Neoliberalism Part 2: The Trade World War: G7 vs G77

In part 2 of our series on Neoliberalism we look at the economic crises that plagued the 1970's and the forgotten conflict between the G7 and the G77 that shaped the modern world

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Episode Transcript

Speaker 1 (00:05):
What's I mean, that's that's all I got today. Who's
who's taken over? Come on? It's me? I guess it's me.
All right, Well then, what what show is this? And
what do we do? This is it could happen here
we talk about things being bad and also what you

(00:26):
can do about them, But this is a this is
a things are bad episode, and not at what you
can do about the episode specifically. This is part two
of what I guess you could call our mini series
on neoliberalism. And so you know, yesterday we talked a
lot about who the original the liberals are. They have
a bit of power in Germany in the fifties, but

(00:47):
through fifties and sixties up to the seventies, they're kind
of nobody's there. You know, they're they're there. They have
a couple of think tanks, but they're kind of they're
kind of just siloed off in the corner and they
yell at people and people kind of northam and what
they're waiting for, essentially is the right crisis, and in
the nineteen seventies they finally find that crisis. Now, I

(01:09):
think it's kind of hard to remember in a lot
of ways because of how the eighties went. But in
early nineteen seventies, things are not looking good for capitalism.
I mean, you have so you know I and i
end wins this election nineteen seventy We'll talk about what
happened there in another episode. But you know it's it's

(01:29):
not just that in nineteen nineteen seventy four. Well, so
the whole early nineteen seventies, am called Carbrial is just
absolutely annihilating the Portuguese army. And he, you know, he wins.
He fights one of the like one of history's greatest
grilla wars, and this basically destroys the entire Portuguese state
and caused the Carnathan Carnation Revolution. The Portuguese colonies get free,

(01:51):
the dirt takes part in me Theiopia and the ninteen
seventy five the North Vietnam wins of the like the
war in Vietnam. And now you know the product of
this is that Compada falls, Loos falls. There's now there's
five social estates in Eastern East Asia, in Southeast Asia,
and you're also Uncle Lea, but nobody really cares about them.
And as as all of this is happening, as these
sort of as the anti colonial armies are sort of

(02:12):
marching their way through the world. There's an enormous economic crisis,
and yeah, I mean there's a lot of things happening
at the same time. One of the ones I think
is probably the thing, the thing that people remember the
most is there's just unbelievable inflation, and you know, and
and economic growth starts to slow down. Although something I

(02:35):
think that we do need to keep in mind is
that when I say economic growth slows, so economic growth
from like sixty seven nine is um from two thousand
to two thousand and seven, it was two point three
percent in the US, And so you know, when when
when I say there's an economic crisis going on here,
like economic growth in the seventies is better than any

(02:55):
decades sense, but it's still considered the crisis decade because
there's much of the nation and you know, everyone has
their own theory as to why this is happening. Because
the sort of Keynesians who who have been in power,
whose thing is, oh, well, we can you know, if
there's every economic crisis, we can sort of we can
spend money, and that you know, then the government spending
money will drag everyone out of the crisis. But in

(03:18):
Keynsian theory, like there's not supposed to be inflation if
like if if unemployment is increasing and there's an economic crisis,
there's not supposed to inflation, and suddenly there's both. So
the Kensians have nothing and they're sort of just running
around like just with basically like chickens to their head
cut off, going oh god, we have no idea what's happening.
We don't know what's happening. And so into this gap
steps a bunch of weirdos. And so I'm just gonna

(03:41):
I'm gonna go through a few of the theories as
to why this crisis happened, because I don't know, and
I think there's elements of truth in most of the
stories ish kind of, but you know, it's this is
extremely complicated and there's still no consensus on it. So
I'm gonna start with the most crank, which is so

(04:04):
so the run Paul people. The whole thing is, yeah,
every everything went to ship has been shipped ever since
because the US abandon the gold standard, and like they're
right into the extent that this happens. So basically Nixon
has been trying to pay for the Vietnam War, and
he can't. And you know, the the US dollar has
been pegged to a certain amount of gold, right, and

(04:25):
you can do this thing where if you get it,
you have an American dollar, you can exchange it for
that amount of gold. And so travels the goal just's like, okay,
we're just gonna we're gonna take all of this gold,
and so he does in the US starts running out
of gold and so bye bye bye. In the early seventies,
Nixon is like, fuck this, you can't actually exchange dollars
for gold anymore. And now every single libertarian starts every

(04:45):
rant with fiat currency. But you know this, this this
does have an effect on the economy, which we'll talk
about more in the bit um. There's you know, there's
there's there's a lot of other explanations for this um
the modern monetary three people if you listen to them,
and also Peter Thiel. Weirdly, I will argue, oh, it's

