U.S. Economic strategies against Western Europe: From Nixon to Reagan

Abstract

This paper seeks to examine the destabilizing role of the U.S. in international monetary affairs by charting the changing economic and monetary policies of successive U.S. administrations. It suggests that U.S. economic policy since the beginning of the 1970s can only be explained as a reaction to the relative decline of the U.S. economy vis-à-vis Western Europe and Japan. To ward off this decline the U.S. has pursued unilateral policies of dollar devaluation and revaluation which have often worked to the disadvantage of its rivals and the Third World. In detail, this paper examines the nature and consequences of a dollar devaluation policy under Nixon and Carter, of the strong dollar policy of the first Reagan administration, and of the renewed devaluation policies of Reagan's second administration. This paper shows how these policies have evolved against a background of deepening international crisis (and with reference to U.S. geopolitical strategies and the sanction of protectionism). Lessons are drawn for the European Left and future scenarios are mapped out concerning possible geographical alignments at the turn of the century. This paper places the debt crisis in the wider context of an asymmetrical and dysfunctional economic and monetary order.