Commanding Heights Notes -Control over Globe/ World Economy -won by governments? -by corporations? -or ideas?

-umbrella over both sides -1910's (early 20th century) -telegraph, steam transport, printing press -August 1914 -Franz Ferdinand assassinated => spark WWI -WWI

8/30/12

-20 million dead -Friedrich Von Hayek served -vowed to work for better world after war -a socialist of a minor sort -follower of Ludwig Von Mises -believed markets, like people needed to be free from government -socialism's flaw is that it doesn't have a functioning price system to determine value of products, services -France wanted Germany to pay reparations after war's end -Keynes resigns afterwards in disgust over exorbitant requests -predicts a second war w/ Germany if reparations are to be paid -after war socialism and communism promised to serve better world for many in Europe -Keynes advises British govt. -Bolsheviks/Lenin led communist revolution to unite workers -to end economic exploitation -led by Marxist ideas -was powerful in Vienna, Austria after war -Soviet Russia became a grim place -Lenin instilled New Economic Policy -allowed for more market freedom -government would maintain control over the commanding heights of industry => railroads, steel production, electricity, mining, manufacturing -Stalin introduces central planning by governments -Vienna 1923 -German government print more money to pay reparations => inflation/hyperinflation -middle classes' savings completely wiped out -Nazi party able to rise to power -Hitler becomes chancellor in 1933 -New York 1920's -roaring 20's economic boom -stock exchange boom in trading -radio industry bubble formed -October 24th 1929 => bubble bursts, stock market crash -1929 onward half of all banks go bankrupt -country left despaired, economy stagnant like European countries

-Europe 1931 -Keynes writes book explaining Great Depression -unemployment levels, GDP, inflation ideas -Washington 1933 -New Deal formed by Roosevelt -government highly regulates industry -eg. aviation industry -Cambridge University 1936 -Keynes' General Theory book published - governments can manage economies -government should spend money on infrastructure -in good times cut back, in bad times spend more -main priority to cut unemployment -inflation becomes necessary -WWII -John Maynard Keynes helped allied nations plan economic activity -was a stock market trader - market is self-correcting -war time spending reverses economic catastrophe, stagnation -London 1944 -Hayek believes moves toward Keynesianism is wrong -rejects macroeconomics -publishes Road to Serfdom -too much government planning means too much government power over economy destroys freedom and makes men slaves -New Hampshire 1944 -Keynes travels to Breton Woods for conference -International bank and International Monetary Fund created -Britain 1945 -labor party wins prime ministry and parliament -nationalized industry mixes with private business -welfare state, trade union rights, health-care system, education -Cold War -Switzerland 1947 -Hayek organizes conference at Mount Pilgrim -Milton Friedman attends -world headed toward heavier government planning -Berlin 1947 -Russians occupy East Germany -Americans/British occupy West Germany -strict price controls instilled by occupiers (Allies) -German economist Earhart abolishes price controls and economy rejuvenates -New Delhi 1947 -Mahatma Ghandi -independent economic India => separate, localized self-sustaining villages -government chose for central planning system mixing western industrialism with eastern socialism -Chicago 1950 -minimal role of government, maximum role of free markets -individuality

-ideas resonate with Hayek -liberals disagree -Austria 1970 -success of mixed economies made Hayek's ideas irrelevant -USA 1971 -inflation and unemployment were raising at the same time => stagflation -Nixon declares, Now, I'm a Keynesian -Nixon proposes wage and price controls to battle unemployment and inflation -economy goes out of whack -creates food shortages -prices kept rising -London 1973 -conservative government (Keith Joseph) believe in free markets but act similarly to Nixon's administration -instill price and wage controls -takes a U-turn on policy and pushes for more conservatism -more risk-taking, less equality -Margaret Thatcher follows ideology -Chicago 1974 -worst downturn since Great Depression -Washington 1974 -airline industry still regulated -effort by agencies to keep price high, not low -major industries never had to compete with others -Globe 1980's onward -Capitalist Revolution -Russia a vast military power determined to extend influence -central controlled government -state ownership -economy run on prison system