LEOTHEPANTHERA The Oil Shock and Neoliberalism - Martin Daunton
Feb 20, 2022
Martin Daunton, a historian and economic expert, dives into the turbulent 1970s, exploring the oil shocks and the emergence of neoliberalism. He discusses the Nixon shock and the end of the Bretton Woods system, highlighting currency tensions and the subsequent rise of floating rates. Daunton explains OPEC's impact on global economics, the cultural shift toward individualism, and the pivotal roles of Thatcher and Reagan in neoliberal policy. He concludes with reflections on the long-term changes in capitalism and the looming energy risks today.
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Nixon’s 1971 Policy Mix And Controls
- Nixon closed the gold window on 15 August 1971 and imposed a 10% import surcharge while introducing price and wage controls.
- Donald Rumsfeld ran those controls inside the United States at Nixon's direction.
Floating Rates Let Prices Absorb Competitiveness
- Removal of capital controls and floating exchange rates rewired economic policy: domestic wage and price choices no longer required exchange-rate fixes.
- This shift enabled countries to let currencies absorb competitiveness adjustments instead of confronting unions directly.
Oil Shock Shifted Global Power To Producers
- OPEC and the 1973 embargo leveraged resource sovereignty into a major redistribution of global economic power.
- The oil shocks squeezed household demand and triggered recession across advanced economies.