(05:06):
all because of the oil shock, because oil prices increased,
Neoliberals will spend neo liberal essentially they blame too much
government spending welfare programs and then wages being too high,
and also bad monetary policy. There's like an entire there's
there's like seventeen different Marxist explanations for it, some of

(05:28):
which are I'll talk about like one and a half
of them, um that are more plausible. One of the
explanations has to do with how essentially, so the other
thing that's happening in the sixty seventies is that minorities
and women are entering the workplace and are you know,

(05:48):
actually demanding to be paid the wages that white men
have been being paid, and corporation essentially just can't afford this,
and so you know that they have two choices. It's
either we pay these people actually ages or we just
murder everyone. And they took the second one. So it's
something that that has also been happening through this whole
period is that profit rates and manufacturing just keep collapsing.

(06:11):
And there there's there's a whole thing here about some
Marxist theory stuff, But the thing that's important is that
that and this this doesn't happen in the seventies. Eventually
you hit a point where manufacturing growth becomes zero sum.
And you know, so you can have manufacturing growth in
one country, but you can't have it in another because
at a certain point you're producing too much stuff and

(06:34):
people start getting kicked out of the labor process. And
this has a bunch of effects. One is that it
means you get a bunch of people who are employed
and too. It means that there's just a bunch of
money floating around that nobody can actually invest in places.
And this is you know, like all of the weird
stuff the Saudias do is just basically from this this money.

(06:55):
There's a whole there, the whole piles of oil money
that are just sitting around that nobody can invest in
any thing. And that's going to cause you know, that
that that that that's that's that's going to cause a
lot of stuff down the road. But for now, yeah,
we'll talk about the dead crisis and causes sort of
next episode. But for now, I'm going to try to

(07:17):
pull all of these together and like have something, have
a coherent thing that makes sense, which is essentially but
by the end of the seventies, profit rate or declining,
and then Nixon pulls, you know, Nick Nixon pulls the
dollar off the gold standard, and this causes the value
of the dollar is plunge and this this is the
thing that sets off the nine oil crisis. So the

(07:40):
nay said, the oil crisis is weird because it's not
an oil crisis. Every everyone looks at the grill of
crisis and it goes, oh, it's an oil crisis. The
crisis because there wasn't enough oil, and it's it's not
it's nothing to do with that is literally nothing to
do a supply of oil at all. What actually happens
is that so you have OPEC, right or PECK is
this sort of is the Alliance of Oil Producing cartels
um and they have this extremely complicated system where they

(08:05):
they sell oil to oil companies and then the oil
companies sell the oil, did they refine it and sell
it to you, and they have this incredibly convoluted tax
structured on it. And eventually, so the oil companies are
having to like the price of oil starts to rise,
and the oil companies are basically just taking it all off,

(08:26):
the profit from this, and so OPEC goes, okay, you
guys are gonna pay taxes, and the oil companies just refuse,
and so OPEC just unilaterally just you know, OPEC just
unilaterally is like, okay, you guys are gonna pay taxes,
and we're gonna make you pay taxes by by just
increasing the price that we sell you oil at. And
this gets remembered as like OPEC increasing the price of oil,

(08:48):
even though it was literally just them saying you're gonna
pay taxes. Now, this is the part that's very weird,
which is that, Okay, so if if you heard you
two heard of the oil crisis, like the story, yeah, yeah,
I mean I are the way it's always gone in textbooks,
as you talk about like the stagflation of the seventies

(09:09):
and the fucking you know, lines of cars at gas
stations going back blocks because OPEC facory And yeah, that's
how it's always framed, is that, like there's this big
political crisis over OPEC that led the gas supply getting throttled,
and it came at a time when the economy had
already slowed down and everything got terrible. And then a
few years later we got RoboCop. Yeah, well we did

(09:32):
get a pop. But the important thing about the story
is that every single thing about that story is wrong,
every part of it. Well, I mean there were lines
at gas station, yeah, I mean, there are lines of
gas stations. But the lines at the gas stations have
literally nothing to do with OPEC. It's just nothing. So
on October six, the Arab members of of OPEC are like, fuckett,

(09:55):
we're gonna make the oil companies pay more for oil.
And then the rest of the rest of OPEC follows them.
Now two days later, is it yeah? The next day
there is a completely unrelated thing to all of this,
which is that while while this is going on, the
yan Kapoor War starts, and so Egypt and Syria attack Israel,
um the basically attack the Israel occupation forces in their country,

(10:18):
and the war is going really badly for them there.
I mean it's it's I mean, it's not going it's
not going as badly as like the previous wars had
gone for the air powers, but it's not going great.
And so on October six, Arab oil producing countries declare
if they're they're cutting the amount of oil they export
by five percent per month until Israel returns his territories.
It occupies seven and they haven't embargo on the US.

