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The post–World War II economic expansion, also known as the postwar economic boom or the Golden Age of Capitalism, was a broad period of worldwide
economic expansion An economic expansion is an upturn in the level of economic activity and of the goods and services available. It is a finite period of growth, often measured by a rise in real GDP, that marks a reversal from a previous period, for example, whi ...
beginning with the
aftermath of World War II The aftermath of World War II saw the rise of two global superpowers, the United States (U.S.) and the Soviet Union (U.S.S.R.). The aftermath of World War II was also defined by the rising threat of nuclear warfare, the creation and implementati ...
and ending with the 1973–1975 recession. The United States, the Soviet Union, Australia and Western European and East Asian countries in particular experienced unusually high and sustained growth, together with
full employment Full employment is an economic situation in which there is no cyclical or deficient-demand unemployment. Full employment does not entail the disappearance of all unemployment, as other kinds of unemployment, namely structural and frictional, may ...
. Contrary to early predictions, this high growth also included many countries that had been devastated by the war, such as
Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...
(
Japanese economic miracle The Japanese economic miracle () refers to a period of economic growth in the post–World War II Japan. It generally refers to the period from 1955, around which time the per capita gross national income of the country recovered to pre-war leve ...
),
West Germany West Germany was the common English name for the Federal Republic of Germany (FRG) from its formation on 23 May 1949 until German reunification, its reunification with East Germany on 3 October 1990. It is sometimes known as the Bonn Republi ...
and
Austria Austria, formally the Republic of Austria, is a landlocked country in Central Europe, lying in the Eastern Alps. It is a federation of nine Federal states of Austria, states, of which the capital Vienna is the List of largest cities in Aust ...
(
Wirtschaftswunder The ''Wirtschaftswunder'' (, "economic miracle"), also known as the Miracle on the Rhine, was the rapid reconstruction and development of the Economy, economies of West Germany and Austria after World War II. The expression was first used to re ...
),
South Korea South Korea, officially the Republic of Korea (ROK), is a country in East Asia. It constitutes the southern half of the Korea, Korean Peninsula and borders North Korea along the Korean Demilitarized Zone, with the Yellow Sea to the west and t ...
(
Miracle on the Han River The Miracle on the Han River () was the period of rapid economic growth in South Korea, following the Korean War (1950–1953), during which South Korea transformed from one of the least developed countries into a highly developed country. The ...
),
Belgium Belgium, officially the Kingdom of Belgium, is a country in Northwestern Europe. Situated in a coastal lowland region known as the Low Countries, it is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeas ...
( Belgian economic miracle),
France France, officially the French Republic, is a country located primarily in Western Europe. Overseas France, Its overseas regions and territories include French Guiana in South America, Saint Pierre and Miquelon in the Atlantic Ocean#North Atlan ...
(
Trente Glorieuses ''Les Trente Glorieuses'' (; 'The Thirty Glorious (Years)') was a thirty-year period of economic growth in France between 1945 and 1975, following the end of the Second World War. The name was first used by the French demographer Jean Fourast ...
),
Italy Italy, officially the Italian Republic, is a country in Southern Europe, Southern and Western Europe, Western Europe. It consists of Italian Peninsula, a peninsula that extends into the Mediterranean Sea, with the Alps on its northern land b ...
( Italian economic miracle) and
Greece Greece, officially the Hellenic Republic, is a country in Southeast Europe. Located on the southern tip of the Balkan peninsula, it shares land borders with Albania to the northwest, North Macedonia and Bulgaria to the north, and Turkey to th ...
( Greek economic miracle). Even countries that were relatively unaffected by the war such as
Sweden Sweden, formally the Kingdom of Sweden, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. It borders Norway to the west and north, and Finland to the east. At , Sweden is the largest Nordic count ...
( Record years) experienced considerable economic growth. The boom established the conditions for a larger series of global changes at the height of the
Cold War The Cold War was a period of global Geopolitics, geopolitical rivalry between the United States (US) and the Soviet Union (USSR) and their respective allies, the capitalist Western Bloc and communist Eastern Bloc, which lasted from 1947 unt ...
, including
postmodernism Postmodernism encompasses a variety of artistic, Culture, cultural, and philosophical movements that claim to mark a break from modernism. They have in common the conviction that it is no longer possible to rely upon previous ways of depicting ...
,
decolonisation Decolonization is the undoing of colonialism, the latter being the process whereby Imperialism, imperial nations establish and dominate foreign territories, often overseas. The meanings and applications of the term are disputed. Some scholar ...
, a marked increase in
consumerism Consumerism is a socio-cultural and economic phenomenon that is typical of industrialized societies. It is characterized by the continuous acquisition of goods and services in ever-increasing quantities. In contemporary consumer society, the ...
, the
welfare state A welfare state is a form of government in which the State (polity), state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal oppor ...
, the
space race The Space Race (, ) was a 20th-century competition between the Cold War rivals, the United States and the Soviet Union, to achieve superior spaceflight capability. It had its origins in the ballistic missile-based nuclear arms race between t ...
, the
Non-Aligned Movement The Non-Aligned Movement (NAM) is a forum of 121 countries that Non-belligerent, are not formally aligned with or against any major power bloc. It was founded with the view to advancing interests of developing countries in the context of Cold W ...
,
import substitution Import substitution industrialization (ISI) is a protectionist trade and economics, economic policy that advocates replacing foreign imports with domestic production. It is based on the premise that a country should attempt to reduce its foreign ...
,
counterculture of the 1960s The counterculture of the 1960s was an anti-establishment cultural phenomenon and political movement that developed in the Western world during the mid-20th century. It began in the early 1960s, and continued through the early 1970s. It is ofte ...
, the beginning of
second-wave feminism Second-wave feminism was a period of feminist activity that began in the early 1960s and lasted roughly two decades, ending with the feminist sex wars in the early 1980s and being replaced by third-wave feminism in the early 1990s. It occurred ...
, and a nuclear
arms race An arms race occurs when two or more groups compete in military superiority. It consists of a competition between two or more State (polity), states to have superior armed forces, concerning production of weapons, the growth of a military, and ...
.


