Things were to unravel quite quickly. America’s disastrous and hugely expensive war in Vietnam had to be paid for. To pay for this overreach, and with a searing hot arms race to set the pace in, in 1971 America unlocked its currency from its gold reserves and set everything afloat, removing the anchor which the post-war Allied economies had been tethered to; and America paid for everything by printing dollars.
Richard Nixon (ARC Identifier (National Archives Identifier 530679)
The post-war consensus was over. While these new facts of life were nervously being adjusted to, the quadrupling of oil prices in 1973 was a hammer blow to the successful and stable post-war economies of the West, and for the next decade, things then started to really grind.
A lot of the crippling problems that enslave huge numbers of the world’s citizens today can be traced to how things panned out in this period, with the resultant lakes of liquidity from the oil revenues with nowhere to go because of economic depression in Europe caused by paying for the oil. A lot of this money was loaned, apparently without thought, to Third World countries, mostly in Africa, and came to imprison them in debt in perpetuity. Africa was re-enslaved by these means.
The same economic depression which meant that the capital had nowhere to go in Europe also removed any hope that these countries could sell in these markets and earn the money to service the debt. That whole idea was anyway cynical fiction, for even had market conditions been favourable, they wouldn’t have had access to the rich nations’ marketplaces anyway, because of the trade barriers around these nations who claimed to believe in free trade. But this was the rationale behind it, if any rationale, that these nations could invest the money in becoming industrialised nations which could sell goods on the international market.
There really was no prospect of this, and you wouldn’t normally have got massive business loans with these kind of prospects, because a bank would be worried about losing its money, of course; but these loans were made under the principle of sovereign debt, because a nation, of course, can never go bankrupt. Very few of these countries had governments which could be described as being democratically accountable and acting for their people. The free world, the moral leadership, found gangster regimes in nascent nations, some of whom were in place through their own manipulation, and used them to take on huge debts in the name of people they were supposed to be representing. That wasn’t moral leadership, that’s not being able to resist being exploitative because you can.
Of course, very soon these nations were going to default on their loans. Then there’s a panic about global financial armageddon, so they have to be loaned another load of money to cover their repayments. And so it goes on, and on, loan sharkery doesn’t even begin to describe it. Third World debt kept on rocketing, $100 billion in 1970, $600 billion by 1980, $1.6 trillion by 1990 and over $2 trillion by 1997. By now, it must be a huge figure. That’s never going to be paid off, and now it is a shackle surer than any ever relied on by a colonial master.
Susan George, who we haven’t yet read much of, (we can’t read everything) expands on this abomination here. (her novel Lugano Report sounds really interesting.)
This debt was really nothing to do with the people made accountable for it. Many, such as the Jubilee Campaign, have made the argument that there is a clear historical precedent for declaring such debts odious debts and cancelling them, as well as precedents from civilisations of the ancient world, where wise rulers could see the disastrous folly of the concentration of wealth and would declare a clean slate.
The Western economies, shivering without their fix of cheap oil, stumbled through the 70s. In the UK, there was a lot of political strife and discord, everybody was shouting, everybody wanted to claim what they saw as their rightful share of the pie.
We continued until very recently, and with difficulty, to fight Socialism’s corner, to look for answers in Socialism, Social Democracy, and all through an age when money was everywhere and the argument seemed to be all over. Mostly in pubs, we’ve been fighting a rearguard action, and continued to look to Socialism, and to the state, because we wanted to believe in a way to find a better world. But in retrospect, something was always not quite right about it all, but nothing that anyone else said made any sense, until Henry George. But such was the cultural power of Socialism, and such were the real achievements of Socialism, we could never disrespect the historical commitments of millions of people who wanted to live in a better world, and knew that the world they were in needed changing; but apparently missed the point of what it was that needed changing.
In the end, Socialism is a misfit. Its jigsaw pieces have mangled edges. Its ideals couldn’t be taken to its full conclusion, because to do this requires coercion and restriction and direction of the individual human spirit. The Utopia it describes may be beautiful, but it cannot be if it has to be coerced, forced into place.
The state of harmony and coherence sought by Socialism was already there, if we had just followed the laws that arise naturally, as described by Henry George. This is what truly frees the people, all of the people. (Was it just too simple?) Socialism necessarily produces a leadership cadre, and experts that know best, and it sees a need to guard and guide society to where everybody needs to be, for the collective good.
Many years earlier, Albert Nock wrote about how Henry George saw the state, and the necessity to:
… decentralize it as far as possible, and reduce the functions and powers of the state to an absolute minimum, which, he said, the confiscation of rent would do automatically; whereas the collectivist proposal to confiscate and manage natural resources as a state enterprise would have precisely the opposite effect— it would tend to make the state everything and the individual nothing.
And that was what happened in the 20th century, everywhere, not just in the Soviet Union, in the West, too, driven by the industrial militarism of the age and the secrecy and security concerns that went with it, and by the drive for social justice in the context of a false paradigm; the state became everything and the individual nothing.
The taking of the true ideal to its full expression would require no coercion whatsoever, it would be a setting free, and would be the full flowering of the human spirit. An ordering of the world around economic justice would have produced that Utopia, and everyone would have been happy and prosperous. La, la, la. But, truly.
British and European Socialist politicians tended to acknowledge, from time to time, the full expression of Socialist ideals as an eventual destination, and talked about everyone being passengers on the same road but moving at a different pace.
By the 70s, what we’ve been very generally calling Socialists, from Andelson’s jigsaw solvers, were struggling with contradictions and manifestations, interpretations, all in the teeth of great economic difficulty, raging inflation rates. Things really stalled, got very stale, wasn’t working. Socialism no longer felt like the wave of the future.
Capital, the twin in this depleted set of triplets, has always been in a position to benefit from the Labour pool made available by the denial of people’s economic rights. As Land and Capital were fused together in Neoclassical economics, so the interests of Land and Capital were necessarily fused politically. But in these careful post-war years of an enlightened Capitalism, the parties of Capital worked hand-in-glove with Labour; its political manifestations would be, of course, pro-business but when in power they didn’t seek to reverse the gains that Labour had made are were very much on board with the same general objectives. The Conservative government of the 1950s was building something approaching 300,000 houses a year, ordinary houses for ordinary people.
In this article in 2014, Andrew Rawnsley says:
The 1970s has a generally bad rep as a decade, but they got at least one thing a lot more right then. They did some building. About four-fifths of public spending on housing was devoted to constructing homes while just a fifth was paid out in benefits to assist people with their rent. Over the current four-year spending period, less than £5bn has been allocated to building homes and £95bn has been earmarked for housing benefit. Spending more than 20 times as much subsiding rents as we do building new homes. There is only one word for this:madness.
Something’s gone badly wrong here. And now we've reached the stage, 2016, where £9 billion in housing benefit was transferred in a year from the taxpayer to private landlords.
In the 70s, the long era of Keynesian managing and massaging of the economy was drawing to a close. A trade-off had been balanced between inflation and unemployment, careful nurturing had seen living standards in the West rising steadily. Then the 70s saw an ugly word enter the economic lexicon, stagflation, what is called a portmanteau of the words stagnation and inflation; high inflation and high unemployment at the same time.
By the end of the 70s, the talk was about rolling back Socialism. The politicians with direct experience of WWII were all gone and the post-war consensus was over.