America in the 1970s is an interesting puzzle. Within recent memory, the United States had been economically and geopolitically dominant. And it was to return to economic and geopolitical primacy soon after the decade ended. But the 1970s represented a trough, a low point, a period of pessimism and malaise. It was also a time of unexpected turbulence in world order once again, sandwiched between decades of relative peace, prosperity and stability.

In the midst of what seemed to be decline and even chaos in America’s domestic and international politics, however, transformative new forces and factors were emerging. Many of them came from the largest state in the Union, facing the great Pacific Ocean: California. Some of these dynamics were technological and economic, such as the rise of Silicon Valley and its dominance in computing, or the emergence of the great California shipping ports, like Los Angeles and Long Beach, on the back of growing trade with Asia and new shipping container technology.

Other examples were more in the realm of how people ate, laughed, and thought about their bodies and human sexuality. While the causal origins of many of these forces are mysterious and their consequences uncertain, something very important, if elusive, took place during the 1970s – in some of the most basic categories of human potential, expression and freedom – symbolised by changes emerging from the so-called Golden State.

It is important to review the standard narrative of the United States and world order in the 1970s. The picture was bleak. Geopolitically, the Cold War competition had settled into an uncomfortable stalemate. While strategic arms control and détente lessened the possibility of a great power war, such stability had come at a cost: recognising the political and moral equivalence of a communist, authoritarian and often ruthless great power, the Soviet Union. The Helsinki Accords had accepted the post-war boundaries of Europe and implicitly acknowledged a pressing Soviet empire in the once independent states of Eastern Europe. Western Europe, mired in its own political and economic frustration, increasingly distrusted the policies of its transatlantic patron, the United States. While the threat of a great war receded, murderous interstate and intrastate conflict raged on every continent.

The international economic order was in even greater disarray. The Bretton Woods system of fixed exchange rates, backed by dollar-gold convertibility, was unilaterally suspended by the US in 1971 and abandoned in 1973. Resource shocks, especially in dramatic increases in the price of oil, acted like a cancer on growth. Currency volatility, debt crisis, inflation and stagnation were all worsened by a lack of global coordination, and protectionism and economic nationalism increasingly framed politics. Global institutions set up to manage these crises, such as the International Monetary Fund, the World Bank, and even the United Nations, were sidelined or seen as unimportant.

The challenges to order were greatest within the anchor and author of the post-war system, the United States. The disastrous US military intervention in Vietnam, which claimed more than 50,000 American lives and considerably more in Southeast Asia, undermined the post-war consensus on both America’s role in the world and its supposed goodness.

Richard Nixon’s deep political corruption, most visibly revealed in the Watergate scandal, was less anomalous than representative of national, state and local politics throughout the country. A crime and drug epidemic was destroying America’s largest cities. Racial, ethnic, gender and class divisions polarised and poisoned America’s politics. America’s economy suffered the twin plagues of inflation and unemployment, as traditional manufacturing collapsed. The technological innovation needed to increase productivity seemed far more likely to come from the booming economies of East Asia, led by Japan, or even Western Europe.

To contemporary observers, this grim narrative spelled a slow but inevitable death, both to the post-war liberal order and the leading role of its architect, the United States. Simultaneously, however, powerful, unseen, tectonic forces were at work that would dramatically upend this narrative. By the end of the 1970s, the outlines of a new and completely unanticipated way of living had begun to take shape.

Perhaps the most consequential shift was the disruptive emergence of Silicon Valley as a hub for profound technological change. This was preceded and accelerated by a less well recognised development: the emergence of California as a defence and aerospace superpower. The 1960s and 1970s saw Southern California, in particular, become the centre for innovative companies and institutions in this field, ranging from CalTech and NASA’s Jet Propulsion Laboratory to Northrop Grumman.

This less noted but crucial development created the hardware engineering culture in places such as Pasadena that complemented the north. This not only drew technological talent to California, but highlighted the important, if often controversial, relationship between the national security state and the more libertarian, hippie culture that emerged in companies like Apple.

The digital revolution that so marks our world today began, expanded and intensified in an area that is part of the greater San Francisco area, around Santa Clara Valley. It did not simply do things such as increase computing power and capabilities, but – first, through Apple – began to put these tools in the hands of individuals, rather than at the service of larger organisations. It also connected these technologies to increased levels of access to information, unmediated through the state or other institutions, providing individual independence and communication.

