Análisis e interpretación del cuestionario de Satisfacción del cliente

The sharp spike in oil prices (which between October 1973 and March 1974 quadrupled from $3 per barrel to $12 per barrel) was mostly a consequence of the same phenomenon that caused the BW system to collapse—the rapid depreciation of the dollar in the late 1960s and early 1970s. Although the Arab-Israeli war of 1973 was the immediate event that caused OPEC to cut production, the consequent rise in the price of oil served to accomplish OPEC’s long-term objective: reversal of the decline in revenues in terms of gold (commodities) (Kliman 2012, p.59). In other words, it was an attempt by the oil exporting countries to recuperate some of the value they had been losing over the previous decade due to declining terms of trade. Such attempts were necessary for the governments of the OPEC countries to respond to their growing internal problems of rising social unrest which they could only manage with increased revenues from oil exports (Cleaver 1989).

As an immediate effect of the rise in oil prices the world economy went into deep recession with consumption and investment slowed down everywhere. Over the same period, however, inflation accelerated in most countries even though unemployment was rising.

This combination of stagnating economic growth and high inflation, called stagflation, was the result of the failed attempts of states to convert higher costs of oil into a reduction in the real wage, i.e., in holding down nominal wage increases in the face of oil boosted inflation (Cleaver 1989). Higher oil prices would mean higher prices for all consumer goods requiring energy in production and this inflation would undermine real wages. In this situation, if real wages are kept repressed, then the loss of real wages would be transferred in a roundabout manner into the Eurodollar market and hence become available for business investment. However, in most countries workers, despite increasing rates of unemployment, achieved higher nominal wages to maintain their customary standard of living, while governments employed expansionary fiscal and monetary policies in the fear of even-higher unemployment and social unrest. Any policies for monetary growth (incurring further current account deficits or depleting international reserves) during this period, thus, contributed to maintaining workers’ real wages rather than to improving the conditions of production, just like in the late 1960s. As a result, during the 1970s international credit rapidly expanded at an annual rate of $50 billion between 1973 and 1975, $ 100 billion between 1976 and 1978, and more than $ 150 billion between 1979 and 1981, the majority of which was increasingly dissociated from industrial accumulation, and instead financed public and private consumption spending (Bonnet 2002, p.107). Insofar as production conditions remained the same, there was no reason that rising prices would stimulate productive investment, reducing unemployment. Instead, the expanded credits (petrodollars) were used to underpin existing levels of consumption with deteriorating current account deficits (incurring non-repayable foreign debts). This trend was most manifest in the US and Latin American nations where the power of labour constrained policy makers who were unable to halt expansionary policies.

Latin America’s rapid economic growth from the early 1960s until the mid-1970s corresponded to the period in which capitals in industrialised nations increasingly sought to escape militant workers' struggles at home (Bonnet, 2002, p.104). Nations in Latin America whose working class was then subject to the open repression of military dictatorships provided a seemingly perfect site for investment. However, this relocation of

production to territories where the conditions for accumulation appear more favourable tends to soon encounter barriers of its own creation: the explosive growth of industry quickly led to labour shortages, which, in combination with more active and organized workers struggles, drive up costs of exploitation (real unit labour costs). As Bonnet puts it,

“the insubordination of labour trails capital like its own shadow. The flight of capital from the insubordination of labour in the capitalist centres meets up with the insubordination of labour in the periphery” (2002, p.105). This was the case in Latin American developing countries since the mid-1970s with a wave of strikes throughout the region.

Faced with strengthening workers’ struggles and rising costs of production, states and capitals in the region relied on credit expansion in an attempt to improve productivity by introducing new means of production and development of infrastructure, while curbing rising unemployment. They extended the public sector by taking over failing private enterprises, maintaining them as sources of employment to stave off the threat of working-class unrest. The number of state enterprises more than doubled between 1970 and 1980, as did the number of their employees (Harvey 2007, p.99). In the 1970s many Latin American countries, notably Brazil, Argentina, Venezuela and Mexico borrowed huge sums of money from international money markets where huge sums of petrodollars (lacking attractive investment opportunities elsewhere) were being accumulated. The borrowing was also facilitated by the US, which relaxed the capital controls that it set up before 1974 while their persistent expansionary policies induced the weak dollar and low interest rates in financial markets. The annual net capital flows to Latin American countries climbed gradually at an average rate of $814 million between 1950 and 1965 (equivalent to 1.2% of regional GDP) to $4,042 million between 1966 and 1973 (2.8% of GDP). From then, the increase accelerated, reaching averages of $15 billion between 1974 and 1976 (4.2% of GDP) and $28 billion between 1977 and 1981 (4.5% of GDP) (World Bank 1995). In consequence, the total stock of Latin American external debt had already ascended to $258 billion in 1980, a sum of which the major part was long-term public debt ($146 billion) and an important portion was short-term ($68 billion, against $42 billion of long-term private debt and $1,413 million owed to the IMF), while interest payments and the repayment of the principal amount increased rapidly, amounting to $66 billion in 1982 compared to only

