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The postwar compact between labor and capital was that a privileged segment of workers shared in the profits from rocketing productivity. In exchange, the labor elite agreed to spend a lot and stay away from communists. And build the best bombs in the world. But freed from the wartime no-strike pledges, other workers—for whom suburban military Keynesianism looked to be a Worse Deal—tried to pick up where they left off in the 1930s. The postwar American economy was a site of high-stakes conflict: In 1946, the country set new records for corporate profits and number of labor strikes.33 Both sides sought to consolidate wartime gains and claim larger shares of expanding output, while workers struggled to keep up with rapidly increasing consumer prices newly liberated from wartime controls. In Oakland, a conflict that began with 1,000 striking department store workers escalated to a citywide general strike of 100,000.34 But the evenhandedness that characterized the Roosevelt administration’s mediation (at its best) was gone.
One of Santa Clara County’s virtues for firms looking to relocate or expand there was the lack of a strong industrial union presence—not an uncommon rationale for selecting a rural factory site. Like railroad engineers, salaried engineers at firms such as HP and IBM remained tough to organize, but some hourly production workers armed themselves with the National Labor Relations Act and bargained collectively. At military contractor Westinghouse’s Sunnyvale plant, the left-wing United Electrical Workers won an election to represent hundreds of workers, beating out more conservative unions. The UE entered the postwar period as the third-largest member union in the CIO with 700,000 workers, including around 300,000 women.35 But the UE had a strong communist current, and in 1947 when the Republican congress passed the Taft-Hartley Act, which required union leaders working with the National Labor Relations Board to affirm that they were not communists, the UE refused to comply. Soon they split entirely with the CIO, preparing it to merge with the tamer and less radical AFL. Marginalized by the increasingly anticommunist mainstream labor movement and shackled by Taft-Hartley, with its ban on sympathy strikes, the UE withered. In 1956 it lost its Westinghouse reelection, and by the end of the ’50s it was redbaited out of burgeoning Silicon Valley. This hit women on the production lines particularly hard. Historian Glenna Matthews writes that “[w]hen the UE lost its vital presence in the Valley, women workers lost their best chance of having labor commit resources to organize them.”36 Uncoincidentally, Silicon Valley firms used immigrant women to fill nonunion low-wage assembly jobs in the coming decades. Warned by example and freed from internal competition by Taft-Hartley, Santa Clara County union leaders stayed friendly with management.37
Manufacturers increased prices to offset the high wages that constituted their side of the compact, which made life hard for Americans whose pay wasn’t tied to industrial revenues. As economist John Kenneth Galbraith wrote of the dynamic, “A passenger in even a very fast automobile is reasonably certain of keeping up with it. A man running alongside is not so well situated.”38 Suburban military Keynesianism was a speedy car, and not everyone was along for the ride. The program left workers behind in new ways. For example, the unionized fruit industry, with its relatively high pay, had been open to undocumented immigrants, but only U.S. citizens were generally eligible for defense work. Still, Northern California’s Mexican population boomed as workers came from every direction toward the new center of prosperity, many solicited by regional labor contractors looking to fill jobs in the fields. In 1948, the Supreme Court struck down restrictive real estate covenants, allowing documented Mexican workers to live anywhere they wanted, but the Supreme Court couldn’t make high-technology firms hire them, even for nondefense work. Meanwhile, mechanization changed food production in California: The state’s agricultural workforce declined (in absolute terms) by over 20 percent between 1949 and 1969, though workers harvested virtually the same amount of acreage.viii Braceros, Mexican-Americans, and undocumented Mexican immigrants, cordoned away and together on the segregated labor market, all vied for the same shrinking set of jobs.
“[T]he solution to the economic crisis of the end of the war turned out to be simply not letting the war end,” writes historian Walter Johnson.51 The Cold War was a real, long war, and millions of people died. To speak of the American “postwar” economy or state into the 1950s is not to talk about a country at peace, but a country finished with peace altogether, a nation that has embraced a permanent conflict. [...]
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Baran was a professional peer and (at least) an intellectual equal of the leading liberal economists. During the war, he worked alongside Galbraith, who called him “one of the most brilliant, and by a wide margin, the most interesting economist I have ever known.”56 But whereas others were eager to ride bombs Strangelove-style into the prosperous American half of the century, Baran loathed military Keynesianism. In fact, he thought its development discredited Keynesianism in a broader sense. Along with his Harvard friend Paul Sweezy, Baran became the strategy’s most incisive critic within mainstream economics. In his 1957 book, The Political Economy of Growth, he argued that it did matter where demand was coming from, that stockpiling weapons of mass destruction for the spending stimulus was “very much akin to the counsel to burn the house in order to roast the pig.”57 The oligopolies running the American economy followed the government down absurd R & D paths, failing to produce anything useful for the people. And on their own, corporate leaders only pursued investment that reduced their costs, avoiding plans to expand output, which (as we’ve seen) ignited price competition and lessened profits. For workers, living didn’t get increasingly easy, as the Keynesians predicted. Under capitalism, people couldn’t direct the nation’s societal surplus to useful ends. Rather, the people’s inability to control those resources in the face of oligopolistic control defined capitalism.
