10 - The golden age

Summary

Introduction

The previous chapter traced the origins of the new institutions that were established in the immediate post-World War II period, and which defined a new form of capitalism. Their origins were to be found in the poor economic performance of the 1930s, which either caused or accelerated the formation of new institutions at the national level. The war itself had demonstrated the ability of governments to manage their economies, confirming the view that such management was needed to provide economic stability and to meet national economic objectives. These emergent economic systems were at odds with the aim of the USA, as economic hegemon, to support the reconstruction of the West European economies in its own image. US ambitions in this direction were eclipsed by the advent of the Cold War. Instead, the USA accepted these new forms of capitalism as necessary to the European economic and political stability that had become an absolute requirement of its Cold War policy.

The Cold War policy imperatives also led to a new international regime designed to encourage trade and European economic cooperation. The experience of protectionism in the 1930s had led to general agreement that multilateral trade and payments should be resumed, but the European governments prevailed over US preferences, and the system put in place reflected their fears for the competitiveness of their industries by postponing full implementation of the agreements reached at Bretton Woods.