(10:41):
But and this is the very important part, this has
nothing to do with OPEC. This is not OPAQ at all.
It's not this, this is this is this is just
a couple of random Arab countries are like, we're going
to do this. And you know, and I think when
I think it's interesting about Robert, we're talking about is
OPEC factory. You know? Is how this gets remembered and
this this is one of the things that that neoliberals

(11:01):
used to sort of push their model of the world, right,
which is that everything functions office supply and demands and
oh look, hey the Arabs cut the supply of oil
and that's why the prices rose. But it's just it's
just wrong. It's empirically wrong. The price cut happens, I mean,
the price increases happened the day before the the oil
the price increases the day before the embargo, and the

(11:25):
embargo and the oil price. People are different groups, they
have nothing to do with each other. But you know,
this this gets sort of system it like this this
is this is how it's it's remembered and and you know,
it's not even just how to remembered, like like the
Encyclopedia Britannica has the dates and which all of this
stuff happens wrong. They have the sequence of events wrong,
like all of the most of the people who write

(11:45):
about this remember this whole thing wrong, and and this
is this is part of the sort of an enormous
propaganda effort that and neo liberals are able to do
at this moment, which is they convince everyone that, oh, yeah,
the price increases and the gag. Typically the gas shortages
are are are about opaque. But again also like the
the US only imports like seven percent of its oil
from from the countries who are doing the embargo at

(12:06):
this point, So the actual thing that's going on has
to do with price. It's it's a weird thing as
with price controls and gas companies are hoarding gas because
they don't want to sell at a price control levels
and stuff like that. But you know, the oil price increases,
you know, the yeah, like it is bad, Like the
price of oil does go up and there are shortages,
but it has nothing to do with like there's nothing

(12:29):
to do with the embargo, has nothing to do with,
you know, like the supply of oil going down. It's
just companies didn't want to pay taxes and so they
started hoarding the oil instead of selling it, and they
passed the price the tax increase on. So the consumers
instead of paying it. And as we talked about before,

(12:54):
once this sort of like tax increase goes that opec
well some of the open countries want to do, goes
into place. The price of whale does increase, and this
does funck the economy even more. But the economy had
really even sort of a mess before this, and it
has one other very important effect that you know this
is you know, I guess, I guess. The theme of

(13:15):
this episode is that the oil and bargo matters. But
the oil and bargo matters because people think it matters,
not because they did anything and the other. So it
matters in the US because everyone thinks that, oh, the
scary Arab nations are coming for us. But it matters
in the rest of the world because everyone else looks
at this and goes, wait, hold on, you can actually

(13:36):
use commodities. Essentially, you can use commodity prices like countries
that like have raw you know, commodities can use this
control to actually go fight you know, to like to
go fight the West, to go fight the capitalists and
go like, you know, get money for themselves. And this
leads us into something Robert Garrison, if you are you

(14:00):
ever heard of the G seventies seven. Uh that like
the seventies seven countries that have the most money. Well,
that that's the that's the G seven. Well yeah, but
I was I was seven might be just a longer list.
So yeah. So so this is this is the other
thing from this period that just is completely lost as
almost completely lost to history, and seventy seven is actually

(14:22):
still around. But what they are was so in the sixties,
you know, you have all of these countries that have
recently gained independence, and all these countries have getting deependence
um from their sort of colonial overlords, and they start
to band together into basically a voting block in the
u N. And also this is the other the other

(14:43):
weird part about the story is that so in the
niteen seventies and sixties seventies particularly, the un actually matters
like it's it's it's it's a thing that people there
was that like twenties years after World War Two, where
people were maybe I mean a good example of the
degree to which the u N Act really used to
be meaningful is watch the first Street Fighter movie, um,

(15:05):
because the Good Guys and that are clearly based off
the u N and nobody thinks it's ridiculous that the
United Nations are actually doing something. Um, it's fine to
have Jean Claude van dam And be the leader of
the United Nations fist fighting a guy that that makes
total sense in the nineteen nineties, and you know, and
so and part of how about this war next episode?
But basically, so, the reason the UN is a joke

(15:27):
right now is because of what the US was doing
to stop that G seventy seven from doing anything. I mean,
I would argue that fail massive failures in Rwanda and
uh Bosnia had a huge impact on that. A couple
of genocides go down and people are like, well, what
are these guys doing? But yeah, yeah, well this is
this is this is how they got dysfunctional to the

