by
Geoff Mann
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- Low unemployment levels empowered labour, which demanded a bigger income share [...] thus reducing profit and slowing innovation.
- High capacity utilization the proportion of productive resources actually in use) and growth increased demand and stressed supply, causing inflation.
- Europe and Japan [...] "caught up" with the US, challenging the Bretton Woods political economic hierarchy, which was explicitly structured with the US on top.
- Existing technologies were pushed to their limits, reducing the Long Boom's unprecedented rates of productivity growth.
- The isolation of planned economies [...] allowed them to grow also [...] fanning domestic opposition in the capitalist core.
he's not offering his own views here, but more a common view held by liberals and conservatives alike. note the very orthodox flavour that seems to blame labour
This underlines the fact that how we explain the crisis of the 1960s and 1970s is not merely "academic". On the contrary, it is enormously important today, both politically and economically, because we are constantly struggling over what lessons the past teaches. Different interpretations of the past lead to different conclusions regarding what can be done at present. But we must not reject orthodox explanations just because they are orthodox. In fact, capitalist reason provides some very helpful tools for understanding capitalism. There are aspects of contemporary economic life that appear to be very well diagnosed by conventional tools. Rather than rejecting orthodoxy because of its ideological predisposition to posit capital as the engine of historical progress, even in periods before capitalism itself existed, and to see workers and noncapitalists as "backward" forces, hindering progress, we need to see it for what it is: a set of ways of understanding the world that is a product of the very world it is trying to explain. Capitalist reason is embedded in and emerges from a particular, ideologically saturated world. Recognising the embeddedness of "reason" in its time is about as close to truth as we are ever going to get with respect to actually existing human communities. We have to resist the desire to dismiss it out of hand, and search instead for the truth in it, truth of which that reason might not itself be aware.
even if the rest of the book weren't fantastic, it would be worth reading just for this paragraph
for diss: not worth citing, but good framing inspo
[...] It has never been interested in upsetting capitalism or its key institutions. If the UAW had its way, the Long Boom would have been Longer, ideally Eternal. [...]
unexpectedly droll
[...] the crisis that ended the good ol' days of the Long Boom was a distributional struggle. Orthodoxy almost never says this explicitly, but it is right there in its account of the history of capitalism. This struggle had two fronts: (1) a struggle between labour and capital over the distribution of income--an increasingly empowered labour-force wanted more of it; (2) a struggle between nationally based capitalists over the distribution and control of productive power and international market share. One might also add: (3) conflicts between highly developed rich countries and resource-rich but less powerful countries. [...]
really important
you can even view the OPEC oil price increases of the 70's through the lens of (3)
[...] It put capital back on top of the political economic hierarchy--it had never really been usurped, but it had been forced to cater to the rabble--by choosing domestic conflict management option (b) above: clamp down by reducing government spending, raising interest rates, suppressing wages and benefits, and tightening up the supply of money and credit in circulation. This hurt capital in the short term, and support among business people for this radical economic restructuring was by no means unanimous, but in the long term it was one of the most brilliant moves it ever made. This turn to inflation control marks the consolidation of the neoliberal capitalist state in the industrialized world.
One of the more common paths this transition took--in Canada, the US, and the UK among others--had three basic steps:
- [...] the government [...] tried to inflate and/or stimulate the way out of it [...] By the early 1970s, increasing inflation proved this tactic ineffective on its own.
- By around 1972 or 1973 [...] they made inflation against the rules, via wage and price controls like those used during World War II [...] union commitments to reduce wage demands and employer commitments to keep prices from rising at such rapid rates. This did not work, and pleased no one.
- In the mid- to late 1970s, the state gave up trying to please both sides, abandoned labour and small business, and embraced finance-friendly Chicago-style economic policy: jacking interest rates and slashing government spending.
The best known example of step 3is the so-called Volcker coup of 1979-83. Paul Volcker was appointed chairman of the Federal Reserve [...] at the end of Jimmy Carter's single presidential term, and remained through most of Reagan's term of office. The Volcker coup is best described as the use of US monetary authority to squash inflation no matter how many jobs, how many social services, or how much human welfare it cost. [...]
the reason for choking inflation: to protect the global value of US dollar, which was needed to maintain American geopolitical influence (e.g., if the dollar kept dropping, OPEC countries could stop using it)
[...] Nixon's attempt to inflate his way out of crisis was not only directed at domestic problems. He was also effectively trying to export inflation, and reduce the real value of the US foreign debt [...]
[...] bond yields also have a massive impact on domestic interest rates. Domestic bands will lend to local enterprises only at rates competitive with what they can earn by investing their money elsewhere. If they are confident they can get 12 percent return on their money buying bonds, they are going to need a lot of convincing to lend to a local firm for less.
obvious once you think about it but worth keeping in mind
[...] during the crisis that led to the Volcker coup [...], US interest rates skyrocketed, and other nations had to follow suit, just to prevent international finance from dropping their currencies and bonds in favor of those of the US--and in the process killing non-US exchange rates and economies. So, with the Volcker coup, the rest of the world had to raise their rates to comparable levels, meaning the Fed's vicious recessionary monetary policy rapidly diffused across the globe.
One of the better-known results of this process was the Latin-American debt crisis. [...]
Latin-Am: interest rates went up way too much; some countries had to default
- Liberalization (drop tariffs, subsidies, capital controls, export restrictins, etc.)
- Privatization (sell state holdings, which in many cases are substantial)
- Stabilization (allow currency to float at its "natural" [usually lower] exchange rate)
As this outline of the neoliberal policy package shows, neoliberalism is [...] a description of at least two powerful and intertwined contemporary economic dynamics: globalization and financialization. Neoliberalism can be understood as the historical conjuncture, and political legitimization (via both coercion and consent) of these two processes. Globalization is the integration of the international economy via trade. The original version of liberalism certainly involved globalization, but without the kind of financialization we have today with _neo_liberalism--or at least, back then, finance played a different and subordinate role as investor in productive enterprise.
[...] this definition of neoliberalism is helpful since it allows us to [...] understand the differences between what is sometimes called the "first era of globalization"--British free trade imperialism in the nineteenth century--and what we call globalization today (by which we mean something more specifically neoliberal).
the conditions are those that must be met for receiving an IMF loan
he describes the IMF as one of the most important frontline institutions for neoliberalism