Where Were You in 1979? The final year of the 1970s witnessed epochal shifts in power that ushered in the modern world.

May 3, 2013, 2:57 p.m. ET

Where Were You in 1979?

The final year of the 1970s witnessed epochal shifts in power that ushered in the modern world.

By Jonathan Karl

The 1970s seem destined to be a justly forgotten decade—a time of disco, stagflation and little of the social upheaval that defined the previous decade or the epic global changes of the one that followed. But Christian Caryl sees more than malaise when he looks at the 1970s; he sees one of history’s great turning points. “With the passage of time,” Mr. Caryl writes in “Strange Rebels: 1979 and the Birth of the 21st Century,” “the 1970s begin to appear less like a sideshow than the main event.”

Strange Rebels

By Christian Caryl
Basic, 407 pages, $28.99

As the title of Mr. Caryl’s book suggests, his focus is 1979—a year that brought Iran’s Islamic revolution, the siege of the U.S. embassy in Tehran, the Soviet invasion of Afghanistan, and the emergence of four leaders who, he argues, changed the course of history: Margaret Thatcher, the Ayatollah Khomeini, Deng Xiaoping and Pope John Paul II.

It is hard to imagine figures as different as these or a year quite as grim as 1979, but suspend your disbelief for a moment. Mr. Caryl makes a fairly compelling case that this was a year when history made a sharp turn and that each leader set in motion the seismic changes that came to shape our world today: the fall of the Soviet Union, the rise of China and the emergence of radical Islam. In 1979, Mr. Caryl says, “the twin forces of markets and religion, discounted for so long, came back with a vengeance.”

In January of that year, China’s new paramount leader, Deng Xiaoping, made a nine-day visit to the United States. He was not technically China’s head of state (he never held that title), but President Jimmy Carter welcomed him to the White House with a state dinner. At the dinner, Deng found himself seated at a table with actress Shirley MacLaine, who had spent time in China working on a documentary extolling the virtues of Maoism during the bloody Cultural Revolution. She told Deng how wonderful it had been for her to meet a professor plowing a field on a collective farm. “Deng looked at her scornfully . . . ,” Mr. Caryl writes. “Professors, he told her, should be teaching university classes, not planting vegetables.”If Ms. MacLaine had done her homework, she would have known that Deng himself had been effectively banished during the Cultural Revolution and had come to power determined to modernize China. He wanted to affirm the supremacy of the Chinese Communist Party—minus the communism. When he returned to China after his U.S visit, Deng said that he couldn’t sleep for several nights as he wondered, “How could China possibly catch up?” His answer was to unleash the market forces that were already transforming the economies of Hong Kong, Singapore and Japan. His first moves were to allow private farming (result: a major increase in productivity) and to create special economic zones that would allow private business and even foreign investment.

In May 1979, Chinese officials brought a group of visiting American businessmen to an undeveloped area in China near Hong Kong. The officials gestured out over the horizon to where China was planning to allow its first economic zone. “All that the Americans could see,” Mr. Caryl writes, “was the usual South China landscape: there were rice paddies, worked by peasants and their water buffalo.” In fact, the group was viewing a site that would become Shenzhen—today a city of more than 10 million people and home to one of the most lucrative manufacturing centers in the world.

While Deng was visiting the U.S., Margaret Thatcher was in London preparing to run for prime minister. By then, Britain’s economy had slumped so badly that it had become the first developed nation to go to the International Monetary Fund for support. “This was a humiliation of epochal proportions,” says Mr. Caryl. “A country that had been at the heart of the Western economic and political system found itself reduced to the status of a banana republic.”

Making matters worse, in late 1978 and early 1979 the British suffered through a series of paralyzing labor strikes and high unemployment, giving the grocer’s daughter an opening to campaign against Labour Prime Minister James Callaghan with the slogan, “Labour Isn’t Working.” But Thatcher was running against more than her opponent—her platform of privatization, spending cuts and self-reliance was a challenge to the views that had come to dominate both of Britain’s political parties and, for that matter, most of the developed world.

