02 fall of keynesianism - The Fall of the Keynesian State -...

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Unformatted text preview: The Fall of the Keynesian State - I The Internationally Obvious Signs of Growing Difficulties Difficulties s s s Decline in US trade balance, trend from Decline surplus to deficit, deficit emerged Spring 1971 surplus Persistent US balance of payments deficit, Persistent export of capital as US provided dollars to world world End result: abandonment of fixed exchange End rates, August 15, 1971 ($ unhooked from gold) rates, Less Obvious Worrisome Trends Less s s s s s Shift from “dollar scarcity” to “dollar glut” Increasing speculation against fixed exchange Increasing rates rates Debate over future of international monetary Debate system system Growing conflict over US ownership/influence Growing in Europe in Discuss each in turn “Dollar Scarcity” to “Dollar Glut” s s s A shift in the nature of the international liquidity shift problem took place problem Dollar provided liquidity in early post-WWII, but ... Growth in European & Japanese economies ⇒ rapid growth in international trade rapid ⇒ increased need for dollars ⇒ “Dollar scarcity” s s But ↑ in dollars > ↑ trade ⇒ int’l inflation But So Europeans had to use monetary policy to neutralize So dollars dollars Increasing Speculation Increasing s s s s Speculation against exchange rate changes Result of rapid growth of Eurodollar market Result (and later Asian dollar market) (and Result of rapid growth of multinational Result corporations (MNCs), both industrial & financial financial Result of conflicts between US & Allies Result – when conflict flared up, markets were destabilized – with consistent conflict ⇒ instability of expectations with Debate over Future of IMS Debate s French vs Americans – Jacques Rueff wanted 3X ↑ gold price Jacques – US opposed, would undercut allies s Some economists proposed flexible rates – supposedly automatic adjustment – experience suggested increased instability s Hybrid solutions – crawling peg (small regular changes) – creation of int’l money (e.g., SDRs) Growing Conflict US-EU Growing s s s Servan-Scriber’s book, The American Servan-Scriber’s Challenge Challenge Stanford School said: differential liquidity Stanford preferences preferences – US less interested in liquidity, wants long US term assets term – Europeans want more liquidity, e.g., dollars Vietnam War expenditures ⇒ ↑ US dollars, Vietnam ↑ inflation in world at large inflation Social Roots Social s s s s Behind these international problems and Behind confrontations lay domestic social conflicts within each country within Conflicts put constraints on foreign policy Conflicts pushed foreign policy in particular Conflicts directions directions See next section, primary example will be US The Fall of the Keynesian State II II National Level Beneath the International Crises: local economic problems local s Beneath exchange rate instability – we find rapid growth of Eurodollar holdings s Beneath excessive liquidity – we find chronic US bal of pay deficits caused by increased we captial flows abroad and ↓ trade surplus s Beneath increased capital investment abroad – we find reluctance to invest at home s Beneath declining trade surpluses – we find accelerating US inflation Beneath cont’d Beneath s Beneath accelerating inflation we find – – – an accomodating monetary policy a growing federal budget deficit wage growth outstripping productivity growth s Beneath accomodating monetary policy& Beneath budget budget – we find Vietnam War & War on Poverty s Beneath wage ↑ > productivity ↑ Beneath – we find new labor militancy (auto, coal, public we employ) employ) Beneath cont’d s Beneath slowing productivity growth – we find growing refusal to work – increased alienation & resistance to new technology – shift from manufacturing to services » linked to women’s refusal of patriarchy, nuclear family s Beneath the Vietnam war – we find peasant refusal of development – we find student refusal of sacrifice in suspicious we cause cause » linked to student refusal of discipline in education » linked to refusal of patriarchy & racism Beneath cont’d Beneath s Beneath the Great Society – we find the urban uprisings of the mid-60s – we find human capital investments s Beneath the urban uprisings – we find the Civil Rights Movement – we find the Black Power Movement s Beneath these movements – we find the revolt against racism, unemployment, we low wages, ghettoization of Keynesian period low Social Roots of Crisis - I Social “Viewed from Above” s s s s Some have seen roots of inflation in crisis of Some democracy, but “crisis” = “excess” for him democracy, Decline in formal voting, ↑ ticket splitting Decline ↑ protests, demos, alternative forms of political action protests, 1960s: more demands for Govt “benefits” ↑ demands produced “welfare shift”, ↑ expenditures ↑ minus taxes = deficit + accom.$ policy = inflation minus Top Down Cont’d Top s ↑ respect for govt, authority, wealth, hierachy respect – function of change in values, fx demographic change Thus ↑ polarization, disintegration of “governing Thus coallition” coallition” All produced decline in authority & prestige of All governing coalition’s representative: the president governing – from Truman & his Wall Street lawyers to Johnson/ Nixon resignations Verdict: behind inflation lies excess of democracy Verdict: excess s s s Social Roots of Crisis - II Social Viewed from Below s s s s s s s But analysis of these things can differ instead of demographics, one can see social conflict instead of excess of democracy, a cycle of struggle not just “youth”, but a recomposition of social forces not which gained power to contest effectively which not just simultaneity of demands, but circulation of not struggle from sector to sector, unwaged to waged struggle Blacks in streets to blacks & whites in auto factories Refusal of patriarchy in home to refusal of authority in Refusal schools, etc schools, Historical Sketch - I Historical s s s s s s Labor resistance to productivity deals in 50s Growing black resistance: Civil Rights, then Black Growing Power Central City Riots & Welfare Rights Power Great Society programs aimed at “unionizing” and Great stabilizing ghettos stabilizing But Federal