“Positive Adjustments”: The Emergence of Supply-Side Economics in the OECD and G7, 1970–1984

Abstract

This chapter analyzes the evolution of the OECD microeconomic recommendations during the 1970s and the early 1980s. It focuses on the development within the organization of “positive adjustment policies,” a broad set of market-oriented measures designed to facilitate the transfer of capital and manpower from declining industries toward new economic activities. While such policies are usually associated with neo-liberalism, this chapter argues that they were initially developed to complement Keynesian macroeconomic strategies during the 1970s. Their goals changed with the second oil shock in 1979. This article shows how the debates among OECD major countries, in other terms the G7, were instrumental in the making and diffusion of these OECD recommendations.