Victoria Junior College

Victoria Junior College

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. George Kennan spelt out the

American attitude when he wrote in 1948 that “[The US] has 50 per cent

of the world's wealth, but only 6.3 per cent of its population. In

this situation, our real job in the coming period is to devise a

pattern of relationships which permit us to maintain this position of

disparity.”[1] This attitude could already have been found earlier in

the Bretton Woods Agreement, the system that could have been said to

be responsible for the post-war economic boom. There, the US dominated

all the major decisions and statues regarding the formation of