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Vietnam War and a growing US Federal budget deficit. The dollar was tied to a gold standard, and there was a growing fear in Washington that foreign holders of US currency (including Europe’s central banks) would seek to exchange their dollars for gold, draining American reserves.
If the dollar was to float, then so must the European currencies, and in that case all of the carefully constructed certainties of the post-war monetary and trading systems were called into question.
a conference in Paris, in March 1973, formally buried the financial arrangements so laboriously erected at Bretton Woods and agreed to establish in its place a new floating-rate system. The cost of this liberalization, predictably enough, was inflation. In the aftermath of the American move of August 1971 (and the subsequent fall in the value of the dollar) European governments, hoping to head off the anticipated economic downturn, adopted deliberately reflationary policies: allowing credit to ease, domestic prices to rise, and their own currencies to fall.
But the uncertainty produced by America’s retreat from a dollar-denominated system encouraged growing currency speculation, which international accords on floating-rate regimes were powerless to restrain. This in turn undermined the efforts of individual governments to manipulate local interest rates and maintain the value of their national currency. Currencies fell. And as they fell, so the cost of imports rose:
And it was in this already unstable situation that the international economy was hit by the first of the two oil shocks of the 1970s.
The consumer boom of the late fifties and sixties had greatly increased European dependence on cheap oil: the tens of millions of new cars on the roads of Western Europe could not run on coal, nor on the electricity now being generated—in France especially—by nuclear power.
Instead, western Europe began to experience what was inelegantly dubbed ‘stagflation’: wage/price inflation and economic slowdown at the same time. In retrospect this outcome is less surprising than it seemed to contemporaries. By 1970 the great European migration of surplus agricultural labor into productive urban industry was over; there was no more ‘slack’ to be taken up and rates of productivity increase began inexorably to decline. Full employment in Europe’s major industrial and service economies was still the norm—as late as 1971 unemployment in the UK was 3.6 percent, in France just
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It was not the 1970s that were unusual so much as the ’50s and ’60s.3 Nevertheless, the pain was real, made worse by growing export competition from new industrial countries in Asia and ever more costly import bills as commodities (and not just oil) increased in price. Unemployment rates started to rise, steadily but inexorably.
One immediate result of the economic down-turn was a hardening of attitudes towards ‘foreign’ workers of all sorts. If published unemployment rates in West Germany
(close to zero in 1970) did not climb above 8 percent of the labor force despite a slump in demand for manufactured goods, it was because most of the unemployed workers in Germany were not German—and thus not officially recorded. When Audi and BMW, for example, laid off large numbers of their workforce in 1974 and 1975, it was the ‘guest workers’ who went first;
The northern European jobs crisis was being re-exported to the Mediterranean.
In Keynesian thinking, budget shortfalls and payments deficits—like inflation itself—were not inherently evil. In the Thirties they had represented a plausible prescription for ‘spending your way’ out of recession. But in the Seventies all Western European governments already spent heavily on welfare, social services, public utilities and infrastructure investment.
Nor could they look to the liberalization of trade to save them, as it had done after World War Two: the recent Kennedy round of trade negotiations in the mid-Sixties had already taken industrial tariffs to a historic low.
The venerable manufacturing economy of Western Europe was disappearing.
In the past, the social cost of economic change on this scale, and at this pace, would have been traumatic, with unpredictable political consequences. Thanks to the institutions of the welfare state—and perhaps the diminished political enthusiasms of the time—protest was contained.
The decline in the number of workers in old industries had shifted the balance of strength in trade union movements to the service-sector unions, whose constituency was rapidly growing. In Italy, even as the older, Communist-led industrial organizations lost members, teachers and civil service unions grew in size and militancy. The old unions evinced scant sympathy for the unemployed: most were anxious above all to preserve jobs (and their own influence) and shied away from open confrontations. It was the combative service-sector unions—Force Ouvrière in France, NALGO, NUPE and ASTMS in
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There were national variations in these responses to economic downturn. The French authorities pursued a practice of micro-economic intervention, identifying ‘national champions’ by sector and favoring them with contracts, cash and guarantees; whereas the UK Treasury continued its venerable tradition of macro-economic manipulation through taxes, interest rates and blanket subsidies. But what is striking is how little variation there was along political lines. German and Swedish Social Democrats, Italian Christian Democrats, French Gaullists and British politicians of every stripe instinctively
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In 1978 the West German Chancellor Helmut Schmidt proposed recasting the snake into something altogether more rigorous: a European Monetary System (EMS). A grid of fixed bilateral exchange rates would be set up, linked by a purely notional unit of measure, the European Currency Unit (the écu5), and underwritten by the stability and anti-inflationary priorities of the German economy and the Bundesbank. Participant countries would commit themselves to domestic economic rigour in order to sustain their place in the EMS. This was the first German initiative of its kind and it amounted in fact if
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It was not so much that they succeeded in time in driving out the demon of inflation (though they did), but that they did so by steadily depriving national governments of their initiative in domestic policy. This was a momentous shift, of greater consequence than was sometimes appreciated at the time. In the past, if a government opted for a ‘hard money’ strategy by adhering to the gold standard or declining to lower interest rates, it had to answer to its local electorate. But in the circumstances of the later 1970s, a government in London—or Stockholm, or Rome—facing intractable
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As we have noted, the instinctive reaction of politicians everywhere was to assuage the anxieties of the blue-collar male proletariat: partly because they were the worst affected, but mostly because precedent suggested that this was the social constituency most likely to mount effective protests. But as it transpired, the real opposition lay elsewhere. It was the heavily-taxed middle classes—white-collar public and private employees, small tradesmen and the self-employed—whose troubles translated most effectively into political opposition.
