The politics of unemployment
Keynes's ideas had, in general, attracted a sceptical response in the 1930s, largely because they involved governments in deliberately unbalancing their budgets to finance reflation and were likely, given short-run constraints on the ability of economies to expand, to accelerate inflation. Neither of these consequences appealed to a
However, the long boom was brought to an abrupt halt in the mid-1970s following the decision of the Organisation of Petroleum Exporting Countries (OPEC) to use oil as a political weapon, which resulted in a quadrupling of oil prices in 1973-74. This hit the heavily oil-dependent West European economies hard - only Norway had its own oil flowing ashore and then in minuscule quantities - and sent them into the first large-scale recession of the post-war period. Virtually all West European governments responded to the crisis in the approved Keynesian manner by deliberately unbalancing their budgets and pumping new demand into their economies to avert the
Table 5 Standardised unemployment rates in selected Western European countries
Austria 2.0 Belgium 2.6 Denmark 1.8 Finland 2.0 France 1.9 Germany 1.3 Italy 6.1 Netherlands 1.7 Norway 2.0 Spain 2.4 Sweden 1.9 Switzerland 0.1 United Kingdom 2.9 * National figures for the 1980s. t Average 1980-85.