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THE CRISIS OF INDUSTRIAL CAPITALISM IN 1970s

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Robert Bartels

on 27 April 2010

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Transcript of THE CRISIS OF INDUSTRIAL CAPITALISM IN 1970s

Double click anywhere & add an idea CONTENT Introduction
Causes of the crisis of the 1970‘s
Consequences
Solution
Comparison to the current crisis
Discussion
References
WORK
Business
AND
Society Introduction Capitalist companies make profit and reinvest it to expand their operations
Capitalist firms that cannot turn a profit will not have an incentive to invest
If capitalist companies do not invest, factories will be shut down and workers will be unemployed
No innovation, lag behind competitors, ultimately fail
3 main crisis in the framework institution The Great Depression of the 1930‘s
The crisis of the 1970‘s
The current crisis
Causes Rising international competition
Increase of energy prices
Declining productivity and profitability
Rising inflation
Unemployment
U.S Trade deficit increased
Inflation increased to 10% in 1974
Oil shocks in 1973-1974 Increase the price of petroleum
Increase in energy cost for consumers and
businesses
Workers demand higher wages
Wage outpaced the rate of productivity
Increase of
unit labor cost
for businesses
Lay-offs
High unemployment rate
Stagflation Low economic growth combined with high
unemployment and high rate of inflation
Traditional macroeconomic policy tools
were ill equiped to deal with it
U.S. loss of economic, political and military
dominance in the capitalist world
U.S. encouraged the reconstruction
of Western Europe and Japan to:
undermine the appeal of communism in those countries
demonstrate the superiority of capitalism Revival of manufacturing in Europe & Japan
Increase of competitive advantage for U.S. firms
Consequences OF THE CRISIS INDUSTRIAL CAPITALISM 1970s IN declining international confidence in the dollar
Reduction of U.S. government gold reserves because international holders of dollars demanded redemption for gold
Breaking union contracts
Frozen wages for city workers
Annuling schedules wage increases
Direct lay-offs in different areas
Decrease spending in workers pension funds while worker payments increased
Decline of population
Solution Hallo NEO-LIBERAL CAPITALISM Liberalisation of economy:
Abolishment of price controle deregulation of the capital market Abolishment of trade barriers privatisation fiscal policy Discussion Breaking union contracts
Frozen wages for city workers
Annuling schedules wage increases
Direct lay-offs in different areas
Decrease spending in workers pension funds while worker payments increased
Decline of population dominance of neoliberal economy and politics
deregulation of financial transactions
High inflation
increasing uNemployment and gapping between rich and poor
Rising international competition
Increase of energy prices
Declining productivity and profitability
Rising inflation
Unemployment


equity prices shrunk sharply
mass bankruptcies
increasing unemployment
cut offs in social system
favouring gov. control
The Economic Crisis Reader, A. Reuss, 2009
Current Economic Issues, 13th ed., D. Fireside, 2009
Big-city politics, governance, and fiscal constraints,
G.E.Peterson, 1994
The New York City Financial crisis of the mid-1970s,
The Workers' Advocate, 1976
http://www.trialog.or.at/images/doku/nov-es-current-
crisis.pdf, 20.04.2010
http://www.presidentprofiles.com/Kennedy-Bush,
20.04.2010
http://crisisofcredit.com, 20.04.2010
Full transcript