{Keynesian ‘Management’ through OPEC around 1984}[10th-13th February 1991]

[Redbook8:250-251][199102[10-13]:1145]{Keynesian ‘Management’ through OPEC around 1984}[10th-13th February 1991]

(10-13)?

199102^.1145

‘The mid-1980s were indeed a period of glut [of oil],* with a general collapse [in prices]* in 1985. Opec responded** with a “tax cut” in 1986. Yergin has this to say. “If the two oil price shocks of the 1970’s*** constituted the “Opec tax”, an immense transfer of wealth from consumers to producers, then the price collapse was the “Opec tax cut”, a transfer of $50 billion in 1986**** alone back to the consuming countries. This tax cut served to stimulate and prolong the enormous growth in the industrial world that had begun four years earlier,# while at the same time driving down inflation.”’

#*

What’s interesting about this is the way in which the effect of the Opec moves seems to have been more-or-less exactly what was required by neo-Keynesian theory to even out the overheating→crisis peak→slump process which a 64-year cycle would lead one to expect in and soon after 1984. In other words, money was removed from the World economy as that economy might have been in danger of overheating on its way to the crisis, and was then re-injected into the economy just as they would have been expecting the slump to begin to take hold. The 1982-c[irca]1987/8 period of growth would then have to be seen as only possible because of the earlier restraints, although I cannot describe the economic mechanisms of this relationship.

It is worth bearing in mind that Kondratieff cycles often seem to occur later#** than they should (depending upon whose version you choose), but that these delays can almost always be plausibly accounted for in terms of socio-political history.#***

*[Square brackets per ms, indicating ms insertions into original text]

**[sic?]

***64G~1968

64R~1976

****64C1984

#ie 1982

#*T[imes] L[iterary] S[upplement] 19910208:9, ‘From Titusville to Baghdad[’], Conor Cruise O’Brien reviewing Daniel Yergin’s ‘The prize: the epic quest for oil, money and power’.

#**(occasionally, earlier)

#***{(See VII?….[])}

[PostedBlogger20for21072023]