Powell’s memo emphasized the domestic threats to corporate America, but abroad, even more pervasive challenges to United States–based corporate control were emerging. First, following the devastation of World War II, Japan and Germany had rebuilt their economies. Between 1950 and 1980, real annual per capita growth in gross national product went up by 7.4 percent in Japan and 4.9 percent in West Germany—but only by 2 percent in the United States.8 Fueled by this rapid growth, Japanese, German, and other European corporations began to compete with U.S. companies for global markets and profits. In the auto industry, for example, in 1953, the United States made 70 percent of the world’s motor vehicles; by 1968, this share was down to 38 percent.
Over the next four decades, the increasing globalization of multinational corporations forced U.S. companies to develop new strategies for increasing profits. This globalization of capital also changed how U.S. companies interacted with the U.S. government, ultimately diminishing government influence on companies. By 2008, shortly before the start of the economic crisis, Business Week observed that, “in effect, U.S. multinationals have been decoupling from the U.S. economy in the last decade. They still have their headquarters in America, they’re still listed on U.S. stock exchanges and most of their shareholders are still American. But their expansion has been mainly overseas.” As economic pressures forced corporate managers to let go of patriotism that may have motivated earlier decisions, their concern for the well-being of the American people and its economy declined.
The early 1970s also brought the first of several energy crises, precipitated by declines in energy production in the United States and by the growing power of oil-producing states to set energy prices. Rising oil prices contributed to a global economic downturn, ending two decades of American prosperity during which U.S. national income had nearly doubled and the size of the middle class had expanded significantly. A stock market crash in 1973–1974 further contributed to a global economic downturn, alarming investors and corporate owners.
It was in response to these national and international threats that corporate America devised a new game plan, designed to restore corporations’ ability to advance their political and economic agendas. No single individual or organization had the power to shape this response, but Powell’s memo clearly laid out a comprehensive agenda that could mobilize American business to take on its challengers.