Loose monetary policy plus oil shocks triggered the 1973 economic crisis

Evidence

The momentum of the postwar boom was maintained through the period 1969-73 by an extraordinarily loose monetary policy on the part of both the United States and Britain. The capitalist world was awash with excess funds, and with few diminished productive outlets for investment, that meant strong inflation. The attempt to put a brake on nsmg inflation m 1973 exposed a lot of excess capacity in Western economIes, triggering first of all a world-wide crash in property markets (see figure 2.6) and severe difficulties for financial institutions. To that were added the effects of OPEC’s decision to raise oil prices, and the Arab decision to embargo oil exports to the West in the 1973 Arab - Israeli War. This (1) changed the relative cost of energy inputs dramatically, and pushed all seg­ ments of the economy to seek out ways to economize on energy use through technological and organizational change, and (2) led to a recycling problem of surplus petro-dollars, that exacerbated the already brewing instability m the world’s financial markets. The strong deflation of 1973-5 further indicated that state finances were over­ extended m relation to resources, creatmg a deep fiscal and legit­ imation cnSIS. — David Harvey, The Condition of Postmodernity, 861

Categorization

• XREF: Heightens the flexible-accumulation rival-periodization comparison the reader is testing against competing economic accounts of postmodernism. — connects to: The 1973 recession undermined Fordism and birthed a new accumulation regime — David Harvey, The Condition of Postmodernity: An…, 864; The Fordist regime collapsed with the 1973 recession — David Harvey, The Condition of Postmodernity: An…, 847; Britain’s mid-1970s crisis combined global recession with its own weak capital accumulation — Hall, Stuart, Essential Essays, Volume 1, 1100 (+6 more)

Broader Connections

• The Fordist regime collapsed with the 1973 recession #expands (0.75) — David Harvey, The Condition of Postmodernity, 847
• Britain’s mid-1970s crisis combined global recession with its own weak capital accumulation #expands (0.72) — Hall, Stuart, Essential Essays, Volume 1, 1100