But the restructuring through crises did not have the full effect it had had in the "free market" period of capitalism from the early 19th century until the First World War. It did not get rid of unprofitable capital on a sufficient scale to raise profit rates to the levels of the 1950s and 1960s. The neoliberal ideology may have embraced the notion of "creative destruction", with its implication that some giant firms must be allowed to go bust in the interests of the others. But the practice of states-and of the pressures which industry and finance put on states-was rather different. The fear of what the collapse of the really big corporations and banks might do to the rest of the system persisted.
Hardly any big firms had been allowed to go bust during the first two crises of the mid-1970s and early 1 980s. Governments had continued to step in to keep them afloat, most notably with the US state's support for the bail-out of the car giant Chrysler at the end of the 1970s, of the Continental Illinois bank in 1984 and of the Savings & Loans corporations (the US version of building societies) in the late 1980s. Things changed to some degree from the late 1980s onwards. As the Bankruptcy Year Book reports:
During the 1980s and early 1990s record numbers of bankruptcies, of all types, were filed. Many well known companies filed for bankruptcy . . . Included were LTV, Eastern Airlines, Texaco, Continental Airlines, Allied Stores, Federated Department Stores, Greyhound, R H Macy and Pan Am ... Maxwell Communication and Olympia & York.12
The same story was repeated on a bigger scale during the crisis of 2001-2. The collapse of Enron was, as Joseph Stiglitz writes, "the biggest corporate bankruptcy ever-until WorldCom came along" .13
This was not just a US phenomenon. It was a characteristic of Britain in the early 1 990s, as bankruptcies like those of the Maxwell Empire and Olympia & York showed, and, although Britain avoided a full recession in 2001 -2, two once dominant companies, Marconi/GEC and Rover, went down, as well as scores of recently established dotcom and hi-tech companies. The same phenomenon was beginning to be visible in continental Europe, with an added twist in Germany that most of the big enterprises of the former East Germany went bust or were sold off at bargain basement prices to West German firms, 14 and then in Asia with the crisis of 1 997-8. On top of this there was the bankruptcy of whole states-notably the USSR, with a GDP that was at one stage a third or even half that of the US.
The Years of Delusion
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