Göran Hydén and Bo Karlström*
Now that the 1980s are over, it stands out as a decade of major economic adjustments in the world economy as well as in many individual economies. Not since the 1930s has the world economy undergone such dramatic changes. What is more, the adjustments of the 1980s affected not only capitalist but also socialist economies. Two main forces were driving the economic changes in the 1980s. First, the adjustment back to ‘normality’ after the two oil shocks in the 1970s and the exceptionally high inflation and interest rates which these shocks generated. Second, a shift in political and economic ideology away from state control and interventionism towards ‘neo-liberal’ ideas. In short, this global adjustment has meant major public policy shifts: from equity to growth; from state to market; and from ‘self-sufficiency’ to outward-looking development strategies.
Needless to say, these shifts have caused a great deal of political tension and, in many countries, major political realignments. Paradoxically, the latter have been most far reaching where, at the beginning of the decade, they were least expected: in the Soviet Union and Eastern Europe. In the liberal democracies of Western Europe and North America the process has been gradual but steady. Even in societies where the Keynesian macroeconomic legacy and the notion of the welfare state weighed heavily, adjustments in economic policies have taken place, although sometimes grudgingly. In Scandinavia, for example, it has either forced the Social Democrats - the guardians of Keynesianism - out of office, as in Denmark and Norway or, as in Sweden, prompted the ruling Social Democrats to adopt more market-oriented economic policies, thereby triggering off a crisis of legitimacy within the Swedish labour movement.
Structural adjustment has proved particularly painful and difficult for the countries in Sub-Saharan Africa and Latin America for three major