] 10. The Limits to Growthmanship: the 1970s

The immediate response of the establishment to ’68 was to try to “man-age” it, to buy off discontent, and to stimulate economic growth by the time-trusted methods of Keynesian demand management. Spending in order to create political stability might have worked better in completely closedoff economies; with greater economic openness, the money slopped out of the national buckets. The new spending created big imbalances in the external accounts (the balance of trade and the current account, which includes payment for services), and major capital flows to compensate for the trade and services imbalances. In addition, when countries tried to engage in an international version of the social experiment of paying off the disenchanted, their monetary expansion helped to produce a boom in commodity prices that raised new questions. What was at stake was no longer a debate about the best distribution of wealth and resources in the closed context of the national economy, but about international distribution: in other words, about the relationship of rich countries to poor countries.