Energy constraints on macroeconomic paradigms

The three US macroeconomic policy paradigms of the twentieth century, defined by transformational economic shocks, had distinct energy characteristics. The pre-Keynesian era (to 1929) was dominated by coal; the Keynesian era (1930–1973) witnessed substantial growth with unconstrained access to abundant domestic oil supplies; and the Monetarist era (after ∼1973) was energy constrained. Moreover, the economic shocks that precipitated paradigm changes were rooted in changes to energy supply. The Great Crash of 1929 followed from discovery of vast oil fields in the US Southwest. The collapse of the Bretton Woods system in 1971 occurred in part due to US peak oil production; and together they established the conditions for the First Oil Crisis of 1973.