Full Description:
A portmanteau of “stagnation” and “inflation,” describing a period of high unemployment coupled with rising prices. This economic crisis in the industrialized West shattered faith in the post-war order and provided the “window of opportunity” for neoliberalismMonetarism Monetarism is the economic school of thought associated with Milton Friedman, which rose to dominance as a counter to Keynesian economics. It posits that inflation is always a monetary phenomenon and that the government’s role should be limited to managing the currency rather than stimulating demand. Key Mechanisms: Inflation Targeting: Using interest rates to keep inflation low, even if high interest rates cause recession or unemployment. Fiscal Restraint: Opposing government deficit spending to boost the economy during downturns. Critical Perspective:Critics argue that monetarism breaks the post-war social contract. By prioritizing “sound money” and low inflation above all else, monetarist policies often induce deliberately high unemployment to discipline the labor force and suppress wages. It represents a technical solution to political problems, removing economic policy from democratic accountability. to ascend. StagflationStagflation Full Description:A portmanteau of “stagnation” and “inflation,” describing a period of high unemployment coupled with rising prices. This economic crisis in the industrialized West shattered faith in the post-war order and provided the “window of opportunity” for neoliberalism to ascend. Stagflation was the crisis that Keynesian economics could not explain or fix. Triggered in part by oil shocks, it created a situation where traditional state spending only fueled inflation without creating jobs. This failure paralyzed the political left and allowed the neoliberal right to step in with radical new solutions focused on breaking unions and shrinking the money supply. Critical Perspective:Naomi Klein and other critics view this moment as the first major application of the “Shock Doctrine.” The crisis was used to justify painful structural reforms—such as crushing labor power and slashing social spending—that would have been politically impossible during times of stability. was the crisis that Keynesian economicsKeynesian Economics Full Description:The dominant economic consensus of the post-war era which argued that the government had a duty to intervene in the economy to maintain full employment and manage demand. Neoliberalism defined itself primarily as a reaction against and a dismantling of this system. Keynesian Economics underpinned the “Golden Age” of capitalism and the welfare state. It operated on the belief that unregulated markets were prone to collapse and that the state must act as a counterbalance—spending money during recessions and taxing during booms—to ensure social stability and public welfare. Critical Perspective:From the neoliberal viewpoint, Keynesianism was a slippery slope to totalitarianism. However, critics argue the dismantling of this consensus broke the social contract between capital and labor. By abandoning the commitment to full employment and social safety nets, the state abdicated its responsibility to its citizens, prioritizing the health of the currency over the health of the population.
Read more could not explain or fix. Triggered in part by oil shocks, it created a situation where traditional state spending only fueled inflation without creating jobs. This failure paralyzed the political left and allowed the neoliberal right to step in with radical new solutions focused on breaking unions and shrinking the money supply.

Critical Perspective:
Naomi Klein and other critics view this moment as the first major application of the “Shock Doctrine.” The crisis was used to justify painful structural reforms—such as crushing labor power and slashing social spending—that would have been politically impossible during times of stability.