Timeline

In 2000, economist Roger Middleton wrote that economic historians generally agree that 1950 represented the beginning year of the golden age, while
Robert Skidelsky Robert Jacob Alexander Skidelsky, Baron Skidelsky, (born 25 April 1939) is a British economic historian. He is the author of a three-volume, award-winning biography of British economist John Maynard Keynes (1883–1946). Skidelsky read histor ...
states 1951 is the most recognized start date. Both Skidelsky and Middleton have 1973 as the generally recognized end date, though sometimes the golden age is considered to have ended as early as 1970. This long-term business cycle ended with a number of events in the early 1970s: * the collapse of the Bretton Woods monetary system in 1971 * the closing of the gold window by President
Richard Nixon Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 until Resignation of Richard Nixon, his resignation in 1974. A member of the Republican Party (United States), Republican ...
as a response to the Bretton Woods collapse * the continued growth of
international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (See: World economy.) In most countries, such trade represents a significan ...
in manufactured goods, such as automobiles and electronics * the
1973 oil crisis In October 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) announced that it was implementing a total oil embargo against countries that had supported Israel at any point during the 1973 Yom Kippur War, which began after Eg ...
, * the 1973–74 stock market crash, and * the ensuing 1973–75 recession While this is the global period, specific countries experienced business expansions for different periods; in
Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia. The main geography of Taiwan, island of Taiwan, also known as ''Formosa'', lies between the East China Sea, East and South China Seas in the northwestern Pacific Ocea ...
, the Taiwan Miracle lasted into the late 1990s, for instance, while in France the period is referred to as ''Trente Glorieuses'' (Glorious 30 ears and is considered to extend for the 30-year period from 1945 to 1975.


Global economic climate

OECD The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...
members enjoyed real GDP growth averaging over 4% per year in the 1950s, and nearly 5% per year in the 1960s, compared with 3% in the 1970s and 2% in the 1980s. Skidelsky devotes ten pages of his 2009 book '' Keynes: The Return of the Master'' to a comparison of the golden age to what he calls the
Washington Consensus The Washington Consensus is a set of ten economic policy prescriptions considered in the 1980s and 1990s to constitute the "standard" reform package promoted for Economic crisis, crisis-wracked developing country, developing countries by the Was ...
period, which he dates as spanning 1980–2009 (1973–1980 being a transitional period): Skidelsky suggests the high global growth during the golden age was especially impressive as during that period Japan was the only major Asian economy enjoying high growth (Taiwan and South Korea at the time being small economies). It was not until later that the world had the exceptional growth of China raising the global average. Skidelsky also reports that inequality was generally decreasing during the golden age, whereas since the Washington Consensus was formed it has been increasing. Globally, the golden age was a time of unusual financial stability, with crises far less frequent and intense than before or after.
Martin Wolf Martin Harry Wolf (born 16 August 1946 in London) is a British journalist who focuses on economics. He is the chief economics commentator at the ''Financial Times''. He also writes a weekly column for the French newspaper ''Le Monde''. Earl ...
reports that between 1945 and 1971 (27 years) the world saw only 38 financial crises, whereas from 1973 to 1997 (24 years) there were 139.


