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Introduction

In the period 1945-1973, the world economy underwent a period of exceptional growth in the following thirty years that had never been exceeded previously. Indeed, this "Golden Age" was differentiated from past economic booms by two main characteristics: dynamic and extensive economic growth. By dynamic, the expansion of the world economy made it a truly international economy, with countries trading with and depending on each other instead of the autarkic empires that had been the hallmark of previous generations. Extensive growth was seen in the world economy growing in the sense of the entire world and not by specific regions, for example, the previously Eurocentric economy of the Industrial Revolution. Yet the Golden Age, suddenly and swiftly, was replaced by what came to be known as the "Crisis Decades" in 1973, thus raising the question: was the Golden Age really an Age which could have lasted, with stable and secure foundations? To answer this question, we must look at three areas of study: the distribution of economic power during the Golden Age, the breakdown of the economic structures of the Golden Age, the factors which had contributed to the boom and the long-term social and political viability of economic growth in the post-war years. The main nation upon which the stability of the Golden Age rested was, of course, the US. At the end of the Second World War, of the five major pre-war industrial centres, (the US, Britain, Germany, Japan and the Soviet Union) only the US had remained largely untouched by the effects of total war. As such, the US felt that it was necessary, or even natural, that it should assume the economic, and by extension political, leadership of the world and guide it towards economic prosperity. Moreover, world economic prosperity was the only way that the US could continue its own economic growth - the loss of production necessitated by war meant that the US economy was facing a slowdown unless it could divert its surplus potential into channels outside the US - and that meant the world economy. ...read more.

Middle

Ultimately, the post-war global economic boom was based on US stability alone, and once the US proved to be unable to hold up the system, it collapsed and plunged the world economy into recession even though other nations had, by that time, built up their economies to a level able to match the former. The Golden Age was partially fueled by factors that had been present throughout previous cycles of economic booms: the rise of industrialization, the rise of consumerism, a collection [in this case a single] group of rich and wealthy nations that spread their riches to others, the spread of technology to the world. Yet two factors unique to the Age stand out as the prime foundations of the post-war economic boom: the economic power of the military-industrial complex and the dependence on oil. These two characteristics were undeniably associated and credited with the formation of the Golden Age; yet their very fluctuations and vagaries were to prove the downfall of the said period. Even after actual war had ended, the military still retained significant clout in directing the economy. In most cases, merely evoking the thought of Soviet expansionism was enough to persuade military expansion as deterrence, and this was most prevalent in the US, who again had to trade off military considerations with economic costs. NSC-68, formed in the aftermath of the Korean War, allowed for the tripling of the defense budget to $50 billion, while the Vietnam War was by 1968 consuming $2 billion per day. Without even considering the amount spent on non-combat defense in Europe and the vast costs incurred in the production of weapons of deterrence such as nuclear weapons, it was only a matter of time before the sheer strain of military expenditure took its toll on the economic boom. While an expansion in military production in the post-war years - an unheard-of phenomenon - might have been a good idea to soak up excess labour and was politically the only course to go, the ...read more.

Conclusion

Allied to other factors - the price explosion of oil, the weakening of US economic domination - the social trend of labour in the Golden Age being productive - uniquely productive without the constant demand for higher wages - could not be found in the new generation, which had been untouched by the memories of the war period. As such, once the war generation departed from the labour market, the Golden Age was never likely to be repeated. In conclusion, the Golden Age arose as much out of a organized, carefully planned system to rebuild the international economy as much as it did out of a combination of factors that were unique to the era - the low prices of oil, the influence of the Cold War, the position of the US as the sole economic superpower and the memories of war and depression. Though the Golden Age did result in great economic benefit to many of the major industrial countries, it was indeed built on insecure foundations. In the last analysis, the Golden Age depended on the US to secure and continue to spread economic growth - once the US was mired into the Vietnam War, it could no longer afford to prop up the international economy, leading to the crisis decades that would follow. 1 jtlaw.freeshell.org/ideas/economic.html 2 Pollard, Sydney. The International Economy Since 1945 (London: Routledge, 1997) pp.77 3 Pollard. The International Economy Since 1945 pp.46 4 Hobsbawm E.J. Age of Extremes: The Short 20th Century 1914-1991 (London: Abacus, 1996) pp. 242 5 Lairson Thomas. International Political Economy: The Struggle for Power and Wealth (London: Harcourt Brace College, 1997) pp.89 6 Spero, Joan. The Politics of International Economic Relations (Canada: Wadsworth, 2003) pp.21 7 Lairson. International Political Economy: The Struggle for Power and Wealth pp.80 8 Hobsbawm. Age of Extremes: The Short 20th Century 1914-1991 pp.262 9 Hobsbawm. Age of Extremes: The Short 20th Century 1914-1991 pp.278 10 Ibid., pp.285 11 Pollard. The International Economy Since 1945 pp.107 ...read more.

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