Topic: Post-WWII economic boom (2024)

The post-Second World War economic boom was an era of considerable prosperity that followed the recovery period and ended with the 1973-1975 Recession. These years are also referred to as the "Golden Age of Capitalism" in the West, although Eastern Europe and parts of Asia also saw significant growth in these years. This economic boom began at different points per region depending on the length of the recovery period; for example, it started in the U.S. almost as soon as the war ended, as the U.S. was not as structurally devastated by the war as Europe or Asia. In contrast, growth in some Southern European economies did not take off until the late 1950s due to the legacy of the civil wars in the region. The cause of these developments, particularly in Europe, remains a topic of discussion among historians today, though the emergence of the welfare state and increased international cooperation tend to be the most cited causes of this prosperity in the West.

U.S. influence and integration

Another influence was the international role played by U.S.. The U.S. government had given billions to Japan and Western Europe through individual loans and grants in the immediate aftermath of the war, before taking a much broader approach with the Marshall Plan in 1947. While these investments undoubtedly aided in economic recovery after the war, most historians now conclude that the most important American long-term influences were removing trade tariffs, the "Americanization" of business structures, and the new wave of private investment that followed. Also, many of the organizations that promoted European integration were founded to distribute aid from the U.S., which led to the OECD's founding in 1961 to promote international trade between developed nations. Of the OECD states, it was Japan in particular that became the fastest-growing major economy of these decades, eventually becoming the third-largest in the world. In Europe, West Germany saw the most success in many areas, becoming the largest economy by the mid-1950s. Overall, it was the French and German alliance that pushed much of the economic development in the region, alongside the northern European members of the European Communities, and a few from the south. In contrast, the United Kingdom, traditionally one of the strongest economies in the world, fell behind due to the decline of its empire and its reluctance to integrate into the European economy before the 1970s.

Southern and Eastern Europe catch up

While most of Northern and Western Europe had already industrialized before the war, the Eastern Bloc and Mediterranean region underwent a rapid catching-up period in the 1950s and 1960s. Trade and industrialization in the Soviet Union saw it keep pace with the West, allowing it to technologically and militarily rival the U.S.. The Soviet Union also became the center of the communist economic sphere through the CMEA, although countries such as China and Yugoslavia did diverge from this model. Southern Europe, which had traditionally been one of the poorest regions of Europe, also saw rapid growth during this boom. For example, the Italian government lifted many of the restrictions that had limited urbanization and migration during the interwar period, and upwards of nine million people migrated to urban centers to fulfill the demand of the emerging manufacturing and export industries. The south became strategically important for the U.S.' fight against communism; therefore, the U.S. focused its efforts on supporting these governments economically to prevent Soviet access to the Mediterranean. As the years progressed, however, these countries benefitted economically by becoming popular tourist destinations, especially Spain. There was also a more permanent migration in the other direction, as many Southern Europeans migrated northward to meet the labor demand, especially to West Germany after its eastern border closed.

Changing lifestyles and quality of life

The emergence of tourism industries was just one sign of the changing lifestyles in the developed world in this period. For generations who had endured years of war, rationing, and hunger, the opportunity to spend their newfound disposable income was enthusiastically welcomed, and consumerism became a defining aspect of this period. Emerging automobile industries made cars better and more affordable, while government spending on infrastructure along with more open borders meant that consumers had more opportunity to travel than before. The mass production of household appliances also revolutionized daily life; for example, the number of Italian households with refrigerators and washing machines increased from below three percent in the 1940s to over 94 percent and 76 percent respectively by the early 1970s. The amount spent on non-essential items rose exponentially, and a much higher priority was given to leisure and holiday times; this was even the case in communist countries, where consumption was restricted by the government. While these developments largely came from the private sector, it was facilitated by public spending on sectors such as healthcare, education and social security. In the West, this public spending was funded through large tax increases. However, there was little resistance to this due to the significant quality of life improvements and the general level of trust that the public had in their government. The Nordic Model is viewed as the prime example of this, although similar practices were carried out across the developed world; it was only when the economic crises of the 1970s hit that the public began to lose faith in their governments on a large scale, and this rapid growth came to an end.