The reigning ideology favored more government intervention into the economy and an expanding welfare state. “The aim of the Thatcherite counterrevolution,” Mr. Caryl writes, “was to dismantle the postwar consensus.” Thatcher’s transformational moves—facing down the unions, selling off state-owned businesses—would come later, but the groundwork was laid with her first campaign as Conservative leader in 1979. Her win, Mr. Caryl argues, “reflected a fundamental shift in British thinking.” As Labour’s Peter Mandelson would say years later, “We are all Thatcherites now.”

Another fundamental shift was under way elsewhere in Europe. With a puff of white smoke at the Vatican on Oct. 16, 1978, a Polish cardinal—Karol Jozef Wojtyla—was chosen as the first non-Italian pope in more than 400 years. Pope John Paul II had nothing to say on the economic theories being put into practice by Thatcher and Deng, but his June 1979 trip to his Polish homeland represented an even greater challenge to a reigning orthodoxy—specifically, the ideas underlying the Soviet empire.

Over the course of nine days, the pope gave 39 sermons attended by an estimated 11 million Poles. The church, not the state, organized these vast assemblies—a crucial experience that would be put to use in the Solidarity rallies that led to martial law in 1981 and, ultimately, to the collapse of the Eastern Bloc in 1989.

The pope’s message was a religious one, of course, but it was also a rebuke to Marxist doctrine. “Dear brothers and sisters,” the pope said in one sermon, “do not let yourselves be seduced by the temptation to think that man can fully find himself by denying God, erasing prayer from his life and remaining only a worker, deluding himself that what he produces can on its own fill the needs of the human heart.” As Mr. Caryl points out: “Never before had a Communist Party in the Soviet bloc endured such a direct public challenge to its ideological and informational hegemony.”

In January 1979, a very different revolution was taking part in Iran. The rise of the Ayatollah Khomeini and the Islamic Republic of Iran not only deposed a corrupt American ally—the shah—but also represented the end of the leftist parties in Iran. The ayotallah and his followers had little use for godless Marxism, and the Soviet Union was as much an enemy for the ayotollah’s followers as the U.S. A young Mahmoud Ahmadinejad was among the radical students who urged, without success, a siege of the Soviet embassy instead of the American one.

For the Soviet Union, the Islamic Revolution ushered into power an enemy of its enemy, but not a friend. For the United States, it was a wake-up call that the march of communism was not the only global threat. What nobody could predict was that the new threat would long outlive the old one.

But the broader effect of Khomeini’s revolution was on the rest of the Islamic world. For the first time since the fall of the Ottoman Empire an overtly Islamic movement had seized political power. This achievement reverberated beyond Iran, inspiring even the country’s natural enemies in the Arab Sunni world. “After Khomeini, the Islamists did not just talk,” Mr. Caryl writes. “They acted. The most potent legacy of the Islamic revolution in Iran was simply to show it could be done.”

The Soviet invasion of Afghanistan in December was also one of the major stories of 1979 and, like the others chronicled in “Strange Rebels,” one that was historically significant in ways not apparent until later. The long, costly and ultimately fruitless war pushed the Soviet Union closer to collapse, helping to bring an end to the Cold War. It also helped set the stage for the next global conflict by providing a rallying point and training ground for militant Islam. After all, it was to fight the Soviets that Osama bin Laden first came to Afghanistan.

“Strange Rebels,” though engagingly written, is occasionally repetitive, and Mr. Caryl’s effort to craft a coherent narrative out of a series of disparate and chaotic events is at times a bit forced. But the reader comes away convinced that the forces set in motion, for good and for ill, in 1979 set the stage for the world we see today, in ways that were hard to see at the time. We’ll no doubt face another turning point (maybe we already have?), and when we do, there is no guarantee that it will be any more obvious than it was in 1979.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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