Finally, in a more speculative vein, I consider whether the seeds of a new reorganization of the capitalist world economy can be detected and compare several hypothetical scenarios of the course that the crisis may yet take. In this section we shall try to identify the international conditions which underpinned the regularities of Western growth from the Korean War to the end of the sixties. That is, can we speak of international institutions—or of procedures tacitly recognized by the leading capitalist states—which give a precise form to international monetary constraints and therefore influence the kind of adjustment made to changes in the balance of payments?
Moreover, are the forms of international monetary regulation structurally correlated with underlying tendencies of accumulation in the heartlands of the world economy: with extensive or intensive accumulation, with a relative orientation to internal or external markets, with reliance upon vertical or horizontal international divisions of labour, and so on? A historical, comparative approach is the most fruitful way of tackling these questions, and it is helpful to make a summary comparison between the postwar system of growth under American hegemony with the previous system that blossomed under British hegemony in the second half of the nineteenth century.
Synoptic Table I sets out the major structural differences between the two types of regulation; relating these differences to specific divisions of labour and forms of the internationalization of capital as well as enunciating the principal characteristic articulations of the international economy in each type of regulation.
Michel Aglietta World Capitalism in the Eighties T he main currents of thought on world economic problems can be distinguished from one another, amongst other things, by the precise importance they attach to the national dimension. Email required. Password required.
World Capitalism in the Eighties
They wished to build a rural and largely self-sufficient society. For some time, only the Crown was permitted to purchase land from Maori. This land was then either resold or leased to settlers. Many Maori felt — and many still feel — that they were forced to give up land, effectively at gunpoint, in return for a pittance.
Perhaps they did not always grasp that land, once sold, was lost forever. Conflict over land led to intermittent warfare between Maori and settlers, especially in the s. There was brutality on both sides, but the Europeans on the whole showed more restraint in New Zealand than in North America, Australia, or Southern Africa.
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Maori actually required less land in the nineteenth century because their numbers were falling, possibly by half between the late eighteenth and late nineteenth centuries. By the s, Maori were outnumbered by British settlers. The introduction of European diseases, alcohol, and guns contributed to the decline in population.
Increased mobility and contact between tribes may also have spread disease. The Maori population did not begin to recover until the twentieth century. Gold was discovered in several parts of New Zealand including Thames and Otago in the mid-nineteenth century, but the introduction of sheep farming in the s gave a more enduring boost to the economy.
Australian and New Zealand wool was in high demand in the textile mills of Yorkshire. Sheep farming necessitated the clearing of native forests and the planting of grasslands, which changed the appearance of large tracts of New Zealand.
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This work was expensive, and easy access to the London capital market was critical. Economic relations between New Zealand and Britain were strong, and remained so until the s. Between the mids and mids, New Zealand was adversely affected by weak export prices, and in some years there was net emigration. But wool prices recovered in the s, just as new exports — meat and dairy produce — were coming to prominence.
Until the advent of refrigeration in the early s, New Zealand did not export meat and dairy produce. After the introduction of refrigeration, however, New Zealand foodstuffs found their way on to the dinner tables of working class families in Britain, but not the tables of the middle and upper classes, as they could afford fresh produce. In comparative terms, the New Zealand economy was in its heyday in the two decades before New Zealand though not its Maori shadow, Aotearoa was a wealthy, dynamic, and egalitarian society.
The total population in was slightly above one million. Exports consisted almost entirely of land-intensive pastoral commodities. High labor costs, and the absence of scale economies in the tiny domestic market, hindered industrialization, though there was some processing of export commodities and imports. Encouraged by high export prices, New Zealand farmers borrowed and invested heavily between and Land exchanged hands at very high prices. Unfortunately, the early twenties brought the start of a prolonged slump in international commodity markets.
Many farmers struggled to service and repay their debts. The global economic downturn, beginning in , was transmitted to New Zealand by the collapse in commodity prices on the London market. Farmers bore the brunt of the depression. At the trough, in , net farm income was negative.
Declining commodity prices increased the already onerous burden of servicing and repaying farm mortgages. Meat freezing works, woolen mills, and dairy factories were caught in the spiral of decline. Farmers had less to spend in the towns. Unemployment rose, and some of the urban jobless drifted back to the family farm. The burden of external debt, the bulk of which was in sterling, rose dramatically relative to export receipts. But a protracted balance of payments crisis was avoided, since the demand for imports fell sharply in response to the drop in incomes.
The depression was not as serious in New Zealand as in many industrial countries. Prices were more flexible in the primary sector and in small business than in modern, capital-intensive industry. At first, there was no reason to expect that the downturn in was the prelude to the worst slump in history. As tax and customs revenue fell, the government trimmed expenditure in an attempt to balance the budget.
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Only in was the severity of the crisis realized. Further cuts were made in public spending. The government intervened in the labor market, securing an order for an all-round reduction in wages. It pressured and then forced the banks to reduce interest rates. The government sought to maintain confidence and restore prosperity by helping farms and other businesses to lower costs. But these policies did not lead to recovery.
Several factors contributed to the recovery that commenced in The New Zealand pound was devalued by 14 percent against sterling in January As most exports were sold for sterling, which was then converted into New Zealand pounds, the income of farmers was boosted at a stroke of the pen.
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Devaluation increased the money supply. Once economic actors, including the banks, were convinced that the devaluation was permanent, there was an increase in confidence and in lending. Other developments played their part.
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World commodity prices stabilized, and then began to pick up. Pastoral output and productivity continued to rise. As was the case elsewhere, the recovery in New Zealand was not the product of a coherent economic strategy. When beneficial policies were adopted it was as much by accident as by design. A Labour government, elected towards the end of , nationalized the central bank the Reserve Bank of New Zealand. The government instructed the Reserve Bank to create advances in support of its agricultural marketing and state housing schemes.
It became easier to obtain borrowed funds. A balance of payments crisis in was met by the introduction of administrative restrictions on imports. Labour had not been prepared to deflate or devalue — the former would have increased unemployment, while the latter would have raised working class living costs.
Although intended as a temporary expedient, the direct control of imports became a distinctive feature of New Zealand economic policy until the mids. Full employment was now the main priority. There was a desire to create more industrial jobs, even though there seemed no prospect of achieving scale economies within such a small country. Uncertainty about export receipts, the need to maintain a high level of domestic demand, and the competitive weakness of the manufacturing sector, appeared to justify the retention of quantitative import controls.
After , many Western countries retained controls over current account transactions for several years.
Michel Aglietta, World Capitalism in the Eighties, NLR I/, November–December
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