Capitalism’s Post-War Transformation: Growth and Welfare States
The Capitalist World Since 1945
The capitalist world since 1945 covered large areas of the planet. The most important areas were North America, Western Europe, and Japan, which experienced a growth spurt called the “welfare state,” interrupted only by the oil crisis in 1973. These were the golden years of the capitalist system, which had undergone a profound change to avoid repeating the mistakes that led to the crisis of 1929. In the 1980s, neoliberalism emerged, and the state minimized its involvement in economic matters. In the political realm, parliamentary democracy was consolidated, alternating with progressive and conservative governments. Western Europe moved toward economic integration and, at the end of the twentieth century, saw the first steps towards political union that would give rise to the EEC.
The twentieth century has been called the American century because of the enormous importance that North America achieved in the international context, with its political, economic, and cultural leadership.
- Since 1941, its economy grew after the momentum of the war and the reconstruction of the post-war economy, achieving economic leadership.
- Its scientific innovation led to increased production. The brain drain during the war and the acceptance of Nazi scientists after the war were very important.
- The leadership of the U.S. economy was recognized by the Bretton Woods Accords, which laid the foundations of the postwar economic model, leading to a new international economic order. Establishing the World Bank established the dollar as the world currency.
- The international financial market moved to New York with the Wall Street Stock Exchange.
- With the Marshall Plan, the U.S. rebuilt the economies of Western Europe and Japan, offered U.S. industrial markets for their surplus, and gained greater prestige.
Many countries in Europe, seeing the U.S. become a great power, implemented policies based on state intervention in the market economy. The great forerunner of this model was Keynes. He said the state had to redistribute wealth and boost growth through:
- The increase in public investment through infrastructure development (railways, roads, airports).
- The extension of public services (health, education, pensions).
Increased public expenditure is financed by:
- Fiscal policy, through a progressive and redistributive system, supported by direct taxes (income) and less on indirect taxes.
- The public deficit created would be paid off with future economic growth.
Keynesian policy is based on increasing demand, which leads to increased economic growth and the absence of crises.
The Welfare State and Social Revolution
The Welfare State and Social Revolution led to a prolonged expansion of capitalist economies between 1945 and 1973 due to migration from the countryside to the city, raising the cultural level of the population, and the incorporation of women into the workforce. This led to the development of the welfare state and consumer society, which had a number of consequences:
- The consolidation of the middle-class society.
- Access to full employment.
- The creation of a system of universal social protection for all citizens as a basic social right.
- The spread of consumer society and mass entertainment, thanks to the reduction of working hours and increased wages.
- The population growth due to increased life expectancy and birth (baby boom in the 60s).