THE 1960s: BUSINESS AND THE ECONOMY: OVERVIEW

American Century

In 1941 publishing magnate Henry Luce proclaimed the dawning of the American Century, and by the mid 1960s, if one looked at the business community, there was every reason to believe he was correct. At home and abroad American business was preponderant. The domestic economy was growing, unemployment was down, firms were increasingly productive, and technology was fueling constant innovation. Historians Louis Galambos and Joseph Pratt noted: "It was a good time to be in business in the United States, an era when American efficiency and entrepreneurship were the wonder of the world."

Decade of Affluence

During the 1960s the United States experienced its longest uninterrupted period of economic expansion in history. Whereas automobiles, chemicals, and electrically powered consumer durables were the leading sectors in the 1950s, they were supplanted by aerospace, housing, and the computer industry in the 1960s. By the end of the decade the average American's real income had increased SO percent since 1950, and the country's high standard of living became the envy of the world. Median family income rose from $8,540 in 1963 to $10,770 by 1969. This newfound affluence meant that many Americans for the first time enjoyed discretionary income that could be spent for enjoyment, not necessities. This prosperity did not reach all, however; poverty remained a growing problem, and its elimination became a cause celebre for Lyndon Johnson's presidency.

Big Business

Big business dominated the domestic economy of the 1960s. In 1962, for example, the five largest industrial corporations accounted for over 12 percent of all assets in manufacturing, the top fifty held over one-third of the country's manufacturing assets, and the largest five hundred controlled over two-thirds. Some firms grew unbelievably large—by 1965 General Motors (GM), Standard Oil of New Jersey (Exxon today), and Ford had larger gross incomes than all the farms in the United States. Viewed another way, General Motors's revenues for 1963 were nearly eight times those of New York State. In addition to controlling the U.S. market, American big business also reigned supreme globally. American overseas investment increased from $11.8 billion in 1950 to $49.2 billion in 1965. These businesses were Americanizing the world: by 1970 International Business Machines (IBM) was a major firm in every country in which it operated; Campbell's and Heinz sold their processed foods throughout the world; Procter and Gamble's products were distributed on all continents; and Coca-Cola was so widespread that some spoke of American overseas business expansion as the "Coca-Colonization of the world."

Big Government

The federal government's position in the economy continued growing during the decade. By 1970 it employed 3.9 percent of the labor force, up from 2.4 percent in 1940. This expansion of government also meant a much more active involvement in the economy. The government, in fact, played several economic roles: it was at once a consumer, an employer, a regulator, and a social-welfare agency. As a consumer it pumped billions of dollars into the economy by supporting scientific research, buying military equipment (especially at the height of the Vietnam War, when defense expenditures amounted to 10 percent of the Gross National Product [GNP] and 45 percent of the federal budget), building highways, and competing with the Soviet Union in outer space. As an employer it provided large numbers of civilian and military jobs. In 1967, for example, it employed 3 million civilians and 3.4 million military personnel. As a regulator the government stepped up its operations to control the economy and shape the business environment. And with the legislation of President Johnson's Great Society, the government greatly expanded social-security benefits and extended its obligation to care for its citizenry.

Big Labor

The 1960s were mixed for organized labor. On the one hand, union membership increased over the course of the decade—from 18 million in 1960 to 20.7 million in 1970—largely because of the growth of public-employee unionism; but as a percentage of the workforce it decreased. While wages and benefits were up and in most cases outstripped the rising cost of living, the American Federation of Labor and Congress of Indus-trial Organizations (AFL-CIO) came under increasing attack by radicals who opposed the union's support of the Vietnam War and its apparent lack of support for the civil rights of African-Americans. Yet even as its critics became more vocal, the AFL-CIO piled up a series of successes through its political arms. Up until 1968 and the election of Richard Nixon the union enjoyed several political victories, placing labor-supportive liberals in the White House as well as both houses of Congress. By the end of the decade, however, unions' influence appeared to be decreasing.

Cracks in the System?

Unions were not alone in their struggle by decade's end; there were clear signs that the American economy was in trouble. New competition loomed on the international horizon as Japan and a resurgent Europe challenged American corporations both at home and abroad. Meanwhile, as the costs of the Vietnam War spiraled upward, inflation put pressure on the economy, and America's long period of prosperity gave way to one dominated by stagflation in the 1970s.

Sources:

Mansel Blackford and K. Austin Kerr, Business Enterprise in American History (Boston: Houghton Mifflin, 1994);

Louis Galambos and Joseph Pratt, The Rise of the Corporate Commonwealth (New York: Basic Books, 1988);

U.S. Department of Commerce, Historical Statistics of the United States: Colonial Times to 1970 (Washington, D.C.: Government Printing Office, 1975);

Robert Zieger, American Workers, American Unions: 1920-1985 (Baltimore & London: Johns Hopkins University Press, 1986).