Lecture 13.2

The Rise of Nationlism and Socialism

Emmanuel Teitelbaum

Populism in Europe

Golden Years of Post-War Capitalism

  • Trade \(\rightarrow\) growth \(\rightarrow\) social safety net, wage gains & social peace
  • Low unemployment, low inflation
  • Came to an end in 1970s for same reasons in the U.S.
    • Overcapacity
    • Regulations
    • Aggressive unions (in some countries, but not all)
    • Higher oil prices (energy crisis)

Crisis and Fallout

  • Deficit spending that stimulated demand in golden years made things worse in the crisis
    • Increased inflation
    • Undermined investment
    • Increased demand for imports, worsening BOP
  • To cope with the crisis, leaders turned away from Keynesian policies and toward neoliberal policies
    • Tried to limit wage increases
    • Raised taxes to tamp down consumer demand
    • Raised interest rates
    • Squashed or coopted unions
    • Removed regulations on industry
    • Lowered taxes on businesses and the wealthy
    • Etc.


  • During the boom years, labor was in short supply, immigrants came for work

  • In the 1980s, however, new immigrants were asylum seekers

  • Most recent wave of refugees is from refugees trying to escape the violence in the Middle East

  • cool map

The European Union 1

  • Precursors to the EU (1950s)
    • European Coal and Steel Community
    • European Economic Community
    • France, West Germany, Netherlands, Luxembourg, Belgium and Italy
  • Formation of EU in 1993
    • Allowed goods and people to move freely
    • Original six plus Greece, Spain, Portugal, the UK, Ireland and Denmark
    • All except UK and Denmark also signed onto the Euro in 1999

The Europe Union 2

  • Stability and Growth Pact (1997)
    • Members’ deficits had to stay below 3% of GDP and debt below 60% of GDP
    • Severely constrained government spending
    • Devaluations impossible and tariffs forbidden
    • Cemented in place neoliberal policy, no room for Keynesian response to downturns
  • Freedom of movement
    • Unions opposed because companies could move to places with cheaper labor
    • Right opposed because of influx of immigrants from poorer EU countries

Judis Discussion

Discussion Strategy

  • Identify one chapter from Part II or Part III from Judis
  • Meet with other people who read chapter from same part of book
  • Now share findings with a group that read a chapter from different part
  • Question: should the U.S. abandon globalism?