Abstract
This sharp question is appropriately thought-provoking. We certainly have been living through a great capitalist crisis, really only the fourth crisis of such scale after the so-called Great Depression of 1873-96, the more familiar Great Depression of the 1930s, and the global stagflation and profitability crisis of the 1970s. The very fact that capitalism survived these earlier crises should warn us away from reverting to the old mistaken notions of economic crises heralding the final breakdown of the system. But could this at least be a major turning point? Is this at least a crisis of neoliberalism? Or of American empire? Or even perhaps of "globalization"?
Highlights
The crisis of the 1970s was managed with the aid of the development of derivative markets in the United States that smoothed the transition to floating exchange rates, but it was not until the underlying cause of the inflationary and profitability crisis which beset all advanced capitalist states was addressed that the crisis was brought to an end
It was a mistake to see the restructuring of the U.S economy that followed in terms of the "hollowing out" of the material base of the informal American empire
The ''third world" debt crisis of the 1980s was largely a side effect of the U.S Federal Reserve's use of high interest rates to break domestic inflationary pressures, but it provided the means to discipline states in the global South along the lines of the "Washington Consensus." This soon included disciplining the formerly Communist regimes into becoming "emerging market states." Opening up these states to free trade, the free flow of capital, and international treaties that guaranteed the legal treatment of foreign capital on the same terms as national capital, was not undertaken against the dominant local capitalist forces but very much in concert with them
Summary
The crisis of the 1970s was managed with the aid of the development of derivative markets in the United States that smoothed the transition to floating exchange rates, but it was not until the underlying cause of the inflationary and profitability crisis which beset all advanced capitalist states was addressed that the crisis was brought to an end. The ''third world" debt crisis of the 1980s was largely a side effect of the U.S Federal Reserve's use of high interest rates to break domestic inflationary pressures, but it provided the means to discipline states in the global South along the lines of the "Washington Consensus." This soon included disciplining the formerly Communist regimes into becoming "emerging market states." Opening up these states to free trade, the free flow of capital, and international treaties that guaranteed the legal treatment of foreign capital on the same terms as national capital, was not undertaken against the dominant local capitalist forces but very much in concert with them.
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