Causes


Productivity

High productivity growth from before the war continued after the war and until the early 1970s. Manufacturing was aided by
automation Automation describes a wide range of technologies that reduce human intervention in processes, mainly by predetermining decision criteria, subprocess relationships, and related actions, as well as embodying those predeterminations in machine ...
technologies such as feedback controllers, which appeared in the late 1930s were a fast-growing area of investment following the war. Wholesale and retail trade benefited from new highway systems, distribution warehouses, and material handling equipment such as forklifts and
intermodal containers An intermodal container, often called a shipping container, or a freight container, (or simply "container") is a large metal crate designed and built for intermodal freight transport, meaning these containers can be used across different mod ...
. Oil displaced coal in many applications, particularly in locomotives and ships. In agriculture, the post WWII period saw the widespread introduction of the following: * Chemical fertilizers *
Tractors A tractor is an engineering vehicle specifically designed to deliver a high tractive effort (or torque) at slow speeds, for the purposes of hauling a Trailer (vehicle), trailer or machinery such as that used in agriculture, mining or constructio ...
* Combine harvesters * High-yielding variety *
Pesticides Pesticides are substances that are used to pest control, control pest (organism), pests. They include herbicides, insecticides, nematicides, fungicides, and many others (see table). The most common of these are herbicides, which account for a ...


Keynesian economics

Keynesian economists argue that the post war expansion was caused by adoption of Keynesian economic policies.
Naomi Klein Naomi Klein (born May 8, 1970) is a Canadian author, social activist, and filmmaker known for her political analyses; support of ecofeminism, organized labour, and criticism of corporate globalization, fascism and Criticism of capitalism, ca ...
has argued the high growth enjoyed by Europe and America was the result of Keynesian economic policies and in the case of rapidly rising prosperity that this post war period saw in parts of South America, by the influence of developmentalist economics led by Raúl Prebisch.


Infrastructure spending

One of Eisenhower's enduring achievements was championing and signing the bill that authorized the
Interstate Highway System The Dwight D. Eisenhower National System of Interstate and Defense Highways, commonly known as the Interstate Highway System, or the Eisenhower Interstate System, is a network of controlled-access highways that forms part of the National Hi ...
in 1956. He justified the project through the
Federal Aid Highway Act of 1956 The Federal-Aid Highway Act of 1956, also known as the National Interstate and Defense Highways Act, was enacted on June 29, 1956, when President Dwight D. Eisenhower signed the bill into law. With an original authorization of $25 billion (e ...
as essential to American security during the
Cold War The Cold War was a period of global Geopolitics, geopolitical rivalry between the United States (US) and the Soviet Union (USSR) and their respective allies, the capitalist Western Bloc and communist Eastern Bloc, which lasted from 1947 unt ...
. It was believed that large cities would be targets in a possible war, hence the highways were designed to facilitate their evacuation and ease military maneuvers.


Military spending

Another explanation for this period is the theory of the permanent war economy, which suggests that the large spending on the military helped stabilize the global economy; this has also been referred to as " Military Keynesianism". This also goes into hand with retired WWII vets with pensions to spend.


Financial repression

This period also saw financial repression—low nominal interest rates and low or negative real interest rates (nominal rates lower than inflation plus taxation), via government policy—resulting respectively in debt servicing costs being low (low nominal rates) and in liquidation of existing debt (via inflation and taxation). This allowed countries (such as the US and UK) to deal with their existing government debt level and also to reduce the level of debt without needing to direct a high portion of government spending to debt service.


Wealth redistribution

Much property was destroyed in war. In the inter-war period, the
Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
also caused investments to lose value. During both World Wars, progressive taxation and capital levies were introduced, with the generally-stated aim of distributing the sacrifices required by the war more evenly. While tax rates dipped between the wars, they did not return to pre-war levels. Top tax rates increased dramatically, in some cases tenfold. This had a significant effect on both income and wealth distributions. Such policies were commonly referred to as the "conscription of income" and "conscription of wealth". ''
The Economist ''The Economist'' is a British newspaper published weekly in printed magazine format and daily on Electronic publishing, digital platforms. It publishes stories on topics that include economics, business, geopolitics, technology and culture. M ...
'', a British publication, opposed capital levies, but supported "direct taxation heavy enough to amount to rationing of citizens' incomes"; similarly, the American economist Oliver Mitchell Wentworth Sprague, in the '' Economic Journal'', argued that that "conscription of men should logically and equitably be accompanied by something in the nature of conscription of current income above that which is absolutely necessary".
Rationing Rationing is the controlled distribution (marketing), distribution of scarcity, scarce resources, goods, services, or an artificial restriction of demand. Rationing controls the size of the ration, which is one's allowed portion of the resourc ...
of goods was also widely used, with the aim of distributing scarce resources efficiently. Rationing was widely done with ration stamps, a second currency that entitled the bearer to buy (with regular money) a certain amount of a certain sort of good (for instance, two ounces of meat, or a certain amount of clothing or fuel). Price controls were also used (for instance, the price of restaurant meals was capped). In the post-war period, progressive taxation persisted.
Inheritance tax International tax law distinguishes between an estate tax and an inheritance tax. An inheritance tax is a tax paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the estate (money and pro ...
es also had an effect.
Rationing in the United Kingdom Rationing was introduced temporarily by the British government several times during the 20th century, during and immediately after a war. At the start of the Second World War in 1939, the United Kingdom was importing 20 million long tons ...
lasted until 1954. Allied war bonds matured during the post-war years, transferring cash from governments to private households. In Japan, progressive tax rates were imposed during the Allied occupation, at rates that roughly matched those in the United States at that time. High marginal tax rates for the wealthiest 1% were in place throughout Japan's decades of post-war growth South Korea, after the
Korean War The Korean War (25 June 1950 – 27 July 1953) was an armed conflict on the Korean Peninsula fought between North Korea (Democratic People's Republic of Korea; DPRK) and South Korea (Republic of Korea; ROK) and their allies. North Korea was s ...
saw a similar trajectory. Marginal tax rates were high on the rich, until falling quickly in the 1990s. The state also legislated significant
land reform Land reform (also known as agrarian reform) involves the changing of laws, regulations, or customs regarding land ownership, land use, and land transfers. The reforms may be initiated by governments, by interested groups, or by revolution. Lan ...
, cutting deeply into a landholding elite's power and clientelism.


