This paper also argues that the global system of economic affairs is prone to repeated crises due to the nature of neoliberalism and capitalist forms of economic development throughout the globe, the following will explore the recent global economic crisis and compare it with the Great Depression of 1929. Accordingly, the current economic crisis shares many parallels with the economic crisis that occurred eighty years ago. This paper will look at the role of organizations such as the IMF in mitigating – although not hindering – the outbreak of the global economic crisis. The essay then concludes with an overview of the issues analysed (Harvey, 2007: 33-27).
Planned capitalism, expressed through governmental economic intervention and the Bretton Woods Agreements of 1944, exploded during the 1970s. Bretton Woods, which established both the World Bank and the IMF, symbolised the supremacy of the United States in setting international monetary policy. Hobsbawm argues that these two international institutions were “de facto subordinated to US policy” (1994: 274). When the United States pulled out of the Bretton Woods monetary system in 1971 and allowed its currency to float in international markets, it caused a chain reaction with unexpected global ramifications. Currencies were devalued across the board and the United States, as well as its Western allies, was ill equipped to deal with the resulting oil embargo implemented by OPEC two years later. When OPEC, the Organization of the Petroleum Exporting Countries, announced that it would no longer be shipping oil to countries that had supported Israel in its war with Egypt and Syria in 1973, it triggered an international calamity known as the Oil Crisis of 1973. The Yom Kippur War – as the war between Israel and the joint forces of Egypt and Syria in 1973 is now known – inadvertently led to a global economic crisis OPEC members