A new international economic order?

Abstract

The oil crisis was not merely a crisis for South Africa but for the world. The great world boom of 1971–3 had, before the crisis, already begun to judder and slow under the combined impact of record inflation, raw material shortages and industrial capacity bottlenecks, but the oil crisis provided the coup de grâce. As 1973 ended the Western industrialised world began to nose-dive, like a stricken ship, into the deepest depression it had known since the 1930s. Not surprisingly, the oil crisis and the Arabs were widely depicted as the villains of the piece; the long beneficent upswing of the post-war world economy had, it seemed to many, been killed off somewhere in the Mitla Pass or the Golan Heights. In fact, as we have seen, this was a superficial and misleading view. Throughout the 1960s the international economic order inaugurated at Bretton Woods had come under steadily increasing stress. The old order had essentially been one of American economic hegemony, an order based on the final power and certainty of the US dollar. With America letting her own blood in Vietnam and rival powers growing stronger every year, this dollar hegemony had become weaker and weaker, a fact reflected in the increasing instability of the world financial system. None of the various attempts to patch up the old order could work for long; the house was falling down and even the most ingenious building extensions to it did not compensate for its basic structural weaknesses. In a sense the old system ended in a blaze of glory, with a great, final, concerted and giddy boom.