GOLDEN AGE OF CAPITALISM

The Institutions That Supported the 'Golden Age of Capitalism' Also Caused Its Downfall



The Institutions That Supported the 'Golden Age of Capitalism' Also Caused Its Downfall

The post-war economic expansion, also known as the long boom and the Golden Age of Capitalism, was an international period of economic prosperity in the mid 20th century which followed the end of World War II in 1945, and lasted until the early 1970s, ending with the collapse of the Bretton Woods system in 1971, the 1973 oil crisis, and the 1973-1974 stock market crash, which led to the 1970s recession. Narrowly defined, the period spanned 1950/1951 to 1973, though there are some debates on dating the period, and booms in individual countries differed, some starting as early as 1945, and with the East Asian booms lasting into the 1980s or 1990s.

During this time there was high world wide economic growth, with western and East Asian countries in particular experiencing unusually high and sustained growth together with full employment. However, the Soviet-influenced Eastern bloc was in economic decline for most of this period. Contrary to early predictions, it also affected many countries devastated by the war, such as West Germany (Wirtschaftswunder), France (Trente Glorieuses), Japan (Japanese post-war economic miracle) and Italy (Il Boom).

Among the causes can be mentioned the rapid normalization of political relations between former Axis powers and the western Allies. After the war, the major powers were determined not to repeat the mistakes of the Great Depression, some of which were ascribed to post-World War I policy errors. The Marshall Plan for the rebuilding of Europe is most credited for reconciliation, though the immediate post-war situation was more complicated.

The post-World War I period was shaped by the Treaty of Versailles, whose Article 231 of the Treaty of Versailles (the "war guilt clause") attributed guilt to the losing Germans and instituted World War I reparations, which delayed the normalization of relations. There was also occupation of Germany's industrial Saar region by France and Britain, and protectionism in the Great Depression era.

Following World War II, the victorious Allies first followed a policy of deindustrializing and extracting resources from Germany under the Industrial plans for Germany - the Morgenthau Plan in America and the Monnet Plan in France - which involved dismantling German factories and removing them to victor nations, largely France and Russia - and destroying what could not be dismantled - together with the forced labor of millions of former German prisoners of war, the occupation of the Saar region by France (as had been done in the post-WWI period), extensive logging by Americans, and transfer of German technology, patents, and scientists to victor nations, the latter under Operation Paperclip.[7] The Morgenthau Plan was then abandoned, being replaced by the Marshall Plan, which called for the rebuilding of Europe, including Germany. Some elements of the Morgenthau Plan continued under the Marshall Plan, and eventually ended officially in 1955. The occupation of the Saar was resolved by returning it to Germany in 1957, ...