(15:49):
point where you can get that yeah, which is so
so okay. So you have you know, and a bunch
of coaches that call themselves, you know, the term they
used for themselves is the third World, and they come
together the form of this group and it's it's it's
a really weird ideological mixed bag, like I mean, you
have you know, you have you have like actual socialists
like tensan years and Michael Borele and Jamaica. You've also

(16:12):
got like Gaddaffi and the Bathists and like was a
socialist come on Paradise ka Libya. You know, okay, my my,
my my, My most contrarian hot take is that Salak
Jaded was like actually kind of an mL who was
that he was? He was briefly the Bathist in charge

(16:34):
of Syria and then he got overthrown by But both
of them, there's there's definite like actual like Marxist, you know, Linen,
there's something like especially in the old school Bathists, like
there were aspects of that. There was socialism kind of
within it. It just it would be nonsense like for example,
called Saddam Hussein's baths. Yeah yeah, and you know, and

(16:59):
you can't red see like this is this is this
is this is a real grab back and you have
there's also just a bunch of random Latin American countries,
like none of whom you can call socialist. And then
there's also Saudi Arabia and Thailand or in this group.
To get a sense of how fractus this is, India
and Pakistan are also both part of this, and they
fight too full scale wars while they're both in the
G seventies seven. Actually that's not true. There's two full

(17:20):
scale wars and then there's like another half war they
fight in the nineties. This yeah, like all all of
the people in this thing are fighting, are literally fighting
wars against each other. It's kind of a mess, and
you know, it's fun. It's fun. In in the mid
sixties and until likeeen seventy four, it's kind of their
Their whole thing is we have moral authority like where yeah,
like where you know where We're like we we we

(17:42):
we have the authority of all of these nations have
colonized us for a long time, and we're going to
use that. But in the seventies, you know that the
oil embarko happens, and a lot like most i think
all most of the OPEC states are are are are
in um are are in the G and they look

(18:05):
at they look at the oil embargo and they look
at OPEC raising prices and they go, wait, we can
do this too. And the OPEC states are like, oh, hey,
we can use this to push the hood, you know,
we can use like push the whole power of like
of the Third world. And they they they're planned to do.
This is something called the New International Economic Order, which

(18:25):
is also something that no one has ever heard of
that is extremely important that as just so, the spoilerler
is that this this movement gets crushed so thoroughly that
nobody knows what the new Economic order is and the
Third World is now a slur. But you know, the
thing that they're trying to do is create a new

(18:45):
It calls the New International Economic Order a trade union
of the poor. And so it's it's this thing they're
trying to get passed through the u N that would
you know, just designed to sort of ensure the economic
sovereignty of these developing nations. Um and I'm gonna read
a list of the stuff that's in here. Um So.
A an absolute right of states to control the extraction

(19:08):
and marketing of their domestic natural resources. Be the establishment
and recognition of state man managed resource cartels to stabilize
and raise commodity prices. See the regulation of transnational Corporations
D no strings attached technology transfers from north to south. E.
The granting of preferential trade preferences to countries in the south,

(19:29):
and f forgiveness for for certain debts that states in
the South, Oh to the north. So this is like
the act, this thing, if the International Economic Order had
ever been implemented at all, it would have completely reversed
the basically completely reverse the balance of economic power, shifting
it basically from countries like the US, like you know,

(19:52):
Western Europe, like Japan that are these giant manufacturing powerhouses,
two countries that produce you know, raw materials, and there
would have you know, and the other thing that would
have happened from this is you have these the no streams,
you have a debt relief for the global South, and
also these technology transfers. And the plan is basically to

(20:15):
create a bunch of mini opex for just not even
mini opus, create opex basically for every commodity. So you know,
you have like an opaque, but it's for like box
site or like copper, and you know they would use
they would you know, you have all these opex and
each one of them uses their power and they all
cooperate to to to make sure that there's a stable

(20:35):
price for for all of these commodities. And another part
of this is that it's supposed to basically enshrine the
right of countries to be able to just like nationalized
resource companies, so you know, you have like a British
oil company. I was like, well, we just take it
out now it's ours. And the threat of this is
great enough that if you read conservatives in the era,

(20:55):
they will say things like the Soviet Union is no
longer a threat. The greatest danger to the West today
is the seventies seven. Yeah, yeah, this is this. Yeah,
it's it's these these people are enormous. Yeah, no, no
one even rivers this anymore. And and it's it's because
largely it's because of how just unbelievably badly these guys
got stopped. Um, you know. And one of the other

