Oil Crises, Communism’s Fall, and Cold War Dynamics
Causes of Oil Price Fluctuations
Causes: Lower oil production leading to falling prices.
Production Chain: Increased productivity, lower prices, and increased consumption.
Development
As oil is cheap, mass production occurs. To increase productivity while reducing costs, products become cheaper, which in turn increases consumption. If consumption increases, more is invested, wages increase, and consumerism rises.
Oil Crisis of 1973
- Causes: Yom Kippur War. The U.S. defended Israel against Egypt and Syria. OPEC countries, dominated by Arab nations, raised the price of oil. The risk of scarcity increased prices, leading oil companies to increase production costs.
- Consequences: Since oil is more expensive, less is produced, the price increases, and products are more expensive. Therefore, less is consumed. There are fewer benefits for companies, they do not invest, and wages for employees do not increase, leading to increased unemployment.
Second Oil Crisis of 1980
Causes: The Islamic Revolution in Iran and the Soviet invasion of Afghanistan.
Disappearance of the Communist Bloc
Causes of the Crisis
- Economic Crisis: A large part of the economy was sensitive, and basic needs were not met.
- Political and Social Crisis: People did not want a dictatorship.
Gorbachev’s Reforms (1985)
Restoration of management freedom and foreign investment (transparency), free elections (1989), disarmament, and more autonomy to the republics that made up the USSR.
Implications (1989-1990)
- Communism ends in satellite countries thanks to popular revolutions.
- Fall of the Berlin Wall and reunification of Germany (1990).
- Disappearance of the USSR.
The Cold War (1947-1991)
The Cold War was characterized by a great tension between the two superpowers (USSR and USA), but did not cause direct armed conflict between them.
West Bloc vs. Soviet Bloc
- Leader: USA / USSR
- Catchment Area: France, United Kingdom, Italy, Spain, and West Germany / Poland, Hungary, Romania, Bulgaria, and East Germany
- Political System: Liberal Democracy / “Popular Democracy”
- Election System: Universal free suffrage / Universal suffrage, but only one party.
Organization
- Division of Power: Judicial, executive, legislative / No division; concentration of power.
- Rights and Freedoms: Rights, duties, and freedoms of individuals enshrined in a constitution / Absence of freedoms and repression by the army.
- Political Pluralism: The possibility of accessing government, even for the communist party / One party; others prohibited.
Economic System
- Type: Mixed economy capitalism / Planned economy from the state.
- Property System: Ownership of the means of private production / Owned by the state.
- Market: Free market, law of supply and demand / State economy and plans control.
- Role of the State: Control of the basic sectors and encouraging consumption and investment / Controls virtually everything.
Treaties and Organizations
- Marshall Plan (economic aid), NATO (1949) (military) / Mutual military and economic aid.