The supposed dominance of finance over production is often traced back to the US Federal Reserve under Paul Volcker raising interest rates sharply in 1979. Boyer, Crotty, Chesnais, Dumenil and Levy all see this "Volcker coup" as a decisive point. Dumenil and Levy regard it as the great victory of finance, and argue this was why high interest rates were "maintained through the 1980s and 1 990s". 65 Implicit in such arguments is the suggestion that somehow finance in general and shareholders in particular had suffered through the decades of the long boom but were only able to express their feelings with the "coup" of the late 1 970s. The argument simply does not fit the historical facts. The post-war decades were ones of enormous self-confidence among all sections of capitalism. The "golden age" for industrial capital was by no means a living hell for its shareholders and financiers. All gained as the growth of profitable productive investment translated into secure long-term capital gains.
There was some change with the crisis of the 1970s. The US's bankers and multinationals did dislike the way the "macroeconomic" "Keynesian" response to the crisis of the 1970s led to inflation and devaluation of the dollar. But, as Robert Brenner points out, had such a policy solved the problems of profitability and industrial overcapacity for the rest of US capitalism, "it is quite conceivable that even the powerful coalition of international and domestic interests arrayed against it would have failed" .66 In fact the Keynesian approach did not achieve these capitalist goals. Limited economic recovery from the recession of 1974-6 increased the level of inflation, which reached 1 3.3 percent. This had two negative consequences for all sections of US capital. It was likely to encourage workers to struggle over wages. And it was undermining the capacity of the US dollar to act as a measuring rod for US capitalists in their transactions with each other. Forcing up interest rates was meant to solve both problems-by reducing the level of economic activity to scare workers into accepting lower wage increases (which it did) and to reduce inflation (which it also did). This enabled some sections of finance to gain and induced a recession that damaged some sections of American productive capital. But it also served the general interests of all US capitalists.
As Marx had noted, capitalism needs money to act as a fairly stable measure of value, even if damage is done to society as a whole in order to achieve it:
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The New Age of Global Instability