THE CAPITALIST BLOC (II) : FROM 1973 TO 1991

THE SPREAD OF LIBERAL DEMOCRACY

From 1970 to 1980 the military dictatorships remaining in Europe disappeared and were replaced by democratic governments. In Portugal, the Carnation Revolution in 1974 was a military insurrection which put an end to the dictatorship of Antonio Oliveira Salazar while in Greece the colonels’ dictatorship and monarchy of Constantin II were overthrown also in 1974. In Spain, the death of Francisco Franco open the door to the establishment of a Constitutional monarchy with king Juan Carlos I.

1973 ECONOMIC RECESSION

In 1973, an economic recession took place in the Western bloc. The main cause was an energy crisis due of the rise in oil prices determined by the OPEC. Arab member countries wanted the support of Western countries in their conflict with Israel. An industrial crisis produced by the backwardness of certain industries in Newly Industrialized countries.

The consequences of the recession were:

  • High inflation
  • Reduction in demand
  • Decline of corporate profits.
  • High levels of unemployment.
  • Social instability in Latin America which led to the establishment of military dictatorships such as the ones in Argentina and Chile

MEASURES TO RECOVER FROM THE 1973 RECESSION

Measures taken by the Western countries varied:

  • Neoliberal policies consisted in the liberalization of the economy by privatizing public companies, reducing public and social budgets, deregulating labor market. President Reagan in US and Margaret Thatcher in UK implemented this kind of policies.
  • Restructuration of traditional industrial sectors which involved reducing production and number of workers, modernizing production and relocating industries in cheaper places. High tech industries were promoted as well as the robotization of the production. The use of alternative energy sources was encouraged to reduce costs.

concept_review_chapt_17_students.doc

oil crisis

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