The Consolations of Economics: How We Will All Benefit from the New World Order by Gerard Lyons

Author:Gerard Lyons [Lyons, Gerard]
Language: eng
Format: epub
ISBN: 9780571307807
Publisher: Faber & Faber
Published: 2014-06-17T00:00:00+00:00

The Cold War

When I was growing up, one issue dominated the news and global debate. It was not economic or financial. It was the Cold War and it meant the risk of a nuclear war was a constant fear. In fact, as a schoolboy it sometimes seemed more likely to happen than not.

That is now a long time ago, but visiting Japan at the end of 2012, I was struck by the feeling there that we were entering a new Cold War between the US and China. Is that really the case? There are certainly rising tensions between the two, but could it really reach the scale of intensity of the US–Soviet stand-off?

It is worth remembering how much the rivalry between the USSR and America at the height of the Cold War dominated everything, spreading into so many other areas of what was going on in the world and its coverage in the media.

One area was the economic divide. The consumer-focused West, where the price system dominated and allowed resources and investment to be directed into many of the right areas, stood against the price-controlled, target-driven system in the East that failed to deliver on strong economic growth. Comecon was the economic gathering of the Eastern Bloc, and its idea of control and direction proved second best to what was happening in the West. Over time this made it difficult, and ultimately impossible, for the Soviets to match the Americans on hard-power spending.

While there was always lots of data to show the West’s better economic performance, not least rising living standards, when I visited Berlin in the mid-1980s, before the Wall fell, I always felt the best visual indication of the economic difference was in the centre of West Berlin. There a giant bright Mercedes Benz symbol rotated on top of the Europa Centre and could be seen across much of the city, even from parts of the East, where people were driving about in Trabants. There was no economic comparison between the two systems.

The Cold War saw growing competition between the US and the USSR in all walks of life. There was the Space Race of the 1960s and even the battle for the World Chess Championship in 1972, which made news across the globe as the American Bobby Fisher took on the Russian Boris Spassky in Reykjavik. By 1980 the US was boycotting the Olympics in Moscow in reaction to the Soviet invasion of Afghanistan in 1979.

The US–USSR military conflict was reflected in an escalating build-up of weapons and technology, and was also a factor in many other disputes, such as the Vietnam War or the earlier Korean War, which was the last time China and the US faced each other in battle. Then there were various nuclear close shaves, notably the 1962 Cuban missile crisis.

The positive economic spin-off of increased military spending is often overlooked. It allowed both the US and the USSR to be at the forefront of scientific development and technological innovation, although the communist system never allowed commercial development and wider use, while the US free-market system did.

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