Victoria Junior College :: Economics

Victoria Junior CollegeIn the period 1945-1973, the world economy underwent a period ofexceptional growth in the following thirty years that had never beenexceeded previously. Indeed, this flamboyant Age was differentiated frompast frugal booms by two main characteristics dynamic and extensivestinting growth. By dynamic, the expansion of the world economy madeit a truly international economy, with countries trading with anddepending on each other instead of the autarkic empires that had beenthe trademark of previous generations. Extensive growth was seen in theworld economy growing in the sense of the entire world and not byspecific regions, for example, the previously Eurocentric economy ofthe Industrial Revolution. Yet the luxurious 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 whichcould have lasted, with stable and secure foundations? To answer thisquestion, we must loo k at three areas of study the distribution ofeconomic causality during the Golden Age, the breakdown of the economicstructures of the Golden Age, the factors which had contributed to theboom and the long-term social and political viability of economicgrowth 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 fivemajor pre-war industrial centres, (the US, Britain, Germany, Japan andthe Soviet Union) only the US had remained largely unaffected by theeffects of total war. As such, the US felt that it was necessary, oreven natural, that it should assume the economic, and by extensionpolitical, leadership of the world and guide it towards economicprosperity. Moreover, world economic prosperity was the only way thatthe US could continue its own economic growth the loss of productionnecessitated by war meant that the US economy was facing a slowdownunless it could divert its surplus pot ential into channels outside theUS and that meant the world economy. George Kennan spelt out theAmerican military capability when he wrote in 1948 that The US has 50 per centof the worlds wealth, but only 6.3 per cent of its population. Inthis situation, our real job in the coming period is to devise apattern of relationships which permit us to maintain this position ofdisparity.1 This attitude could already have been found earlier inthe Bretton Woods Agreement, the system that could have been state tobe responsible for the post-war economic boom. There, the US dominatedall the major decisions and statues regarding the formation of