The Silicon Valley experience also transformed how innovation was encouraged and financed, with the rise of venture capital and the new start-up culture. A culture of entrepreneurship, which celebrated risk and tolerated failure, took hold. The consequences for America’s power position in the world was undeniable.

Many of these technologies were related to, and accelerated, a revolution in military affairs that provided the US with both strategic and battlefield advantages unforeseen in the 1970s. It also created both immeasurable wealth and soft power, as Silicon Valley’s success became a model that cities and nations around the world attempted to emulate.

This is what the historian Margaret O’Mara calls the American Revolution, which combined ‘entrepreneurship and government, new and old economies, far-thinking engineers and the many nontechnical thousands who made their innovation possible’. As she points out, few people had heard of Silicon Valley before ‘a journalist decided to give it that snappy nickname in early 1971’. At that point, ‘America’s centres of manufacturing, of finance, of politics’ were 3,000 miles away, and ‘Boston outranked Northern California in money raised, markets ruled, and media attention attracted’. Ten years later, the situation had transformed, creating the foundation for the radically different world we live in today.

A year after the term Silicon Valley was coined, the firm Kleiner Perkins Caufield & Byers opened offices in Menlo Park, becoming the leading entity of a new way of financing emerging technology that avoided traditional and more conservative banks by pooling venture capital. The state also hosted the nation’s first discount airline, Pacific Coast Airlines, whose cheap fares in the unregulated state market helped inspire the Carter administration’s deregulation of the airline industry in 1978, transforming the cost and availability of air travel.

A more mundane, but perhaps equally important, example is the container shipping revolution, which emerged in several places but turned the ports of California and, in particular, the adjacent ports of Los Angeles and Long Beach into global trading powerhouses. Trade as a percentage of American GNP was low in 1970, but as the restrictions on capital and finance were lifted, and global economic interactions exploded, the ports of California – utilising the new, less labour-intensive technologies of containers and container ships – became the hub in the massively increased economic interaction between the United States and the rising economies of East Asia – first Japan, then the Pacific Tigers, and today, China.

A force that combined both economic power and American soft power was the Hollywood film and television industry. Hollywood had always made entertainment for the world. But in the mid-1970s, the American film industry began to produce blockbusters on a new scale, such as Jaws and Star Wars, with increased global reach. The post-1970s Hollywood powerfully influenced tastes, fashions and ideas around the world. And despite great efforts, no other national film industry has been able to approach Hollywood’s power.

A similar conflation of economic and cultural power was the rise of the wine industry in the Napa and Sonoma valleys. Wine was first grown there in the eighteenth century, and by the late nineteenth century, a wine industry existed. Georges de Latour protégé Andre Tchelistcheff moved to Napa Valley in the late 1930s and introduced new techniques. But throughout most of the twentieth century, Americans were not heavy consumers of wine. Nor was American wine seen as comparable in quality to that made in Europe. In the 1960s and 1970s, a group of innovators, led by Robert Mondavi, transformed California winemaking. The quality of the Golden State wines was demonstrated during a 1976 wine test in Paris – captured in the book and film Judgement at Paris – when a group of California whites dominated the top rankings, and the gold medal for red wine was awarded to the 1973 Stag’s Leap.

These are the obvious manifestations of the energy and innovation emerging from California during the 1970s, which upended American society and eventually large parts of the globe. But they are not the only ones. In 1969, then-Governor Ronald Reagan signed the nation’s first no-fault divorce law, fundamentally altering American family dynamics forever. The state developed some of the first legal protections against discrimination in housing and employment, including an early law (1978) protecting pregnant women from contract termination. How humour was generated and employed changed in this period. When the popular late-night show host Johnny Carson moved his programme from New York City to Burbank California, the state became the capital for modern stand-up comedy, aimed at subjects ranging from gender and race relations to politics to routine observations. While much of this humour upended polite norms and challenged traditional authority and beliefs, it became enormously popular. The Comedy Store in Los Angeles trained a generation of comedians whose humour transformed how, and at what, people laughed.

Human bodies and identities were not immune to these Californian changes. San Francisco clothing store Levi Strauss went public in 1971, moving from providing blue jeans to cowboys to creating a global brand that has become part of a universal uniform of sorts. San Francisco also became the global epicentre for a gay culture and lifestyle that was no longer kept hidden. It developed as a nascent political force, with the election (and tragic assassination) of gay advocate Harvey Milk to the San Francisco Board of Supervisors. A fine meal in an American restaurant before the 1970s likely consisted of surf and turf. Alice Waters, using fresh ingredients (from places such as the Corti Brothers supermarket in Sacramento), transformed the American palette with her Berkeley restaurant, Chez Panisse. Its success spawned successors everywhere, and marked the birth of the modern ‘foodie’ restaurant. Before 1970, specific exercise regimens were rare, and exercise in public was even rarer. Professional athletes were warned off weightlifting, for fear it would damage their health. Gold’s Gym, and the muscle pen of Venice Beach, became the model for the ubiquitous health clubs now seen throughout the world.