Low oil prices

In the 1940s, the
price of oil The price of oil, or the oil price, generally refers to the spot price of a barrel () of benchmark crude oil—a reference price for buyers and sellers of crude oil such as West Texas Intermediate (WTI), Brent Crude, Dubai Crude, OPEC ...
was about $17, rising to just over $20 during the
Korean War The Korean War (25 June 1950 – 27 July 1953) was an armed conflict on the Korean Peninsula fought between North Korea (Democratic People's Republic of Korea; DPRK) and South Korea (Republic of Korea; ROK) and their allies. North Korea was s ...
(1951–1953). During the
Vietnam War The Vietnam War (1 November 1955 – 30 April 1975) was an armed conflict in Vietnam, Laos, and Cambodia fought between North Vietnam (Democratic Republic of Vietnam) and South Vietnam (Republic of Vietnam) and their allies. North Vietnam w ...
(1950s–1970s) the price of oil slowly declined to under $20. During the Arab oil embargo of 1973—the first oil shock—the price of oil rapidly rose to double in price.


International cooperation

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 The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
, some of which were ascribed to post–World War I policy errors. The
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred $13.3 billion (equivalent to $ in ) in economic recovery pr ...
for the rebuilding of Europe is most credited for reconciliation, though the immediate post-war situations was more complicated. In 1948 the
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred $13.3 billion (equivalent to $ in ) in economic recovery pr ...
pumped over $12 billion to rebuild and modernize Western Europe. The
European Coal and Steel Community The European Coal and Steel Community (ECSC) was a European organization created after World War II to integrate Europe's coal and steel industries into a single common market based on the principle of supranationalism which would be governe ...
formed the foundation of what was to become the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
in later years.


Institutional arrangements

Institutional economists point to the international institutions established in the post-war period. Structurally, the victorious Allies established the
United Nations The United Nations (UN) is the Earth, global intergovernmental organization established by the signing of the Charter of the United Nations, UN Charter on 26 June 1945 with the stated purpose of maintaining international peace and internationa ...
and the Bretton Woods monetary system, international institutions designed to promote stability. This was achieved through a number of policies, including promoting
free trade Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...
, instituting the
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred $13.3 billion (equivalent to $ in ) in economic recovery pr ...
, and the use of
Keynesian economics Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomics, macroeconomic theories and Economic model, models of how aggregate demand (total spending in the economy) strongl ...
. Although this was before modern eastern countries growing their workforce I.e. before the outsourcing problem protectionists point to.


=US Council of Economic Advisers

= In the United States, the Employment Act of 1946 set the goals of achieving full employment, full production, and stable prices. It also created the
Council of Economic Advisers The Council of Economic Advisers (CEA) is a United States agency within the Executive Office of the President established in 1946, which advises the president of the United States on economic policy. The CEA provides much of the empirical resea ...
to provide objective economic analysis and advice on the development and implementation of a wide range of domestic and international economic policy issues. In its first 7 years the CEA made five technical advances in policy making: #The replacement of a "cyclical model" of the economy by a "growth model", #The setting of quantitative targets for the economy, #Use of the theories of fiscal drag and full-employment budget, #Recognition of the need for greater flexibility in taxation, and #Replacement of the notion of unemployment as a structural problem by a realization of low aggregate demand.


