• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Are scholars justified in using the term 'Golden Age' to describe the economic history of Western Europe during the period between 1950 to 1973

Extracts from this document...


Are scholars justified in using the term 'Golden Age' to describe the economic history of Western Europe during the period between 1950 to 1973? 'Nothing in the history of Western Europe resembles its experience between 1945 and 1968.' Milward, European rescue, pg. 21 In the quarter of a century that followed the Second World War, the achievements of the European economy were so impressive that the period was often referred to as the 'Golden Age'. Since 1913 Europe had experienced two world wars plus the great depression and trade wars of the 1930's, the economy had been stunted and growth was well below trend. In the early post-war years between 1945 and 1947 recovery was frustrated by shortages of food, labour, raw materials and the need to reastablish both financial and political institutions. However this gave Europe a clean slate so to speak and the opportunity for rapid growth through the correction of previous mistakes. Between 1950 and 1973, the real GDP of western Europe grew more than twice as fast as the secular trend, fluctuations in this growth were mild and inflation rates were seen as socially acceptable. But more importantly in the long run, 'by the end of this period the perpetual possibility of serious economic hardship, which had earlier always hovered over the lives of three-quarters of the population now menaced only about one-fifth of it.' ...read more.


In this sense the breaking point was brought about in 1973, not just by the quadrupling of the price in oil but also by the world economic boom which preceded it and drove prices up in all industrial countries across the world. The question economists wanted to know was no more, how long? But rather, why? Ever since it became clear the forecasting of the post war economy, based on previous trends, did not reflect the reality presented by the 'Golden Age', economists started their search for reasons why? Work by such writers as Maddison gave an explanation of the 'Golden Age' through an approach known as "growth accounting". Observing a huge increase in the ratio of investment to GDP and incorporating technical progress, Maddison argued that investment itself was the main cause of Europe's performance in productivity growth. For Maddison the implementation of new favourable policy and the increase in technology transfer led to the growth in total factor productivity. Kindleberger, in his explanation however consentrated on an unlimited supply of labour. Drawing on a growth model derived from Lewis, Kindleberger argued that an elastic labour supply skewed income distribution, favoured profits, and thereby sustained unusually high investment ratios. Lesser known is the exports approach by Lamfalussy which came to be known as the export-led growth explanation of the 'Golden Age'. ...read more.


The answer, in my opinion, would have to point to yes. However the survivors of these decades do not look back on them as a resounding success. 'Those who presided over the Golden Age did not feel at the time that they were singularly blessed and carried in a golden coach'. People are more likely to remember these decades as ones of repeated crises. There were currency uncertainties almost throughout due to balance-of-payments difficulties, and if they think to the economic experiments of the 1960s, they may look on how many were later abandoned. So if the question was asked again in terms of whether the economist using all his tools guided the economy into a 'Golden Age' of success the answer may be somewhat negative. If taken individually, each explanation of the 'Golden Age' reviewed proves to be lacking and inadequate. However taken together they provide an insight to the main factors that helped to sustain the 'Golden Age'. High investment rates were critical to the transfer of technology; exports provided rapidly expanding markets; the abundant labour supply helped the allocation of manpower to the more technologically advanced industries as well as the moderation of wages and stabilised expectations reinforced the investment drive. But why did these ingredients catalyse and produce rapid growth at this point in time, from 1950-1973? 'Economists possess their full share of the common ability to invent and commit errors.... Perhaps their most common error is to believe other economists.' G. J. Stigler ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Development Theories - Describe the Harrod-Domar model of growth

    The key to development was to increase savings and investment. Lewis saw the existence of the modern industrial sector as essential if this was to happen. Urban migration from the poor rural areas to the relatively richer industrial urban areas gave workers the opportunities to earn higher incomes and crucially save more providing funds for entrepreneurs to investment.

  2. Retailing In India - A Government Policy Perspective

    The cost of capital incurred by an Indian retailer, especially the smalle players, is significantly higher than the CoC for foreign players. In case of the mom and pop stores in India, availability of capital from the formal lending sources is pretty difficult.

  1. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    particularly EME debt, thus, it will be interesting to see if it also affects US corporate debt liquidity. Higher inflation erodes the return of bonds. Both EME and US high-yield bonds are dollar denominated, therefore the US Consumer Price Index (CPI)

  2. Causes of the Great Depression

    The fuel industry also profited and expanded. Companies such as Ethyl Corporation made millions with items such as new "knock-free" fuel additives for cars. In addition, "tourist homes" (hotels and motels) opened up everywhere. With such a wealthy upper-class many luxury hotels were needed.

  1. Supply side policies and its economic impact.

    Conversely, policies that increase productivity and thus the level of aggregate supply at a given price level, can help reduce inflationary pressures. In the early 1980s supply-side economists promised that disinflation was possible without unemployment. The 1981-1982 recession punctured that hope.

  2. 'There is a great deal of evidence to support the view that the relative ...

    Britain had little to compare with the scale and provision of university and technical education in Germany, which ultimately provided an army of technicians and scientists for the new science-intensive industries. Just before the First World War, Britain had only 9,000 full-time students compared with around 58,000 in Germany, a figure not reached in this country until 1938.

  1. What were the main characteristics of Early Modern Europe?

    Many people in the 16th century didn't venture far beyond their hometown for the duration of their lives. Although inflation indicated healthy economic growth and expansion, for much of the 16th century, most households suffered from its adverse effects, and lived in poverty for the majority of the period.

  2. In what ways, and to what extent, does the concept of Spain's 'Golden Age' ...

    In order to establish to what extent Philip's reign was alone the elusive 'Golden Age,' it is necessary to examine his fortunes in these four areas, which were fundamental to Spain's experience throughout the whole period. A comparison of his successes and failures to the fortunes of earlier rulers should

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work