$12 billion in 1975 (Bonnet 2002, p.108; Theberge 1999). At the time of borrowing, Latin

American economies were exhibiting great performance and growth, which also played an important role in relieving the effect of the recession in other countries during the 1970s.

Credit expansion itself does not necessarily cause a financial crisis. It leads to a crisis when it is not matched by a corresponding expansion of productive investment and productivity growth that presupposes class relations favourable to capital (carrying out restructuring plans). As referred to above, the expansion of credit in Latin America, during the period, was largely dissociated from industrial accumulation and instead used to finance public and private consumption (especially oil deficits) (Soederberg 2001). As a result, the ratio of debt-to-GDP continued to increase with ever-growing debt-service burden, eroding potential for future growth, and so creating bad debts. By the early 1980s, most nations in Latin America could not but increase resources towards repaying debts which resulted in further reduction of domestic output and investment (Palat 2003). The economies were no longer capable of increasing their economic growth by means of increasing debts. In short, foreign debt of Latin American nations surpassed the amount their economies were able to earn.

The US at that time was witnessing the futility of currency depreciation in improving domestic production conditions. Just like the effect of oil price hikes, depreciation of national currency can be effective in lowering relative unit labour costs only when it is accompanied by cuts in real wages. Without a cut in real wages the fall in terms of trade caused by depreciation will lead to further trade deficits and more depreciation in a vicious cycle (Shaikh 1996, p.67). The US government (trying to avoid direct confrontation with workers), however, had only focused on dealing with unemployment problems through expansionary monetary and fiscal policies. As a result, while the unemployment rate dropped from a recession high of 8.3% in 1975 to 6.0% in 1978, inflation was reignited and the current account was pushed further into deficit with a steep depreciation of the dollar from 1976 (Krugman and Obstfeld 2008, p.541). The value of the dollar depreciated almost 20% between 1976 and 1979, which in turn encouraged oil exporters and speculators to re-boost the price to its historical level. There emerged an urgent need for the US monetary authorities to intervene to stop the vicious cycle and regain confidence in the dollar. In 1979 a strong intervention was implemented by Paul A. Volcker, the newly

appointed Federal Reserve chairman, who announced a tightening of US monetary policy and the adoption of more stringent procedures for fighting inflation (wage increases) (the reference interest rate passed 15% during 1981 and the start of 1982 whilst annual dollar inflation fell from 12 to 2.5%) (Mussa 1994). As a consequence, the feeble credit-based recovery from the oil shock fell into the deepest recession since the Great Depression of the 1930s.

The dramatic interest rate hikes in 1979 immediately undermined debt-ridden Latin America’s ability to repay its debts. The US’ macroeconomic stringency -the soaring interest rates together with the strong dollar- raised the cost of debt service to unsustainable heights, while the subsequent global recession (and a heavy fall in the prices of primary commodities) made it more difficult for the ‘debtors’ to earn foreign exchange. As a result, global debt problems went from bad to worse. As Mexico, in August 1982, threatened to default on its national debt, the majority of international banks refused to refinance developing states’ short-term loans, which in turn drove Argentina, Brazil, Chile and a host of other developing countries to financial crises. In a bid to forestall the danger of a generalized default and an international financial collapse and to ease the strains of the severe recession, major industrial states led by the US now reversed their tight economic policy stance and embarked on another large monetary expansion based on the provision of fresh credit to debtor nations. While this led to a resumption of large-scale capital flows to developing countries at an average of $18.5 billion a year during the latter half of the 1980s (Kettell 2004, p.35), most of this now gravitated toward the booming economies of East Asia, where average annual growth rates were at that time some two and a half times higher than those in advanced countries.