As in the past, the redistributive impact of inflation, made worse by the endemic high taxation of the modern service state, was felt most severely by citizens of the middling sort.
there was a backlog of nervousness provoked by the iconoclastic rebellions of the 1960s; what had seemed curious and even exciting in the confident atmosphere of those days now looked more and more like a
harbinger of uncertainty and anarchy. Then there was the more immediate anxiety born of job losses and inflation, about which governments seemed helpless to act.
Catholic, stern and moralistic—in a manner ironically redolent of Franco himself—ETA activists targeted not just Spanish policemen (their first victim was killed in June 1968) and moderate Basque politicians and notables, but also symbols of ‘Spanish’ decadence in the region: cinemas, bars, discothèques, drug pushers and the like.
As its political project lost touch with social reality ETA became ever more extreme—having forgotten its aim it redoubled its efforts, to cite George Santayana’s definition of fanaticism.
By the 1960s the official stance in Dublin somewhat resembled that of Bonn: acknowledging the desirability of national re-unification but quietly content to see the matter postponed sine die.
If politicians on the British mainland preferred not to know about these matters, it was because the Conservative Party depended on its ‘Unionist’ wing (dating from the nineteenth-century campaign to maintain Ireland united with Britain) for a crucial block of parliamentary seats; it was thus committed to the status quo, with Ulster maintained as an integral part of the United Kingdom. The Labour Party was no less closely identified with the powerful labour unions in Belfast’s shipbuilding and allied industries, where Protestant workers had long received preferential treatment.
Moreover, many Ulster Catholics felt no urgent desire to be ruled from Dublin. In the 1960s Ireland was still a poor and backward country and the standard of living in the North, while below that of most of the rest of the UK, was still considerably above the Irish average.
The IRA’s wooly, anachronistic rhetoric had little appeal to a younger generation of recruits (including the seventeen-year-old, Belfast-born Gerry Adams, who joined in 1965) more interested in action than doctrine and who formed their own organization, the clandestine, ‘Provisional’ IRA.
Faced with growing public violence and demands from Catholic leaders for London to intervene, the UK government sent in the British Army and took over control of policing functions in the six counties. The army, recruited largely in mainland Britain, was decidedly less partisan and on the whole less brutal than the local police. It is thus ironic that its presence provided the newly formed Provisional IRA with its core demand: that the British authorities and their troops should leave Ulster, as a first stage towards re-uniting the island under Irish rule.
Even if the British authorities had wanted to walk away from Ulster (as many mainland voters might have wished), they could not. As a referendum of March 1973 showed and later polls confirmed, an overwhelming majority of the people of Ulster wished to maintain their ties to Britain.9
A small minority of erstwhile student radicals, intoxicated by their own adaptation of Marxist dialectics, set about ‘revealing’ the ‘true face’ of repressive tolerance in Western democracies. If the parliamentary regime of capitalist interests were pushed hard enough, they reasoned, it would shed the cloak of legality and show its true face. Confronted with the truth about its oppressors, the proletariat—hitherto ‘alienated’ from its own interest and victim of ‘false consciousness’ about its situation—would take up its proper place on the barricades of class warfare.
The urge to bring the architecture of security and stability crashing down on the heads of their parents’ generation was the extreme expression of a more widespread skepticism, in the light of the recent past, about the local credibility of pluralist democracy. It was not by chance, therefore, that ‘revolutionary terror’ took its most menacing form in Germany and Italy.
