Government Effectiveness in the Face of Debt

Abstract

The fundamental claim of O’Connor’s Fiscal Crisis of the State is that when the governments are deprived of financial resources, they are unable to fulfill their natural function of reproducing capitalism. This argument seemed very foreign to O’Connor’s American leftist readers of the early 1970s. The United States was the dominant superpower of the world. “Big Government” was aggressively addressing social problems, notably racial discrimination and urban decay. Federal support for university and scientific funding was flush. Keynesian stimulation of demand was largely effective. The prediction that the American state could lack the fiscal ability to support capitalism seemed implausible.