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10 Cards in this Set

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How did Keynes and Hayek differ in their interpretations of the global economic collapse and the solutions they offered to it? Whose views prevailed
Hayek criticized Keynesian economic policies for what he called their fundamentally collectivist approach, arguing that such theories, no matter their presumptively utilitarian intentions, require centralized planning, which Hayek argued leads to totalitarian abuses. Keynes seems to have been aware of the potential pitfalls of his economy theory, since, in the foreword to the German version of the 'The General Theory of Employment Interest and Money', he declared that "the theory of aggregated production, which is the point of ['The General Theory of Employment Interest and Money'], nevertheless can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire."
Another criticism leveled by Hayek against Keynes was that the study of the economy by the relations between aggregates is fallacious, and that recessions are caused by micro-economic factors. Hayek claimed that what start as temporary governmental fixes usually become permanent and expanding government programs, which stifle the private sector and civil society. Keynes himself described the critique as "deeply moving", which was quoted on the cover of the Road to Serfdom.
Why did Mesopotamia (Iraq) suddenly become so important for oil exploration in the 1920’s?
Oil exploration and production in Iraq began in the 1920s under the terms of a wide-ranging concession granted to a consortium of international oil companies
known as the Turkish Petroleum Company and later as the Iraq Petroleum Company.

The U.S. and the British have a history of intervention in Iraq for oil. It really goes back over seventy years to 1911 when the British, German and Turkish formed a pipeline consortium interest. After WWI, the U.K. took over Iraq and installed a king and took over this oil consortium. Herbert Hoover, the former U.S. president, forced the British to allow what is now Exxon Mobil into the consortium. So by the 1920’s you had a king installed by the British and you had oil exploration and production controlled by the origins of British Petroleum (BP), Exxon, Mobil, TotalFinaElf of France and Shell. From the 20’s through the 60’s, starting with the British and then with the U.S., there was a considerable backlash among the Iraqi people against the control of their resources.
There were interventions to get folks out of power who wanted to nationalize the oil company.
What kind of multinational investment continued or expanded during the Great Depression? What kinds of business strategies offered alternatives for FDI in the international or foreign markets? In oil, for example?
In resources, the problem of excess capacity and falling prices led to a virtual halt in new FDI and also to wide-ranging cartel agreements. The ‘Achnacarry Agreement’ signed in 1928 between the world’s three largest oil companies was a symbol of such interwar cartels, even though in reality the oil majors never succeeded in regulating the US domestic market or preventing ‘outside’ supplies undermining agreements elsewhere.

The attempts by MNEs to cartelise the world copper industry were even less successful. In contrast, in other mining industries such as tin, aluminium and diamonds, small numbers and government support led to strong and maintained cartels.20 Similarly in tea and rubber, European trading companies were able to put in place successful cartels to support prices and restrict output, though they failed in other sectors, such as teak.
How did oil shape the causes and conduct of the Second World War?
As documented in the Pulitzer Prize winning book The Prize by Daniel Yergin, oil has been behind many historical events. The U.S.’s naval blockade of oil headed to Japan from Indonesia in 1941 led directly to their attack on Pearl Harbor an our entry into World War II. Hitler’s belief in the power of oil and his quest to acquire large resources of it caused him to fight two very unsuccessful campaigns in Northern Africa and Russia, which led to Germany’s defeat in WWII. America’s support of Israel in the Six Days War in 1967 and the Yom Kippur War in 1973 led to an OPEC embargo of the U.S., causing a steep increase in inflation and a collapse of the American auto market. Our support of the Shah of Iran furthered our troubles with inflation when the Islamic Revolution overthrew the Shah and increased the embargo of the U.S. Even recently, our involvement in two wars in Iraq is a direct result of our attempts to keep control of a large supply of Mid East oil in the hands of people friendly to our interests.
CH (May 8, 1899 in Vienna – March 23, 1992 in Freiburg) was an Austrian-British economist and political philosopher known for his defence of liberal democracy and free-market capitalism against socialist and collectivist thought in the mid-20th century. He is considered to be one of the most important economists and political philosophers of the twentieth century. One of the most influential members of the Austrian School of economics, he also made significant contributions in the fields of jurisprudence and cognitive science. He shared the 1974 Nobel Prize in Economics with ideological rival Gunnar Myrdal "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena." He also received the U.S. Presidential Medal of Freedom in 1991.
Friedrich von Hayek
(May 1878 – January 9, 1962), was responsible for leading Standard Oil to the forefront of the oil industry and significantly expanding the company's presence in the petrochemical field. Trained at Cornell university in Chemistry.
Walter Teagle
As-Is Agreement
Agreement establishing a cartel of Western oil companies, 1928.