Specific countries

The economies of the
United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
,
Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...
,
West Germany West Germany was the common English name for the Federal Republic of Germany (FRG) from its formation on 23 May 1949 until German reunification, its reunification with East Germany on 3 October 1990. It is sometimes known as the Bonn Republi ...
,
France France, officially the French Republic, is a country located primarily in Western Europe. Overseas France, Its overseas regions and territories include French Guiana in South America, Saint Pierre and Miquelon in the Atlantic Ocean#North Atlan ...
, and
Italy Italy, officially the Italian Republic, is a country in Southern Europe, Southern and Western Europe, Western Europe. It consists of Italian Peninsula, a peninsula that extends into the Mediterranean Sea, with the Alps on its northern land b ...
did particularly well. Japan and West Germany caught up to and exceeded the GDP of the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...
during these years, even as the UK itself was experiencing the greatest absolute prosperity in its history. In France, this period is often looked back to with nostalgia as the ''
Trente Glorieuses ''Les Trente Glorieuses'' (; 'The Thirty Glorious (Years)') was a thirty-year period of economic growth in France between 1945 and 1975, following the end of the Second World War. The name was first used by the French demographer Jean Fourast ...
'', or "Glorious Thirty", while the economies of West Germany and Austria were characterized by ''
Wirtschaftswunder The ''Wirtschaftswunder'' (, "economic miracle"), also known as the Miracle on the Rhine, was the rapid reconstruction and development of the Economy, economies of West Germany and Austria after World War II. The expression was first used to re ...
'' (economic miracle), and in Italy it is called ''Miracolo economico'' (economic miracle). Most
developing countries A developing country is a sovereign state with a less-developed Secondary sector of the economy, industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. ...
also did well in this period.


Belgium

Belgium Belgium, officially the Kingdom of Belgium, is a country in Northwestern Europe. Situated in a coastal lowland region known as the Low Countries, it is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeas ...
experienced a brief but very rapid economic recovery in the aftermath of World War II. The comparatively light damage sustained by Belgium's heavy industry during the German occupation and the Europe-wide need for the country's traditional exports (steel and coal, textiles, and railway infrastructure) meant that Belgium became the first European country to regain its pre-war level of output in 1947. Economic growth in the period was accompanied by low inflation and sharp increases in real living standards. However, lack of capital investment meant that Belgium's heavy industry was ill-equipped to compete with other European industries in the 1950s. This contributed to the start of deindustrialisation in
Wallonia Wallonia ( ; ; or ), officially the Walloon Region ( ; ), is one of the three communities, regions and language areas of Belgium, regions of Belgium—along with Flemish Region, Flanders and Brussels. Covering the southern portion of the c ...
and the emergence of regional economic disparities.


France

Between 1947 and 1973, France went through a boom period (5% growth per year on average) dubbed by Jean Fourastié ''
Trente Glorieuses ''Les Trente Glorieuses'' (; 'The Thirty Glorious (Years)') was a thirty-year period of economic growth in France between 1945 and 1975, following the end of the Second World War. The name was first used by the French demographer Jean Fourast ...
'' – the title of a book published in 1979. The economic growth occurred mainly due to productivity gains and to an increase in the number of working hours. Indeed, the working population grew very slowly, the "
baby boom A baby boom is a period marked by a significant increase of births. This demography, demographic phenomenon is usually an ascribed characteristic within the population of a specific nationality, nation or culture. Baby booms are caused by various ...
" being offset by the extension of the time dedicated to study. Productivity gains came from catching up with the United States. In 1950, the average income in France was 55% of that of an American; it reached 80% in 1973. Among the "major" nations, only Japan had faster growth in this era than France. The extended period of transformation and modernization also involved an increasing internationalization of the French economy. France by the 1980s had become a leading world economic power and the world's fourth-largest exporter of manufactured products. It became Europe's largest agricultural producer and exporter, accounting for more than 10 percent of world trade in such goods by the 1980s. The service sector grew rapidly and became the largest sector, generating a large foreign-trade surplus, chiefly from the earnings from tourism.


Italy

The Italian economy experienced very variable growth. In the 1950s and early 1960s the Italian economy boomed, with record high growth-rates, including 6.4% in 1959, 5.8% in 1960, 6.8% in 1961, and 6.1% in 1962. This rapid and sustained growth was due to the ambitions of several Italian businesspeople, the opening of new industries (helped by the discovery of hydrocarbons, made for iron and steel, in the
Po valley The Po Valley, Po Plain, Plain of the Po, or Padan Plain (, , or ) is a major geographical feature of northern Italy. It extends approximately in an east-west direction, with an area of including its Venetian Plain, Venetic extension not actu ...
), re-construction and the modernisation of most Italian cities, such as Milan, Rome and Turin, and the aid given to the country after World War II (notably through the
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred $13.3 billion (equivalent to $ in ) in economic recovery pr ...
).