(21:16):
things that happens out of the product of this is
this is where the G seven comes from. And it's
originally and I think there's another thing. Yeah, the other
funny part arout this. So the G seven is originally
a secret alliance, like through this whole through the whole seventies,
nobody knows G seven exists. It's basically it starts as
this like secret meeting of a bunch of finance ministers.
Eventually they they add, uh, Canada and I think Japan too,

(21:36):
and it goes up to seven members, and you know,
and they have a couple of things they're trying to
deal with. They're trying to deal with the economic collapse.
But one of the big things, like one of the
biggest things they're dealing with, is the G seventy seven
and OPEK And this this the result of this is this,
these enormous series of fights in uh implausibly the United
Nations Conference on Trade in Development, which is I think

(22:00):
this this is this is the last time ever that
the fate of the entire world would be decided in
a battle in like a subcommittee of the U N
And there's there's years and years and years of negotiations
between well, the the G seven hasn't like openly to
cleared itself to G seven. It's sort of just it's
basically the rich European countries. So it's Canada, France, Germany, Italy,

(22:24):
the UK, the US and Japan like for form this
alliance and are like locked in together in order to
stop that G seven from seventy seven from doing anything.
And this is this is the this is the other
the other, the other crisis that the neoliberals are responding
to is it's it's not just and in many ways
this is the one that scares them more because you know,

(22:47):
it's not just that there's an economic crisis. It's not
just that like capitalists are afraid because of losing money.
It's if this stuff goes through, the entire balance of
power in the entire global economy is going to change,
and it's going to swing into the favor of a
bunch of non Western countries and probably more most importantly,
from the liberals. They're going to enshrine the right of

(23:08):
states to take things away from corporations and regulate them.
And this is just absolutely completely unacceptable to both the
neoliberals and just every single other organization that's even tangentially
involved with sort of the Western nations. So the neoliberals,

(23:37):
I talked about this a bit in in the last episodes,
is that they've been working on a strategy in order
to take power that doesn't rely on states. And so
what they've been doing for about twenty years is essentially
infiltrating and working their way up through it like takes
basically basically taking over uh the International Monetary Fund in

(23:59):
the World Bank who in this period, and this is
everything I think it is very weird and hard to remember,
which is that the I m F and the World Bank,
like there was a time when they weren't completely evil,
Like like the I m F was basically set up
to make sure that countries wouldn't just run out of money, right,
it was supposed to give people like yeah, and the

(24:20):
World Bank, and it's it's turned into sort of this
like international debt system for horror countries where they're always
and being forced into austerity measures in the like yeah, yeah,
and and that. But that that didn't used to be true.
It used to be you know, the the I m
F had a bunch of Keynsians in it and sit
same with the World Bank, and both both the I
m F and the World Bank's leadership for a lot

(24:42):
of this period wanted to negotiate, and you know, and
I think, this is this, this is this is this
is where We're gonna leave it here with basically, the
the the entire world is an imp apocal crisis. There
is the all the economies are collapsing, the st the
the armies of of the anti colonial like world or

(25:03):
are moving and the G seventy seven looks like it's
it's literally on the verge of of you know, completely
restructuring the economic system in a way that actually would
have been slightly more fair and just than but the
system that existed then, which was also infinitely more just
and fair, and the system that exist now. And next
episode we're going to talk about how this all fell

(25:25):
apart and how there was a choice in the seventies
between either corporations can make money or people can have things.
And the product of what the new Liberals are going
to do in the next episode is that they're going
to their solution to this problem is to tell the
entire wretched of the earth to each it and die.

(25:48):
And yeah, that's that's that's the episode. It's yeah history. Yeah,
it's it's a time. Um, okay, well we got any
we got any any plugables? What do we what do
we do at the end of episodes? Sophie, where are we?

(26:10):
Thank you? Are we? Thank you for listening. We'll be
back on a day at a time. Maybe we're not
hearing you, Sophie. I think you're muted. I'm not muted.
I'm not muted. Oh, there we go. I'm not muted.
I haven't remuted the whole time. We didn't hear you.

(26:31):
That's so weird. I said, we'll be back on a
day or a time, and yeah, at some point we'll
be back. Find us then, uh, and find us tomorrow
unless this comes out on Friday, in which case eat
with your family. This is dropping on. Adopt a cat,

(26:52):
Adopt two cats, maybe four four? Adopt four cats. Yeah,
get a number of cats greater than the number you
have and put them in your house. We'll see you
one Monday. It could happen here as a production of
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Visit our website cool zone media dot com, or check

(27:13):
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