The thirteenth of August 1982. The default of a major Third World debtor, long expected to be the overture to a world financial collapse, burst like a thunderbolt in a sky heavy with clouds. Mexico announced that it was suspending payments, and all the other major borrowers, and dozens of smaller ones, rushed forward to demand a renegotiation of their debt. Yet the disaster did not take place. A summer on the brink gave way to a calmer autumn. Nothing, of course, was actually resolved. In the period leading up to the Caracas conference and the Annual Meeting of the imf, the arrears continued to mount every month, against the tense background of the Brazilian debt renegotiation. An ongoing debate centred both on the possible solutions and, above all, on the allocation of blame. For everyone knew that the Third World debt and interest charges would never be fully repaid. The whole point was to determine how much would be cancelled at the debtors’ expense. Had the banks been too free and easy in granting the original loans? Or had the Third World countries taken on unreasonable debt burdens and frittered the money away?footnote1

If we think of the situation of Electricité de France, no one would dream of blaming it for the fact that it borrowed $20 billion in order to acquire a surplus nuclear-energy capacity. It raised the loans in the expectation of economic growth, but the subsequent crisis, aggravated by official deflationary policies in the major industrialized countries, has disproved that underlying assumption. Is the picture not the same for most of the Third World loans?

It is undeniable that credits were misused in the Third World. The owners of wealth in the South are said to have shown a basic lack of civic virtue by placing their assets in the banks of the Northfootnote2—11 billion dollars in 1982. But this inverse ‘recycling’ principally affected oil-exporters like Venezuela and Mexico, where the socio-logic of rent was plainly visible. Mention is also made of property speculation, the voracious consumption of the middle classes, and so on. But such phenomena were most keenly felt in countries which had a ‘monetarist’ regime during the 1970s—particularly in Chile and Argentina, those model ‘newly deindustrializing countries’, where the government choked to death a national industry that had been constructed through decades of import substitution.footnote3

What really has to be explained is the dramatic fate of countries which played the investment game, relying on a genuine supply-side policy of import substitution and export promotion to stake their past loans against the ‘promise of future work’.footnote4 How, then, are we to account for the throttling of the new forms of industrialization in the South . . . and the East?

In this article, we shall first recall the principles of the new forms of industrialization, which tended towards an ideal type of accumulation, ‘peripheral Fordism’,footnote5 that was closely linked to that of the industrial heartlands. We shall then discuss why, at a time when central Fordism was entering the seventies period of ‘slow growth’, peripheral Fordism continued to sail on with growth rates of ten per cent or so. Finally, we shall examine how central ‘monetarism’ led first the Centre and then the South to the edge of the precipice, and how its eventual abandonment has not repaired the damage with which it compounded the inescapable general crisis of Fordism.