May 29, 2010

HOW FRIEDMAN, PINOCHET, VOLCKER, HOWE, THATCHER & REAGAN WON THE COLD WAR:

Arms across the ocean: The British historian Norman Stone's 'personal' account of the Cold War is by turns passionately opionated, scabrously humorous and shamelessly partisan: a review of The Atlantic and Its Enemies: A Personal History of the Cold War by Norman Stone (Matthew Price, The National)

[I]n Stone’s telling, it is economics, not armaments and military manoeuvres, that take pride of place. His vignettes on the Korean War and the Cuban missile crisis have the feel of a school primer. But on the economic issues confronting the West, Stone mounts a bold, if not altogether persuasive, argument. For Stone, the spectre haunting the West was not communism, but Keynsianism. America and Europe boomed through the 1950s and 1960s. In Western Europe, it seemed, social democracy could deliver the goods, literally: France had refrigerators and West Germany, washing machines. “Nato developed its own financial military complex,” he writes, “and the central banks were part of it.”

Still, financial arrangements in the Atlantic world were ever precarious. The dollar – and its crucial adjunct, cheap oil – underpinned the whole system, but by the end of the 1960s, this hard-won stability was starting to break apart. The United States, pouring money into the war in Vietnam and into LBJ’s Great Society programmes, unleashed waves of inflationary pressures that, combined with oil shocks of the 1970s, would bring about a sea change for the Western economies. Inflation was the genie unleashed from the bottle, and getting it back in would vex governments across the Atlantic world.

Reviewing the decade, Stone finds little good to say about this turn in the West. It had become “extraordinarily self-indulgent”. He approves of the coup in Chile that brought Augusto Pinochet to power (with not a little bloodshed) and the economic reforms the General put into place after seizing the presidency.

He commends Helmut Schmidt’s gestures to the USSR and East Germany – the so-called “Ostpolitik” – and generally rhapsodises about the performance of the German economy, but for Britain his scorn is unrelenting. “Since 1815 Germans had been asking why they were not English. After 1950, the question should have been the other way about: why was it preferable to be German?” America’s central partner in the Atlantic alliance was in thrall to the unions – Stone hates them – and spent money ontoo generous a welfare state: “The overall Atlantic crisis was displayed at its worst in England.” (He refers to nationalised industries as “a sort of non-violent protection racket.”)


The Third Way experiment in Chile demonstrated that there was an alternative to suffocating socialism or heartless capitalism. Thatcher and Reagan broke the unions. Howe and Volcker (with Thatcher and Reagan's support) tamed inflation.



Posted by Orrin Judd at May 29, 2010 11:30 AM
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