had been suffering from "stagnation" for some years.48 His economic advisor, Abel Aganbegyan, said:
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