Japan

After 1950 Japan's economy recovered from the war damage and began to boom, with the fastest growth rates in the world. Given a boost by the
Korean War The Korean War (25 June 1950 – 27 July 1953) was an armed conflict on the Korean Peninsula fought between North Korea (Democratic People's Republic of Korea; DPRK) and South Korea (Republic of Korea; ROK) and their allies. North Korea was s ...
, in which it acted as a major supplier to the UN force, Japan's economy embarked on a prolonged period of extremely rapid growth, led by the manufacturing sectors. Japan emerged as a significant power in many economic spheres, including steel working, car manufacturing and the manufacturing of electronics. Japan rapidly caught up with the West in foreign trade, GNP, and general quality of life. The high economic growth and political tranquility of the mid to late 1960s were slowed by the quadrupling of oil prices in 1973. Almost completely dependent on imports for petroleum, Japan experienced its first recession since World War II. Another serious problem was Japan's growing trade surplus, which reached record heights. The United States pressured Japan to remedy the imbalance, demanding that Tokyo raise the value of the yen and open its markets further to facilitate more imports from the United States.


Soviet Union

In early 1950s, the Soviet Union, having reconstructed the ruins left by the war, experienced a decade of prosperous, undisturbed, and rapid economic growth, with significant and remarkable technological achievements most notably the first earth satellite. The nation made it to the top 15 countries with highest GDP per capita in the mid-1950s. However, the growth slowed by the mid-1960s, as the government started pouring resources into large military and space projects, and the civilian sector gradually languished. While every other major nation greatly expanded its service sector, in the Soviet Union it was given low priority. Following Khrushchev's ouster, and the appointment of a
collective leadership In communist and socialist theory, collective leadership is a shared distribution of power within an organizational structure, sometimes publicly described or designed as Primus inter pares, ''primus inter pares'' (''first among equals''). Commun ...
led by
Leonid Brezhnev Leonid Ilyich Brezhnev (19 December 190610 November 1982) was a Soviet politician who served as the General Secretary of the Communist Party of the Soviet Union from 1964 until Death and state funeral of Leonid Brezhnev, his death in 1982 as w ...
and
Alexei Kosygin Alexei Nikolayevich Kosygin (–18 December 1980) was a Soviet people, Soviet statesman during the Cold War. He served as the Premier of the Soviet Union from 1964 to 1980 and, alongside General Secretary Leonid Brezhnev, was one of its most ...
, the economy was revitalised. The economy continued to grow apace during the late 1960s, during the Eighth Five-Year Plan. However, economic growth began to falter during the late 1970s, beginning the
Era of Stagnation The "Era of Stagnation" (, or ) is a term coined by Mikhail Gorbachev in order to describe the negative way in which he viewed the economic, political, and social policies of the Soviet Union that began during the rule of Leonid Brezhnev (1964 ...
.


Sweden

Sweden emerged almost unharmed from World War II, and experienced tremendous economic growth until the early 1970s, as
Social Democratic Social democracy is a Social philosophy, social, Economic ideology, economic, and political philosophy within socialism that supports Democracy, political and economic democracy and a gradualist, reformist, and democratic approach toward achi ...
Prime Minister Tage Erlander held his office from 1946 to 1969. Sweden used to be a country of emigrants until the 1930s, but the demand for labor spurred immigration to Sweden, especially from Finland and countries like Greece, Italy and Yugoslavia. Urbanization was fast, and housing shortage in urban areas was imminent until the Million Programme was launched in the 1960s.


United Kingdom

A 1957 speech by UK Prime Minister
Harold Macmillan Maurice Harold Macmillan, 1st Earl of Stockton (10 February 1894 – 29 December 1986), was a British statesman and Conservative Party (UK), Conservative politician who was Prime Minister of the United Kingdom from 1957 to 1963. Nickn ...
captures what the golden age felt like, even before the brightest years which were to come in the 1960s. Unemployment figures show that unemployment was significantly lower during the Golden Age than before or after: In addition to superior economic performance, other social indexes were higher in the golden age; for example the proportion of Britain's population saying they were "very happy" fell from 52% in 1957 to just 36% in 2005.


