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New Left Review I/158, July-August 1986


Riccardo Parboni

The Dollar Weapon: From Nixon to Reagan

us international economic policy since the beginning of the seventies can only be explained as a reaction to the relative decline of the American economy vis-à-vis Western Europe and Japan. There is already an ample literature on the decline in us economic power, [1] See E. Mandel, The Second Slump, Verso, London 1978; R. Parboni, The Dollar and its Rivals, Verso, London 1981; M. Mayer, The Fate of the Dollar, New York 1981; D. Calleo, The Imperious Economy, Cambridge, Mass. 1982; E.A. Brett, The World Economy since the War, London 1985. For a review of the literature, see L. Mjoset, Development in the Postwar World Economy: The Decline of US Hegemony, IPRI working paper 16/83, Oslo. which is evidenced by the fact that in the fifties and sixties the other major capitalist countries, excluding Britain, reached a higher rate of growth of gnp, exports and manufacturing productivity. The share of gross investment in national product was also significantly larger in the rest of the oecd countries. As a consequence,us national income fell from 36 per cent of the world total (including the socialist countries) in 1955 to 30 per cent in 1971, while the us share of the manufactured exports of six leading industrial countries contracted from 25 per cent in 1955 to 18.5 per cent in 1970. Fifteen years ago the us economy seemed geared to a sharp loss of predominance, much sharper indeed than that suffered in the past by Britain or the Low Countries. Up to a point, the United States has managed to retard the decline, and the purpose of this article will be to show the ways in which different strategies adopted by successive us administrations have achieved this without substantially altering the factors at work. However, it will be argued that policies pursued during the first Reagan administration have actually aggravated the country’s economic plight, making more painful an adjustment to the new reality.

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