Prosperity Amidst Crisis
Wilhelm Hankel
Translated by Jean Steinberg
Prosperity Amidst Crisis
Austrias Economic Policy and the Energy Crunch
First published 1981 by Westview Press, Inc.
Published 2019 by Routledge
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Library of Congress Cataloging in Publication Data
Hankel, Wilhelm, 1929
Prosperity amidst crisis.
Translation of Prosperitt in der Krise.
Includes bibliographical references.
1. AustriaEconomic policy1945 I. Title. II. Series.
HC265.H3213 330.9436053 80-22133
ISBN 13: 978-0-367-28451-0 (hbk)
At the beginning of the seventies it seemed as though the industrial nations stood on the threshold of an era of strong economic growth and almost unlimited possibilities. Their optimistic view of the future was grounded in the experience of twenty-five years of impressive postwar reconstruction and accomplishments. But the seventies did not live up to their expectations. The very bases of their hopes were undergoing profound changes.
The protest movements of the students brought the awareness that established values were being questioned. Belief in progress gave way to vague uneasiness.
In the economic area, the dismantling of the monetary system underscored the weakening economic position of the United States. And the political ascendancy of the Third World brought worldwide economic and political realignments in its wake.
The oil shock put an end to the age of cheap energy and raised serious questions about the nature of industrial society. The recession of the mid-seventies was not followed by the expected strong recovery but by a period of limited growth and continued high unemployment.
Global interdependence and sophisticated methods of mass communication spread moods and attitudes throughout the world with lightning speed.
In an interdependent world of interrelated world markets no countryand that of course includes Austriacan remain detached. Measured by the yardsticks of growth and full employment as well as social stability, Austria has more than held its own among the industrial nations of the world.
The international economic order is undergoing profound changes, and traditional beliefs in "preordained" rises in production and the level of prosperity are being shaken. A solution to the conflict between the Northern world and the developing countriesboth oil producers and those without their own sources of crude oildoes not seem imminent.
In the industrial nations the number of citizens who will have to be integrated into the labor market continues to rise, A sense of responsibility toward our youth dictates that in the provision of jobs we plan for qualitative as well as quantitative factorsthat means that we also have to deal with the problem of "psychological unemployment."
Given this array of problems, economic policy now more than ever before cannot afford to limit itself to short-term measures geared to ephemeral political considerations, to issues that already have entered into the public consciousness, or to only those issues that are forced upon us. Such an approach would reduce our sphere of action so severely that even the most essential steps could no longer be taken.
If it takes a generating plant ten to fifteen years before it can become fully productive, or if industrial structural improvements do not become effective immediately, a responsible leadership cannot afford policies geared solely to the next election campaign.
The design of our future is a political task. But the more complex the decisions that have to be made and the more they depart from those of the past, the greater the need for expert knowledge and understanding of contemporary problems and the greater the need for enlightened political policies and an expanded range of action.
This book grew out of a study I commissioned in the fall of 1978. It was meant to offer a comprehensive survey of the development, condition, and possibilities of the Austrian economy, to assist in policymaking and decisionmaking. The international theoretical and practical experience of Wilhelm Hankel and his personal interest in the development of our country made him the ideal choice for presenting Austria's development within the broader international framework.
The publication and discussion of this book are a contribution to "public marketing" and a step toward the process of consciousness raising, which in a democracy is the precondition for action.
Vice-Chancellor Dr. Hannes Androsch
Small National EconomyBig Economic Policy
The separate economic blocs and all the friction and loss of friendship they must bring with them are expedients to which one may be driven in a hostile world, where trade has ceased over wide areas to be co-operative and peaceful and where are forgotten the healthy rules of mutual advantage and equal treatment. But it is surely crazy to prefer that. Above all, this determination to make trade truly international and to avoid the establishment of economic blocs which limit and restrict commercial intercourse outside them, is plainly an essential condition of world's best hope.
From Lord John Maynard Keynes's last address before the House of Lords, December 18, 1945 (in Parliamentary Debates, Hansard, House of Lords, vol, 138, no. 41).
In large economic areas policymaking may be easier than in small ones. But is policy therefore also better, as those who sing the theoretical and political praises of what they call "optimal" economic areas (be it Europe or elsewhere) maintain? Alas, recent events support the view that the world economy would most likely be in better shape today if some of the fatal decisions that still haunt us had not been made in the early seventies in the large areas on either side of the Atlanticin the United States and in that part of Western Europe under the economic leadership of the German Federal Republic. The decisions of 1973 culminated in the dismantling of the world monetary system developed at Bretton Woods, flawed though it may have been, and in the failure to respond to the sudden OPEC reach for more favorable terms of trade with a well-thought-out policy of internal readjustments. Instead, the decision makers fell back on traditional export and balance-of-payments surpluses.
In small economic areas economic policy is incomparably more difficult. Almost all the plans made by a government and a central bank to protect the people against the twin scourge of inflation and unemployment can easily and off-handedly be destroyed by outside economic forces that put their own interests ahead of their neighbors'.
In the thirties, small economies were compelled to import the depressions that their big neighbors were unable to contain within their own borders. Since the sixties, the small areas have been the victims of the suicidal battles of their big brothers, who accuse one another of exporting their inflations. Regardless of who is rightthe "German school," which seeks to lay all responsibility at the door of the U.S. balance-of-payments deficit that floods the world economy with U.S. dollars, or the "American school," which sees German unwillingness to reduce its balance-of-payments surplus as the source of all inflationary evil since every new deutsche mark (DM) appreciation sets in motion a new decline in the dollar pricethe "forced" importers of this worldwide inflation are always the small economies dependent on the world market.