Price wars among major oil companies in the 1920s, most significantly one in India between Standard Oil of New York and a subsidiary of Royal Dutch Shell, threatened major oil company profits, especially those from relatively high-cost production in the United States. At an August 1928 secret meeting at Achnacarry Castle in the Scottish Highlands, the As-Is Agreement was devised by the leaders of the Anglo-Persian Oil Company (later BP), Royal Dutch Shell, and Standard Oil of New Jersey (later Exxon). Together with the Red Line Agreement, the As-Is Agreement formed the basis of what a U.S. Senate subcommittee in 1952 called "the international petroleum cartel
As-Is Cartel
The Red Line Agreement is the name given to an agreement signed by partners in the Turkish Petroleum Company (TPC) on July 31, 1928. The aim of the agreement was to formalize the corporate structure of TPC and bind all partners to a self-denial clause that prohibited any of its shareholders from independently seeking oil interests in the ex-Ottoman territory. It marked the creation of an oil monopoly, or cartel, of immense influence, spanning a vast territory. The cartel preceded easily by three decades the birth of another cartel, OPEC, which was formed in 1960.

It is said that Calouste Gulbenkian took out a large map, laid it on the table and drew with a thick red pencil an outline demarking the boundaries of the area where the self-denial clause would be in effect. He said that was the boundary of the Ottoman Empire he knew in 1914. He should know, he added, because he was born in it and lived in it. The other partners looked on attentively and did not object. They had already anticipated such a boundary. (According to some accounts, the “red line” was drawn not by Gulbenkian but by the French.) Excepting Gulbenkian, the partners were the supermajors of today. Within the “red line” was included the entire ex-Ottoman territory in the Middle East, including the Arabian Peninsula (plus Turkey) but excluding Kuwait. Kuwait was excluded, as it was meant to be a preserve for the British.
Years later, Walter C. Teagle of Standard Oil of New Jersey remarked that the agreement was “a damn bad move.”
Red Line Agreement
East Texas. At one time East Texas could have supplied half the oil consumption in the US. It was so unusual it became known as the “Black Giant”. It had been discovered by Dad Joyner and Doc Lloyd. What Dad Johner did had an enormous impact on the oil business.
Black Giant
(short for Interessen-Gemeinschaft Farbenindustrie AG, "syndicate of dyestuff corporations", and also called I.G. Farbenfabriken) was a German conglomerate of companies formed in 1925 and even earlier during World War I. Farben is German for "paints", "dyes", or "colors", and initially many of these companies produced dyes, but soon began to embrace more advanced chemistry.
This was a firm that has enormous amounts of cash. In 1925 I.G. Farben was the biggest private corporation in Europe.
The founding of IG Farben was a reaction to Germany's defeat in World War I. IG Farben held a near total monopoly on chemical production, later during the National Socialist (Nazi) regime, including manufacturing Zyklon B. This was a poison commonly used at the time for delousing, which became notorious as the lethal agent in the gas chambers of the death camps of Auschwitz and Majdanek. The company was a major user of slave labour. Before the war the dyestuff companies had a near monopoly in the world market which they lost during the conflict. One solution for regaining this position was a large merger.
IG Farben consisted of the following major companies and several smaller ones.
I.G. Farben