Victoria Junior College :: Economics

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 â€Å"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 â€Å"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 â€Å"[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