19
really serious attempt to get substantial agreement between
the major powers on the questions of exchange rates,
interest rates, capital movements, debts, and last not least,
world wide mass unemployment, is a proof of my contention
that international cooperation in the West has broken down.
It illustrates at the same time also the fundamental change
in attitudes towards unempkyment. The reason for this
change can be foundjin a reaction against the welfare state
and increasing taxation.
It may be admitted, however, that this major change in
outlook was also influenced by the fact that full employment
policies were bound to be more difficult than before- in
those years. In U.S. specially ( where, however, full
employment was never adhered to consistently ) there was
I
atetrong increase in the growth rate of labour supply in the
70s. A full employment policy would therefore have required
increasing th^rate of growth of GDP by something of the
order of one percent. At the same time there emerged
a series of factors which were apt to create unusual
uncertainties. There was the environmental problem which
had received official recognition in 1969 and which obviously
affected investment decisions and plans, presumably
unfavourably at that time. The same was true for the
changed energy situation. There was, moreover, increased
uncertainty with respect to the way technological development
would gc , not only in connection with energy use but also
raw materials, electronics etc. The superiority of large
scale production, a seemingly ironclad rule of economics
as well as practical management, had been put in doubt,
for technological as well as organisational reasons.