United States

The period from the end of World War II to the early 1970s was one of the greatest eras of economic expansion in world history. In the US, Gross Domestic Product increased from $228 billion in 1945 to just under $1.7 trillion in 1975. By 1975, the US economy represented some 35% of the entire world industrial output, and the US economy was over 3 times larger than that of Japan, the next largest economy. The expansion was interrupted in the United States by five
recession In economics, a recession is a business cycle contraction that occurs when there is a period of broad decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be tr ...
s ( 1948–49, 1953–54, 1957–58, 1960–61, and 1969–70). $200 billion in war bonds matured, and the
G.I. Bill The G.I. Bill, formally the Servicemen's Readjustment Act of 1944, was a law that provided a range of benefits for some of the returning World War II veterans (commonly referred to as G.I. (military), G.I.s). The original G.I. Bill expired in ...
financed a well-educated work force. The middle class swelled, as did GDP and productivity. The US underwent its own golden age of economic growth. This growth was distributed fairly evenly across the economic classes, which some attribute to the strength of
labor unions A trade union (British English) or labor union (American English), often simply referred to as a union, is an organization of workers whose purpose is to maintain or improve the conditions of their employment, such as attaining better wages ...
in this period—labor union membership peaked during the 1950s. Much of the growth came from the movement of low-income farm workers into better-paying jobs in the towns and cities—a process largely completed by 1960.


West Germany

West Germany West Germany was the common English name for the Federal Republic of Germany (FRG) from its formation on 23 May 1949 until German reunification, its reunification with East Germany on 3 October 1990. It is sometimes known as the Bonn Republi ...
, under Chancellor
Konrad Adenauer Konrad Hermann Joseph Adenauer (5 January 1876 – 19 April 1967) was a German statesman and politician who served as the first Chancellor of Germany, chancellor of West Germany from 1949 to 1963. From 1946 to 1966, he was the first leader of th ...
and economic minister
Ludwig Erhard Ludwig Wilhelm Erhard (; 4 February 1897 – 5 May 1977) was a German politician and economist affiliated with the Christian Democratic Union of Germany, Christian Democratic Union (CDU), and Chancellor of Germany (1949–), chancellor of West Ge ...
, saw prolonged economic growth beginning in the early 1950s. Journalists dubbed it the ''
Wirtschaftswunder The ''Wirtschaftswunder'' (, "economic miracle"), also known as the Miracle on the Rhine, was the rapid reconstruction and development of the Economy, economies of West Germany and Austria after World War II. The expression was first used to re ...
'' or "Economic Miracle". Industrial production doubled from 1950 to 1957, and gross national product grew at a rate of 9 or 10% per year, providing the engine for economic growth of all of Western Europe. Labor unions' support of the new policies, postponed wage increases, minimized strikes, supported technological modernization, and a policy of co-determination (Mitbestimmung), which involved a satisfactory grievance resolution system and required the representation of workers on the boards of large corporations, all contributed to such a prolonged economic growth. The recovery was accelerated by the currency reform of June 1948, US gifts of $1.4 billion
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred $13.3 billion (equivalent to $ in ) in economic recovery pr ...
aid, the breaking down of old trade barriers and traditional practices, and the opening of the global market.Junker, Detlef ed. (2004) ''The United States and Germany in the Era of the Cold War, 1945–1968''. Cambridge University Press. Vol 1. pp. 291–309. West Germany gained legitimacy and respect, as it shed the horrible reputation Germany had gained under the Nazis. West Germany played a central role in the creation of European cooperation; it joined
NATO The North Atlantic Treaty Organization (NATO ; , OTAN), also called the North Atlantic Alliance, is an intergovernmental organization, intergovernmental Transnationalism, transnational military alliance of 32 Member states of NATO, member s ...
in 1955 and was a founding member of the
European Economic Community The European Economic Community (EEC) was a regional organisation created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lisbo ...
in 1958.


