ABSTRACT
Especially on the democratic left (communists and new leftists blamed ‘capitalist exploitation’ for everything, including excessive rainfall …) it has been almost a ritual to blame the subsequent oil shocks for the economic slowdown, mounting unemployment, balooning budget deficits and high inflation. Only a minority, although a growing one, held a different view. To them the problems of the 1970s and the early 1980s were the outcome of long-term changes in Western economies and societies which would have taken place anyway, oil crisis or not. In other words they regarded them as caused by endogenous, domestic factors, in spite of the fact that they afflicted almost all Western economies. The consequences of the two oil shocks, including the wealth transfer to oil exporting countries, accelerated the inevitable developments, made them more painful and brought the rigidities imposed upon the market system into sharper focus. (This last outcome might have had a salutary effect in the final analysis as far as the West's future is concerned.) Thus, on the eve of the first oil shock, private enterprise, drained of its own resources by the wage explosion and higher taxes, short of external capital owing to the fall in savings, lacking entrepreneurship and willingness to bear risk because of the decreasing rewards and — last but not least — deprived of ideological support by the increasingly hostile criticism of the market system, stood weakened to such an extent that any deterioration in the general economic situation was bound to put serious strains on all Western economies.
