CHAPTER 16
The United States and Global Capitalism, 1940-2006
LEARNING OBJECTIVES
Describe how the United States emerged as a superpower at the end of World War II.
OUTLINE OF CHAPTER
I. From U.S. Power to U.S. Superpower
II. The Long Boom in the United States, 1945-1970
VII. Creditor to Debtor, United States, 1970-2004
VIII. Government Power and Limits under Global Capitalism
IX. Colonialism to Neocolonialism, 1945-2004
KEY TERMS
budget surplus
occurs when the government takes in more money than it spent in a year; government revenues
are greater than government expenditures
creditor nation
a country that is owed more by other countries than it owes to other countries; a country that
lends more than it borrows from others on an ongoing basis
debtor nation
a country that owes more money to foreign countries than foreign countries owe to it the
ongoing basis
occurs when government spends more than it earns in taxes and fees
in a year (
in foreign countries
geographical locations within which countries agree to lower barriers to trade such as tariffs
Globalization
the process of growing interdependence among countries
government debt
the sum of accumulated surpluses and deficits over time when the accumulated deficits are
greater than accumulated surpluses
situation in which the price of a share of stock is not supported by economic fundamentals
trade deficit
when imports exceed exports
trade surplus
when exports exceed imports
ANSWERS TO END OF CHAPTER REVIEW QUESTIONS
Describe how the United States emerged as a superpower at the end of World War II.
1. What country is a superpower today? What does that mean?
The U.S. is a superpower.
2. Explain why the United States was an economic superpower after World War II.
Compare and co
3. State some characteristics and explanations for the long boom of the post World War II
period. Specifically, what factors made this period unique?
The U.S. dominated trade because other countries were devastated by the war. Pent up
4. Why did the economy slow down starting in the 1970s? Give some examples.
5. What is cited as the key driver of the boom of the 1990s? What happened?
6. What happened to real wages in the three periods? As part of your answer, define the
term real wages and explain why it is such an important measure.
Real wages are the actual purchasing power of the money made from employment or the
Describe the emergence of global capitalism.
7. What is generally meant by globalization? Is it something new? Explain.
8. Discuss some of the reasons for the rapid increase in globalization in the last part of the
twentieth century.
9. What is some evidence of the increase in globalization?
One indicator of the magnitude of global capitalism is that in 2000 the total movement of
10. What is a trade deficit? A trade surplus? What is the explanation for the United States
going from a trade surplus to a trade deficit?
A trade deficit occurs when imports exceed exports. Some of the trade deficit is due to
11. Explain the relationship of the trade deficit or surplus to whether a country is a net
borrower or lender.
12. What are some of the effects of the United States being a net debtor nation? Some
people argue we should worry and others argue we should not worry about the United
Discuss the debates about the role of the government in capitalism.
13. Governments are also players in the economy. What is the main source of funds for the
U.S. government? What happens if the government spends more than it takes in?
14. How does the government raise money if there is insufficient tax revenue to cover
spending?
15. What is the difference between internal and external debt? Why is external debt such a
concern?
Compare and contrast criticisms of globalization.
16. What is neocolonialism? What are the examples of neocolonialism over the 1945 2004
period?
Neocolonialism occurs when a former colony remains dominated both economically and
17. Name two international organizations and discuss what they do.
United Nations and the IMF. The United Nations was formed to stop wars; some of its
18. What are some of the concerns about powerful global corporations, especially in smaller
developing countries?
APPENDIX 16.1
How War has Changed
LEARNING OBJECTIVES FOR APPENDIX 16.1
Compare and contrast the nature of war over time.
SUMMARY OF APPENDIX
Appendix 16.1 discusses further the evolution of war in a global context
ANSWERS TO APPENDIX 16.1 REVIEW QUESTIONS
Compare and contrast the nature of war over time.
1. How do wars and the reasons for war differ over time? Give examples.
Wars change as society changes. The Revolutionary War was a war of liberation of the
2.
Explain the relationship of neocolonialism and war.
3. Is military power necessary to maintain a neocolony? Explain.
4. What methods are used to control neocolonies?
APPENDIX 16.2
Socialist Critique of Global Capitalism
LEARNING OBJECTIVES FOR APPENDIX 16.2
Discuss the different faces of socialism.
SUMMARY OF APPENDIX
Appendix 16.2 briefly explores the evolution and varieties of socialist thought since World War
II.
ANSWERS TO APPENDIX 16.2 REVIEW QUESTIONS
Discuss the different faces of socialism.
1. Describe the evolution of communism from the socialist movements in the post
World War II period.
2. How is communism like socialism, and how is it different?
3. Explain how communism is viewed and treated in the United States.
Explain the different between Marxism and Soviet Marxism.
4. Explain how Marxist scholars argue that Marxism and Soviet Marxism are different.
The Soviet system banned all parties representing capitalists and argued that their one
5. Describe social movements of the late twentieth century and their impact on the
United States.
The old socialist and communist parties in the U.S. almost disappeared by the 1960s.