BOOK REVIEW: The Shock of the Global: the 1970s in Perspective. Edited by Niall Ferguson, Charles S. Maier, Erez Manela and Daniel J. Sargent, The Belnap Press of Harvard University Press, 2010. €22

THE 1970s might not strike us as a particularly noteworthy decade but the contributors to this conference volume show convincingly that the seeds of many subsequent triumphs and failures were sown in that self-centred period, sometimes dubbed the “me” decade.

The 1970s was not a good decade for Americans still embroiled in the Vietnam war, which they could not win. To add to their angst, the first and second oil crises showed them how vulnerable they were, and these crises contributed to a period of stagflation in which the “misery index” (the sum of the unemployment and inflation rates) was one of the highest in the developed world.

Then there was Nixon and Watergate, the return of Khomeini to Iran, and the Soviet invasion of Afghanistan. It was hardly surprising that American optimism about the global spread of democracy and the ending of the Cold War began to wane.

On the plus side, there was a raising of consciousness about civil and human rights, feminism, environmentalism and disease eradication. The Solidarity movement in Poland marked the beginning of the end of Soviet hegemony. There were many technological breakthroughs, though not as dramatic as those that were to follow.

In the economic sphere deregulation caught on, as did the laissez-faire approach to markets, which reached its apogee later under Reagan. Even China began to institute some market-oriented reforms. (In the light of recent events, one wonders if the authors would now put unregulated markets on the plus side of the ledger?)

In general, it is argued that the 1970s saw the beginnings of multiculturalism and postmodernism. Writers like Alvin Toffler (Future Shock) believed the change to a post-industrial society caused much stress and disorientation.

In an aside, Ferguson suggests academics in the English-speaking world who wrote about the 1970s may have been a little jaundiced because their salaries hadn’t risen by very much and were eroded by rapid inflation. So much for the objectivity of historians.

These developments nearly all spread rapidly around the world. That is why the authors claim that globalisation was born in the 1970s. International trade and capital flows took off. The US sold its first mortgage-backed securities abroad in 1971!

American multinational companies began to invest in many countries outside the US and they were well able to cope with the fluctuating currencies that followed the collapse of the gold standard. It was as if America’s economic power compensated for its loss of political power around the globe.

Ferguson provides a valuable insight into the “paradox of globalisation”. Capital and goods were free to move among different countries but economic policies were still being formed on a national basis without any co-ordination between countries.

Hence, it was inevitable that economic crises would occur. Some would be mitigated by floating currencies; others would be exacerbated. (On a personal note, I was often surprised at OECD meetings by the lack of awareness in US delegations about the effects their policies had on the rest of the world.)

What I missed from this masterful book was a fuller discussion of the accusations made by anti-globalisation protesters. Perhaps workers in the least-developed countries are exploited by multinationals, but has anyone asked the workers? There does not seem to be a great deal of evidence-based research on issues such as this.

There is no doubt international capital markets have too much power and could, if they colluded, destroy the credit rating of virtually any country, or force a devaluation of its currency. Even in the US, the private markets can often thwart the policy intentions of the authorities.

Multinational companies also wield immense power and in many cases can dictate terms to sovereign governments. Ireland is no exception. Even if the Irish government wanted to stop US troops using Shannon airport en route to Iraq, it would have involved a huge economic risk.

I would have liked a little more discussion on the oil crises and how these shattered consumer sovereignty in the US. There was stunned disbelief in many quarters that a group of mainly Arab countries (Opec) could hold America to ransom. To what extent did those events contribute to the Middle-East conflict and the first Gulf War? This history has still to be written.

The spread of television around the world clearly played a part in globalisation. Other historians have referred to the Vietnam War as the “living-room war” because it was the first war regularly watched on TV in people’s homes.

Finally, the book does not deal with the decline in national autonomy in a globalised world. It is very clear the UN does not work and that countries like ours have little or no say in world affairs. We take orders from the US or EU. One wonders how long it will be before national identity disappears.

Michael Casey is a former chief economic adviser to the Central Bank and former board member of the IMF