The forgotten economic lessons
BY ROBBIE MacGABHANN
Twenty-five years ago the economies of Western Europe,
North America, Japan and Australia were approaching a crisis. A
combination of high inflation, volatile currencies and domestic
economies clearly out of control was creating huge international
tensions in the global economy.
element of the economic crises of the industrialised world was
increasing poverty, disease, economic underdevelopment and in
some cases war and famine ravaging the less developed states and
regions of the world.
In the industrialised regions of the world people's
expectations of higher levels of personal consumption and ever
increasing standards of living were being thwarted by a
combination of seemingly uncontrollable economic forces.
Then to compound an already precarious situation, enter a
group of states saddled with massively underdeveloped economies
but who possessed vast quantities of oil, a resource on which the
industrialised world was dependent. They were dependent on it for
transport, be it plane train or automobile, for power generation,
for hundreds of millions of domestic boiler units and for the
even more important plastics industry.
OIL PRICE RISE
These states, mainly in the Middle East, had usually
drilled and sold oil on the open market run from Rotterdam for
oil products, with the aid of US and European oil companies.
They formed a new group naming themselves the Organisation
of Petroleum Exporting Countries (OPEC). Overnight they doubled
the price of oil by simply controlling how much oil they
collectively supplied to the international market. The result was
chaos, businesses ground to a halt, whole regions endured power
cuts and inflation already in an upward spiral rocketed while
workers were cut back to a three day week and the economies of
Europe and beyond battened down to a huge downward descent into
In the less developed regions of the world, the economic
crisis gripping the industrialised world sparked off a cycle of
debt generation, from which these parts of the world have never
recovered. The economies of the less developed regions were in a
fragile state. Most were attempting over a period of ten or
twenty years, the level of economic development it took Europe
centuries to achieve. They were also taking the path of trying
for the main part to create market economies, or variations on
the flawed soviet model.
Rather than face up to the international economic issues
that had generated this crisis the industrialised world found
some easier targets to blame for the dire state of the global
economy. First off and most identifiable, were the Arab states
who formed the core of OPEC. They had amassed huge riches from
the oil price hikes and by simple logic it was deemed to be money
taken from the pockets of Europe and North America.
The second target was the social democratic and nominally
socialist governments found at the time in Germany, Britain,
France and the Nordic states. Their policies of nationalisation
and market intervention, particularly in the currency markets,
were direct contributors to the long-term recession now being
Their greatest mistake was their failure to take on their
partners in crime in the trade union movement. `Greedy' workers
were at the root of the economic problems.
This month inflation throughout Europe and North America is
again on the move up. The petrol queues have returned, albeit
briefly and once again there is huge economic uncertainty as to
what is actually happening in the first-world economy. Once again
international currency market turmoil is also an important
factor, and yes once again the less developed regions and
economies are gearing themselves for the brunt of whatever
economic hurricane emerges from Europe and North America.
Sadly once again it is the workers and the OPEC states who
are being blamed. We cannot blame the flawed euro `one size fits
all'' policy. We cannot point to the huge financial interests
driving international financial markets. We cannot point to the
oil companies and oil producers outside of OPEC who have made
hundreds of millions of pounds from the oil price increases of
the last two years.
No, these are irrelevant factors. Workers and consumers are
chiefly to blame. We are either buying too many goods or
demanding too large a wage increase. Why is it that no one can
admit that the real problems afflicting the global economy in the
1970s were never really tackled?
Look at it this way, the centre left ideology has been
replaced by free market ideologies, the chief proponents of which
throughout Europe and North America are the former centre left
parties of the 1970s. Workers in the industrialised world have
been disempowered over the past 20 plus years in ways never
thought possible in the 1970s, yet we suddenly have the same
economic problems today we had then. Why?
The reason is that the core problems afflicting the global
economy 25 years later, have still to be tackled. There is still
massive dependency on oil products for our economies. We have not
really bothered to find a safe alternative to fossil fuels. As a
by-product of this, the international economy has still not faced
up to the environmental consequences of such a massive fossil
fuel burning economy.
In the 26 Counties, in recent weeks, we have seen a growing
number of groups protesting and lobbying about the effects
inflation, rising fuel prices and currency turmoil is having on
In some cases, like the Irish Farmers Association this
week, these interest groups have been looking for special deals
to ease their economic pain.
While there is merit in this the central lesson of the
1970s was that a massive chance to assert the principal of
creating a just equitable solution to the crisis was missed.
Instead worker was set against worker and piecemeal short-term
solutions were implemented that benefited only an inequitable
The final irony of this process is that the global
campaigners who were protesting in Melbourne and are this week
gathered in Prague are the only groups really looking for an
equitable global solution. Their repayment is to be beaten off
the streets, in Seattle, Washington, London, Melbourne and now
Prague. It seems that 25 years on the lesson of how to move
forward towards a just global economy is there to be learnt
again, but those in power are still are not listening.