The current situation in Germany and the world economy is often compared to the world of the two oil crises around half a century ago.
The comparison makes sense because at the time two regional wars - the Yom Kippur War in 1973 and the first Gulf War in 1979 - led to noticeable shortages of an important energy source on which Germany had made itself dependent because it was so cheap .
At that time it was crude oil from the Middle East.
The consequences of the oil crises were temporarily very high inflation rates, which reached 20 percent in some countries, short-term recessions and loud complaints from industry about declining competitiveness due to the significant increase in energy prices.
As in our time, industry demanded support from the state, which was then, as now, granted on an ad hoc basis in a poorly coordinated manner, but ultimately did nothing to change the structural change that would make the German economy more efficient and competitive in the long term.
Those who want to learn from the experiences of the 1970s should also see the differences.
Aside from the brief recessions that followed the rise in oil prices, the 1970s had not been a decade of weak growth.
This impression arose in hindsight because the growth rates were lower than the unusually high rates of the 1950s and early 1960s caused by the reconstruction after the Second World War.
Compared to the following decades, the economy grew decently in the 1970s.
Companies are preparing for the dismantling of globalization
The 1970s was a decade of globalization as the United States opened up more to the international division of labor, Japan and Southeast Asia prospered, and the recycling of petrodollars from the Arab world gave global financial markets a tremendous boost.
In addition, the world market grew because after 1989 China and the Eastern European countries entered the international division of labour.
However, this world market appears to be threatened today by geopolitical upheavals;
many companies are preparing for a reduction in globalization.
The demographics are completely different: In the 1970s and 1980s, the baby boomer generation, which was large in number, sought to enter the labor market.
That's one reason why economic growth went hand in hand with high unemployment in the 1980s.
Today, demographic change could drive a development in which even a recession is accompanied by a shortage of qualified workers.
Nevertheless, useful insights for the present can be drawn from that time.
The 1970s stand for the failure of a Keynesian demand policy, which, beyond combating serious economic crises, wanted to preserve structures that were becoming less and less competitive.
However, the forces that were changing structures were too powerful: the age of largely standardized industrial mass production (“Fordism”) came into a crisis in the rich nations because there were no productivity gains.
At the same time, there was pressure to change as a result of technical progress, which, unlike Fordism, which devoured many resources, allowed energy and materials to be used more sparingly: progress was made in microelectronics, robotics and telecommunications, among other things.
As a result, sectors in Germany, such as heavy and textile industry, parts of shipbuilding and parts of the construction industry, in which many unskilled workers worked, fell into a serious crisis.
From the mid-1970s, the German Council of Economic Experts called for a change in economic policy that focused more closely on supply conditions, because weak supply cannot be combated with demand-side policies.
This call was not heard until after 1982 – and even then only half-heartedly implemented.
A turn to a supply-oriented economic policy based on market principles is necessary in Germany today in order to accompany the structural change that is inevitable as a result of technical progress.
However, distributing money with the watering can, trickery with the debt brake and an ideologically motivated energy policy are no substitute for forward-looking economic policy.