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Unwitting ArchitectGerman Primacy and the Origins of Neoliberalism$
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Julian Germann

Print publication date: 2021

Print ISBN-13: 9781503609846

Published to Stanford Scholarship Online: May 2021

DOI: 10.11126/stanford/9781503609846.001.0001

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PRINTED FROM STANFORD SCHOLARSHIP ONLINE (www.stanford.universitypressscholarship.com). (c) Copyright Stanford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in SSO for personal use.date: 25 September 2021

Disciplining the Hegemon

Disciplining the Hegemon

German Monetary Power and the Volcker Shock

Chapter:
(p.138) Chapter 6 Disciplining the Hegemon
Source:
Unwitting Architect
Author(s):

Julian Germann

Publisher:
Stanford University Press
DOI:10.11126/stanford/9781503609846.003.0007

This chapter argues that in order to protect its export model from the dangers of imported inflation, Germany strove to commit the US to monetary and fiscal rigor. To this end, German officials blocked the attempts of the Carter administration to organize a global Keynesian expansion, and scaled back their foreign exchange interventions in support of a weakening dollar. Both actions helped push the US into the Volcker Shock, which deflated the world economy and launched the attack on organized labor. The chapter concludes that the neoliberal experiment in the US, paralleled and reinforced by similar attempts in the UK, was late and lucky. Rather than the outcome of a decade-long domestic shift—seamless and sealed off from the world outside the Anglo-American heartland—the neoliberal counter-revolution was driven in part by the external pressures imposed by Germany, and subsequently sustained by a bout of Japanese investment.

Keywords:   Germany, United States, monetary policy, exchange-rate policy, Bundesbank

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