Commanding Heights
Episode 1 The Battle of Ideas

The film, Commanding Heights, explains the history of the world’s economy that lead up to globalization and the trends that we may anticipate into 21th century. The film offers insights into how economic theories can help explain how the market and other economic factors come into play for control of a country’s economy.

The two important economists of the age shared air-warden duty on the roof of King’s College, an English gentleman and an Austrian exile. Personal friends, but intellectual rivals. Fredrick Von Hayek is adherent to the free market concept while John Maynard Keynes advocate for government intervention in the market. Keynes felt that the market economy would go to excesses, …show more content…
Many of them seriously feared that Capitalism was a fundamentally broken economic system that would start failing again once WWII ended, and that Communism would prove superior and would slowly take over the world. To prevent that nightmare, the Allies developed the Bretton Woods System, which was a series of economic and financial agreements in which they agreed to maintain healthy trade with each other, to give each other loans to help save weaker countries having problems, and to heavily regulate their currency exchange rates. The International Monetary Fund (IMF) and World Bank were created as part of Bretton Woods. Though it would take several years for this to become apparent, the Bretton Woods system indeed saved the Western World from backsliding into depression and in fact inaugurated a long period of explosive economic growth. During WWII, Britain’s various political parties put aside their differences in order to fight the war, but as the conflict was coming to a close, old divisions reemerged. In 1945, there was a general election. Winston Churchill who was influenced by Hayek’s the Road to serfdom, opposed planning and controls. According to him, no socialist system can be established without a political police, some form of Gestapo. When the labor took power, private owners were …show more content…
Until they hit the obstacle called ‘stagflation’. Stagflation is a compound of stagnation and inflation. After 30 glorious years of growth, the American economy was in trouble. US President Richard Nixon come up for a New Economic Policy for the US. Its targets are unemployment, inflation. The problem with President Nixon was he was willing to sacrifice principles too easily for political advantage. The voters liked the President’s war on prices thus; he was re elected in a landslide. The economy did less well; right away the economy went out of whack. People couldn’t cover their cost. Instead of controlling inflation, they were creating shortages and the prices just keep on rising. On the contrast to the traditional concept of relations between economic growth and price, the phenomenon called stagflation became a biggest rut that few Keynesian economists had any idea of getting out. This is where Ronald Reagan and Margaret Thatcher come into the picture. Both of these contemporary leaders of two major nations believed that restraining government spending and cutting regulations can save their economies. And apparently, they succeeded. The old half-century long dominance of Keynesian system was finally over. The film indicates at the end of the first episode, that in Britain and US the outcome of ‘the battle’ was decided at least for the time