The broken consensus within the industrialized West

Abstract

Underlying the centrifugal forces in the international economic institutions is an even greater and more fundamental splitting apart of the West on ideological and policy grounds. In the period leading up to the electoral reversals of 1980 in the United States and of 1981 in France, it was possible to state that the leading countries of the OECD shared a common economic policy perspective: a priority to fight inflation with primary emphasis on the monetary instrument in that fight. There were, of course, nuances: a strongly deflationary and dogmatically monetarist policy in Britain, “managed” recessions in France and the United States coupled with differing degrees of selective credit intervention, and an attempt to steer a middle course between inflation and recession in West Germany. But on the whole a greater degree of consensus reigned then than at any time since before the first oil shock. That common perspective has now abruptly disappeared.