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As a productive part of the American capitalist economy, Stanford faced some of the same limitations that capitalism did as a system. It was, as an institution, invested in profit and existing property relations. As I’ll note in the rest of this section, in the electronics industry and way beyond, profit incentives determined Stanford’s real shape. Not the school’s own profit—nonexistent, of course—but profit in general. This was the role of universities in the Giannini cartel model: to take on research and development on behalf of the capitalist class rather than any individual firm. As Jordan designed it, Stanford’s capabilities met America’s pressing modern needs—“an adequate supply of suitably qualified technical personnel and a satisfactory number of first-rate scientists.”62 The fruits of this work, therefore, don’t just “happen” to be bombs, ads, canned food, and Hollywood’s “moronizing entertainment,” Baran writes; for the capitalist system, all that is “the very basis of its existence and viability.”63 We’ve seen this dynamic play out with regard to the modern food system: The state demands canned food for war; firms invest in food processing; then, already halfway down the processed-food path, firms keep going, investing in advertising, shipping, mechanization, and additives research. What we’re left with is a very profitable food system that’s objectively harmful to people and to the rest of the earth. This same dynamic undergirded Provost Terman’s Stanford and the wider “postwar” Palo Alto community.
That production chief was named Charlie Sporck, and at Fairchild, and subsequently at the spin-off National Semiconductor, he played an important role in directing the future of Silicon Valley and the American economy at large. In the early 1960s, only around five years after the company started, Fairchild opened its first overseas assembly plant, in Hong Kong. The move—suggested by Bob Noyce—surprised the rest of the industry, but with the low start-up costs for assembly lines, it was a textbook case of labor arbitrage. According to Wilf Corrigan, who was promoted to oversee Fairchild’s overseas manufacturing in the mid-1960s, the going rate for “semiskilled” assembly work was $2.50 an hour in the Bay Area (more than $20 in 2022 money) but only 10 cents in Hong Kong, a 96 percent reduction.50 Fairchild was the innovator in what Corrigan called “jet-age automation” and what we have come to call offshoring.51 At around $1 a day, Fairchild found a way to match the nominal cost of Chinese railroad workers a full century after they built the Central Pacific. Paying so little sounds dangerous, especially so close to Red China, but America’s military bases provided sufficient security. The country’s global anticommunist mandate (self-awarded) ensured capitalist governance, and that made offshoring a more promising investment than automation. Sporck replayed the same layoffs-first strategy at National Semi, and the rest of the industry followed suit.
Offshoring is an inexact term, considering that firms were perfectly willing to seek deals on work in North America, too, by building plants in Mexico. In 1965, Fairchild opened a factory on the Navajo reservation in Shiprock, New Mexico, taking advantage of high unemployment with a low-wage “trainee” program and $700,000 in loans from the Navajo Nation.52 Scholar Cedric Robinson calls sites like Shiprock “production enclaves,” places where corporations “could be guaranteed special privileges and higher rates of exploitation.”53 Whatever you call it, Silicon Valley reoriented around this labor arbitrage strategy, bifurcating high-cost engineering and design from low-cost assembly work—the Shiprock site quickly became New Mexico’s largest industrial employer.54 As we’ll see, the strategy culminated in “fabless” (as in, without fabrication lines) manufacturing in the following period, divorcing design and production at the firm level. The First World’s Cold War arsenal created the production enclaves where capital could count on low wages, freeing semiconductor firms and ultimately U.S. industry in general from domestic wage-price inflation. Besides, putting production in East and Southeast Asia kept electronics firms near their biggest customer: the U.S. military.
From the perspective of East Asia’s indigenous anticolonial movements, the Cold War reoriented but did not recast decades-long conflicts. For the region’s peasants, economic democracy was about avoiding or managing proletarianization, about land reform and the national ownership of national resources in the true national interest. Like most of the agricultural strikers in California, the “communists” in East Asia were more often working people struggling to reduce their level of exploitation via collective action in the face of modern capitalists who were always finding ways to get more for less, new ways to grind their laborers down. The Huk Rebellion in the Philippines was left-wing, but it wasn’t led from Moscow.ii The same was true in Jeju Island, off the Korean peninsula, where autonomous local popular committees governed until the Americans landed in 1945. Capitalist proxy governments had no choice but to treat these forces as capital-C Communists, both because that’s how the American handlers saw them and because if these economic democrats were to take power they would encounter strong incentives to align with the Soviets (as Mao did) or at the very least stake out neutral ground. In the late 1940s, Rhee’s RoK authorities responded to protests in Jeju with a counterinsurgency operation. They killed tens of thousands of suspected leftists while American military occupiers watched.
There is no single line that connects California to the world anticolonial struggle; they are embedded in the same history, as I contended in the first section. It was colonial exploitation that linked these conflicts in the first place, not the spread of doctrines or encounters between individuals. We know this is the case because when large-scale street violence and conflict kicked off in California in the 1960s, it wasn’t thanks to an armed insurrectionary party. Riots that went beyond organizational politics—the organic black-led uprising of the urban exploited, what King called “the language of the unheard”—erupted across Johnson’s America. Police abuse incited rebellions in California’s black ghettos: in Watts (Los Angeles) in 1965 and in Hunter’s Point (San Francisco) the following year, and on a smaller scale in East Palo Alto in 1967, which fit the category by then. The only outside agitators required to start military-scale conflict in America’s streets were the police commuting from their white neighborhoods. That said, there’s value in identifying some particular individual connections between the Bay and the rest of the colonized world. In this period, Californians took conscious political action to join the Third World struggle, even when that meant declaring war on their own government. After all: Isn’t that what colonized people did?