Effects

The post-war economic boom had many social, cultural, and political effects (not least of which was the demographic bulge termed the
baby boom A baby boom is a period marked by a significant increase of births. This demography, demographic phenomenon is usually an ascribed characteristic within the population of a specific nationality, nation or culture. Baby booms are caused by various ...
). Movements and phenomena associated with this period include the height of the
Cold War The Cold War was a period of global Geopolitics, geopolitical rivalry between the United States (US) and the Soviet Union (USSR) and their respective allies, the capitalist Western Bloc and communist Eastern Bloc, which lasted from 1947 unt ...
,
postmodernism Postmodernism encompasses a variety of artistic, Culture, cultural, and philosophical movements that claim to mark a break from modernism. They have in common the conviction that it is no longer possible to rely upon previous ways of depicting ...
,
decolonisation Decolonization is the undoing of colonialism, the latter being the process whereby Imperialism, imperial nations establish and dominate foreign territories, often overseas. The meanings and applications of the term are disputed. Some scholar ...
, a marked increase in
consumerism Consumerism is a socio-cultural and economic phenomenon that is typical of industrialized societies. It is characterized by the continuous acquisition of goods and services in ever-increasing quantities. In contemporary consumer society, the ...
, the
welfare state A welfare state is a form of government in which the State (polity), state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal oppor ...
, the
space race The Space Race (, ) was a 20th-century competition between the Cold War rivals, the United States and the Soviet Union, to achieve superior spaceflight capability. It had its origins in the ballistic missile-based nuclear arms race between t ...
, the
Non-Aligned Movement The Non-Aligned Movement (NAM) is a forum of 121 countries that Non-belligerent, are not formally aligned with or against any major power bloc. It was founded with the view to advancing interests of developing countries in the context of Cold W ...
,
import substitution Import substitution industrialization (ISI) is a protectionist trade and economics, economic policy that advocates replacing foreign imports with domestic production. It is based on the premise that a country should attempt to reduce its foreign ...
,
counterculture of the 1960s The counterculture of the 1960s was an anti-establishment cultural phenomenon and political movement that developed in the Western world during the mid-20th century. It began in the early 1960s, and continued through the early 1970s. It is ofte ...
, opposition to the
Vietnam War The Vietnam War (1 November 1955 – 30 April 1975) was an armed conflict in Vietnam, Laos, and Cambodia fought between North Vietnam (Democratic Republic of Vietnam) and South Vietnam (Republic of Vietnam) and their allies. North Vietnam w ...
, the civil rights movement, the
sexual revolution The sexual revolution, also known as the sexual liberation, was a social movement that challenged traditional codes of behavior related to sexuality and interpersonal relationships throughout the Western world from the late 1950s to the early 1 ...
, the beginning of
second-wave feminism Second-wave feminism was a period of feminist activity that began in the early 1960s and lasted roughly two decades, ending with the feminist sex wars in the early 1980s and being replaced by third-wave feminism in the early 1990s. It occurred ...
, and a nuclear
arms race An arms race occurs when two or more groups compete in military superiority. It consists of a competition between two or more State (polity), states to have superior armed forces, concerning production of weapons, the growth of a military, and ...
. In the United States, the middle-class began a mass migration away from the cities and towards the suburbs; it was a period of prosperity in which most people could enjoy a job for life, a house, and a family. In the West, there emerged a near-complete consensus against strong ideology and a belief that technocratic and scientific solutions could be found to most of humanity's problems, a view advanced by US President John F. Kennedy in 1962. This optimism was symbolized through such events as the
1964 New York World's Fair The 1964 New York World's Fair (also known as the 1964–1965 New York World's Fair) was an world's fair, international exposition at Flushing Meadows–Corona Park in Queens, New York City, United States. The fair included exhibitions, activ ...
, and
Lyndon B. Johnson Lyndon Baines Johnson (; August 27, 1908January 22, 1973), also known as LBJ, was the 36th president of the United States, serving from 1963 to 1969. He became president after the assassination of John F. Kennedy, under whom he had served a ...
's
Great Society The Great Society was a series of domestic programs enacted by President Lyndon B. Johnson in the United States between 1964 and 1968, aimed at eliminating poverty, reducing racial injustice, and expanding social welfare in the country. Johnso ...
programs, which aimed at eliminating poverty in the United States.


Decline

The sharp rise in oil prices due to the
1973 oil crisis In October 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) announced that it was implementing a total oil embargo against countries that had supported Israel at any point during the 1973 Yom Kippur War, which began after Eg ...
hastened the transition to the post-industrial economy, and a multitude of social problems have since emerged. During the 1970s steel crisis, demand for steel declined, and the Western world faced competition from newly industrialized countries. This was especially harsh for mining and steel districts such as the North American
Rust Belt The Rust Belt, formerly the Steel Belt or Factory Belt, is an area of the United States that underwent substantial Deindustrialization, industrial decline in the late 20th century. The region is centered in the Great Lakes and Mid-Atlantic (Uni ...
and the West German
Ruhr area The Ruhr ( ; , also ''Ruhrpott'' ), also referred to as the Ruhr Area, sometimes Ruhr District, Ruhr Region, or Ruhr Valley, is a polycentric urban area in North Rhine-Westphalia, Germany. With a population density of 1,160/km2 and a populati ...
.


See also

* * * * * *


Notes and references


Further reading

* Boltho, Andrea, ed. ''The European Economy – Growth and Crisis'' (Oxford University Press, 1982). * . * Brinckmann, Hans, and Ysbrand Rogge. ''Showa Japan: The Post-War Golden Age and Its Troubled Legacy'' (2008). * Bullock, Paul and Yaffe, David [1975
''Inflation, the Crisis and the Post-War Boom''
RC 3/4 November 1975, RCG. * Crafts, N. and G. Toniolo, eds. ''Economic Growth in Europe since 1945'' (Cambridge University Press, 1996). * * * * * * * * * * * Yarrow, Andrew L.
The big postwar story: Abundance and the rise of economic journalism
. ''Journalism History'' 32.2 (2006): 58+. {{DEFAULTSORT:Post-World War Ii Economic Expansion Economic booms Gold standard Post–World War II economic booms