The San Fernando Valley became the capital of a booming, global trade in pornography, films and photos showing human sexuality in ways that were unthinkable before 1970, a phenomenon captured in Paul Thomas Anderson’s 1997 film, Boogie Nights. As a nation of immigrants, California’s role in welcoming and refusing people from around the globe was crucial.

The Latino influence throughout California was one that preceded but accelerated in the 1970s. Less recognised was the dramatic increase in immigration from East and Southeast Asia. California became home to America’s largest diaspora of ethnic Chinese, Philippine and, after the end of the war in Vietnam, Southeast Asian refugees.

The ‘California dreaming’ story matters for at least three reasons. First, what happened in California in the 1970s played an outsized role in creating the world we live in today – both in the United States and in large parts of the globe – for better or worse. It is not an exaggeration to say this was a historical shift on a par with the changes wrought by the Industrial Revolution in the late eighteenth through to the nineteenth centuries. The means of producing wealth moved from a domestically based, mass industrialised economy to a more decentralised system focused on ‘just in time manufacturing’, sensitive and integrated global supply chains, complex finance, and, especially, revolutionary information and communication technology. Personal identify shifted away from fixed characteristics and affiliation with large, inflexible histories and organisations – ethnic origin, political parties, churches and synagogues, unions, corporations, communities – to curated, flexible, often autonomous conceptions of the self, based on individual preferences and tastes. Demographics were upended: where and how people lived, and with whom they cohabited, transformed, as the structure and composition of both family units and communities evolved dramatically. Politics became more micro-targeted and focused as much on cultural issues as on the socio-economic concerns that dominated the first three quarters of the twentieth century. Everything from markets to culture to identity to politics became fluid, disaggregated and disintermediated from legacy institutions, shaped by historically unprecedented choice and impermanence.

Enormous amounts of wealth were generated. Tolerance of difference increasingly became the norm. Diversity was celebrated as a positive attribute. Global economic and cultural interaction intensified. Innovation exploded, and technology dramatically increased access to vast amounts of knowledge and information, and communication became much easier and cheaper. The choices available to the newly empowered individual – from travel, to what they ate or worshipped, to how they earned their living, to what they laughed at, or who, or even if, they married – was unparalleled.

The second reason the California dreaming story matters is because it highlights the existence and the importance of understanding competing histories. There is a textbook, conventional wisdom about the United States during the 1970s which concentrates on malaise, chaos and American decline. The focus of this history is on the failings of traditional economic and political institutions, largely on the eastern seaboard of the United States, particularly New York City and Washington D.C. The California dreaming story was not uniformly positive, as we continue to deal with the consequences of polarisation, inequality, climate change, disinformation, and other consequences from the 1970s. It is, however, a dynamic story of American growth, rebirth, and reimagination. In this historical retelling, culture and technology matter as much as politics and, over time, intersect. Change, though dramatic, was often hard to recognise in real time, unlike the more traditional domestic and international economic and political narrative of the 1970s. Time horizons are not measured as much by shifting presidential administrations or foreign wars, as by new technologies and popular mass entertainment events. To be clear, competing narratives can both be true, and are obviously inextricably linked. But by focusing our lens only on the most conventional political and economic history, we may risk missing the profoundly important tectonic forces shaping the world.

Which brings up the third reason this story is important: when assessing how political and economic order developed in the post-war world, both domestically and globally, California dreaming forces us to expand the aperture of ‘what matters’. A history that focuses on legacy institutions, be it the United States Congress or the World Bank, will not suffice.

The history of Apple Computer or the rising influence of Hollywood tells us as much, if not more, about the rise, fall and rebirth of this order as a micro analysis of any G-7 summit or annual World Bank meetings. California dreaming should force us to think in more creative ways about the actors and agents that matter, what time horizons shape our current world, how to locate complex historical causality, and, perhaps most importantly, how to reimagine how we understand power. Power in international relations has often been understood as fixed, kinetic and material, built upon mass-industrialised economies that could convert these assets into the capacity to build armies and navies and conquer territory. But the 1970s inaugurated the world we live in today, for better and worse.