One source of local sympathy was a growing nostalgia in literary and artistic circles for Germany’s lost past. Germany, it was felt, had been doubly ‘disinherited’: by the Nazis, who had deprived Germans of a respectable, ‘usable’ past; and by the Federal Republic, whose American overseers had imposed upon Germany a false image of itself. In the words of Hans-Jürgen Syberberg, the film director, the nation had been ‘spiritually disinherited and dispossessed . . . we live in a country without homeland, without Heimat.’ The distinctly nationalist tinge to German extreme-Left terrorism—its
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Reitz, like Syberberg and others, was publicly scornful of the American television series ‘Holocaust’, first shown on German television in 1979. If there were to be depictions of Germany’s past, however painful, then it was the business of Germans to produce them. ‘The most radical process of expropriation there is,’ wrote Reitz, ‘is the expropriation of one’s own history. The Americans have stolen our history through Holocaust.’ The application of a ‘commercial aesthetic’ to Germany’s past was America’s way of controlling it. The struggle of German directors and artists against American
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By careful inter-cutting, the Third Reich and the Federal Republic are made to share a family resemblance. ‘Capitalism’, ‘the profit system’ and National Socialism are presented as equally reprehensible and indefensible, with the terrorists emerging as latter-day resisters: modern Antigones struggling with their consciences and against political repression.
The implicit relativizing of Nazism in Deutschland im Herbst was already becoming quite explicit in intellectual apologias for anti-capitalist terror. As the philosopher Detlef Hartmann explained in 1985, ‘We can learn from the obvious linkage of money, technology and extermination in New Order Nazi imperialism . . . (how) to lift the veil covering the civilized extermination technology of the New Order of Bretton Woods.’ It was this easy slippage—the thought that what binds Nazism and capitalist democracy is more important than their differences, and that it was Germans who had fallen victim
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If this action, so unmistakably reminiscent of selections of Jews by Germans in another time and place, did not definitively discredit the Baader-Meinhof gang in the eyes of its sympathizers it was because its arguments, if not its methods, attracted quite broad consent: Germans, not Jews, were now the victims; and American capitalism, not German National Socialism, was the perpetrator. ‘War crimes’ were now things that Americans did to—e.g.—Vietnamese. There was a ‘new patriotism’ abroad in West Germany, and it is more than a little ironic that Baader, Meinhof and their friends, whose violent
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From the outset, Italian Left terrorists placed far greater emphasis upon their purported relationship to the ‘workers’; and indeed in certain industrial towns of the north, Milan in particular, the more respectable fringes of the ultra-Left did have a small popular following. Unlike the German terrorists, grouped around a tiny hard core of criminals, the Italian far Left ranged from legitimate political parties through urban guerrilla networks to micro-sects of armed political bandits, with a fair degree of overlap in membership and objectives. These groups and sects replicated in miniature
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But by the mid-seventies they had progressed to political assassination—at first of right-wing politicians, then policemen, journalists and public prosecutors—in a
strategy designed to ‘strip away the mask’ of bourgeois legality, force the state into violent repression and thus polarize public opinion.
whatever their roots in popular movements of the Sixties, the terrorists of the Seventies had now placed themselves beyond the spectrum of radical politics. They were simple criminals and should be hunted down as such.
The idea that political violence might have the ‘productive force of self-affirmation’ was not unfamiliar in modern Italian history, of course. What Negri was affirming, and what the Red Brigades and their friends were practicing, was no different from the ‘cleansing power of force’ as exalted by Fascists. As in Germany, so in Italy: the far Left’s hatred of the ‘bourgeois state’ had led it back to the
‘proletarian’ violence of the anti-democratic Right.
While the more serious threat came from the extreme Right—better organized and much closer to the heart of the state—the ‘Red’ terrorists made the greater impact upon the public imagination. This was in part because, like the Red Army Fraktion in Germany, they traded upon widespread local sympathy for radical ideas. Official Communists correctly saw this appropriation of the revolutionary heritage as the terrorists’ chief asset, as well as a symptom of the risk that they posed for the credibility of the mainstream Left.
the one incontrovertible achievement of left-wing terrorism in Western Europe in these years was the thoroughness with which it expunged any remaining revolutionary illusions from the local body politic.
The net effect of years of would-be revolutionary subversion at the heart of Western Europe was not to polarize society, as the terrorists had planned and expected, but rather to drive politicians of all sides to cluster together in the safety of the middle ground.
Most young people were now less concerned with changing the world than with finding a job: the fascination with collective ambitions gave way to an obsession with personal needs. In a more threatening world, securing one’s self-interest took precedence over advancing common causes.
It was not so much the idealism of the Sixties that seemed to have dated so very fast as the innocence of those days: the feeling that whatever could be imagined could be done; that whatever could be made could be possessed; and that transgression—moral, political, legal, aesthetic—was inherently attractive and productive. Whereas the Sixties were marked by the naive, self-congratulatory impulse to believe that everything happening was new—and everything new was significant—the Seventies were an age of cynicism, of lost illusions and reduced expectations.
But when applied to categories of thought—as in ‘post-Marxist’, ‘post-structuralist’ and, most elusively of all, ‘post-modern’—it