programs financed struggle instead of But control control Welfare struggles, like “riots”, sought decoupling of Welfare wage from work wage Refusal of work can be seen to follow from rising real Refusal wages because real w and leisure time are complements wages Historical Sketch - II Historical s s s New waves of struggle appropriated old themes & New culture of insubordination and freedom from exploitation exploitation Examples can be found in music E.g., the song “Which Side Are you On” Capitalist Response Capitalist s Counterattack: National – Nixon’s wage-price freeze – Pay board (w/ unions in the Pay state) state) – Labor-Management Labor-Management Committees Committees – Industrial restructuring s at international level – End of Bretton Woods – Food &oil price attacks on Food real wages real – etc (rest of this course deals etc with what follows) with The Fall of the Keynesian State - II The National Level Focus of Discussion Focus s s s s s Focus on underlying social/national dimensions of the Focus crisis of the Keynesian state crisis Reading: S. Huntington’s essay on the “Crisis of Reading: Democracy” (mainstream political scientist, TC) Democracy” Reading: P. Carpignano, “Class composition in the Reading: 1960s” (Italian radical sociologist) 1960s” Reading: G. Caffentzis, “Throwing Away the Ladder” Reading: (Professor of Philosophy, Univ of Southern Maine) (Professor Reading: M. Montano: “Notes on the International Reading: Crisis”(student radical, whereabouts unknown) Crisis”(student Beneath the International Crises: local economic problems local s Beneath exchange rate instability – we find rapid growth of Eurodollar holdings s Beneath excessive liquidity – we find chronic US bal of pay deficits caused by increased we captial flows abroad and ↓ trade surplus s Beneath increased capital investment abroad – we find reluctance to invest at home s Beneath declining trade surpluses – we find accelerating US inflation Beneath cont’d Beneath s Beneath accelerating inflation we find – – – an accomodating monetary policy a growing federal budget deficit wage growth outstripping productivity growth s Beneath accomodating monetary policy& budget – we find Vietnam War & War on Poverty s Beneath wage ↑ > productivity ↑ Beneath – we find new labor militancy (auto, coal, public employ) Beneath cont’d s Beneath slowing productivity growth – we find growing refusal to work – increased alienation & resistance to new technology – shift from manufacturing to services » linked to women’s refusal of patriarchy, nuclear family s Beneath the Vietnam war – we find peasant refusal of development – we find student refusal of sacrifice in suspicious cause » linked to student refusal of discipline in education » linked to refusal of patriarchy & racism Beneath cont’d Beneath s Beneath the Great Society – we find the urban uprisings of the mid-60s – we find human capital investments s Beneath the urban uprisings – we find the Civil Rights Movement – we find the Black Power Movement s Beneath these movements – we find the revolt against racism, unemployment, low we wages, ghettoization of Keynesian period wages, Social Roots of Crisis - I Social “Viewed from Above” s s s s s Huntington sees roots of inflation in crisis of democracy, Huntington but “crisis” = “excess” for him but Decline in formal voting, ↑ ticket splitting Decline ↑ protests, demos, alternative forms of political action protests, Huntington evokes James Madison on need for “balance” Huntington between governability & democracy between 1960s: more demands for Govt “benefits” ↑ demands produced “welfare shift”, ↑ expenditures ↑ minus taxes = deficit + accom.$ policy = inflation minus Top Down Cont’d Top s ↑ respect for govt, authority, wealth, hierachy respect – function of change in values, fx demographic change Thus ↑ polarization, disintegration of “governing Thus coallition” coallition” All produced decline in authority & prestige of All governing coalition’s representative: the president governing – from Truman & his Wall Street lawyers to Johnson/ Nixon resignations Verdict: behind inflation lies excess of democracy Verdict: excess s s s Social Roots of Crisis - II Social Viewed from Below s s Three articles from Zerowork express radical Three perspective from the core of what Huntington calls an excess of democracy excess Yet there is a parallelism to the analyses – both recognize politics behind economics – both attribute the crisis to upsurge in grassroots both struggle struggle – both recognize existence of permanant anatagonism Differences Differences s s s s s s s But analysis of these things differ instead of demographics, ZW authors see class struggle instead of excess of democracy, a cycle of struggle not just “youth”, but a recomposition of the whole class not which gained power to contest effectively which not just simultaneity of demands, but circulation of not struggle from sector to sector, unwaged to waged struggle Blacks in streets to blacks & whites in auto factories Refusal of patriarchy in home to refusal of authority in Refusal schools, etc schools, Historical Sketch - I Historical s s s s s s Labor resistance to productivity deals in 50s Growing black resistance: Civil Rights, then Black Power Growing Central City Riots & Welfare Rights Central Great Society programs aimed at “unionizing” and Great stabilizing ghettos stabilizing But Federal programs financed struggle instead of control Welfare struggles, like “riots”, sought decoupling of wage Welfare from work from Refusal of work can be seen to follow from rising real Refusal wages because real w and leisure time are complements wages Historical Sketch - II Historical s s s New waves of struggle appropriated old themes & culture New of insubordination and freedom from exploitation of Examples can be found in music E.g., the song “Which Side Are you On” Capitalist Response Capitalist s Counterattack: National – Nixon’s wage-price freeze – Pay board (w/ unions in the Pay state) state) – Labor-Management Labor-Management Committees Committees – Industrial restructuring s at international level – End of Bretton Woods – Food &oil price attacks on real Food wages wages – etc (rest of this course deals etc with what follows) with ...
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