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Economic development after World War II

Article  in  Economic Affairs · June 2018

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Economic
development after
World War II

Desire Gonzalez
Researcher at Valley College
Abstract:
After the 2nd World War and the difficulties of the interwar period, the market economy reached
a high point with characteristic basic features. During this stage you can differentiate two clearly
differentiated moments:
1945-1973: a large number of people increase their standard of living due to the strong
expansion and regular growth.
1973-until our days: during this period a series of recessions and economic crises are
happening.

Keywords: World Economy, global crisis, EU-USA relations

Introduction

In the beginning the USA It was the only country that had an oil supply, but little by little,
and above all, from the 50s onwards, other countries were added where the Middle East stands
out. Already in 1960 the producing countries, most of them Arabs, organized a cartel:
Organization of Petroleum Exporting Countries (OPEC) in order to control their
commercialization among them.
Later, nuclear energy and alternative energies appear.
Generalization of mass production and consumption - due to the high number of jobs,
the assembly line, etc., large shopping centers or shopping centers begin to expand and credit
cards also arise, giving rise to easy access to products manufactured.
Serialization of the active population - gradually the woman was introduced to the labor
world and the services or tertiary sector, began to increase gradually, leading to a decline of the
other two sectors. On the other hand, the rural exodus and migratory movements in search of
employment both in the cities and in the countryside intensify.
Accentuation of business concentration and predominance of multinationals - business
concentration is formed by companies that manufacture all kinds of products, for all sectors and
are also the companies that control the market. The only drawback of business concentration is
that almost all companies are North American.
State intervention and welfare state - from this point we must highlight the social market
economy, which is none other than a market economy of free competition with a control by the
State, based on the ideas of Keynes and influenced by thought socialist. And on the other hand
we must emphasize the welfare state, since it is the State itself that covers some of the social
services.
Inter-capitalist economic vertebrate and large economic spaces- there are two types of
coordination of the State's economy:
Free trade areas. Are those areas that are formed by countries that eliminate all types of
tariffs and customs payments between them. The European Free Trade Association (EFTA)
stands out.
Customs unions They are unions that are gradually eliminating the barriers of tariffs and
trade between the Member States, and giving rise to a single common tariff for all the countries
of this union, compared to third countries. The European Union stands out.
There are also economic cooperation institutions, to reach all the agreements on which
economic relations and commercial exchanges are based.
 RECONSTRUCTION AND ECONOMIC EXPANSION

In 1945, a series of agreements was created in the city of Bretton Woods (USA), known
as the Bretton Woods system to facilitate international transactions and help countries affected
by war. These agreements also establish a monetary system of fixed items, based on the
convertibility into gold of money, which results in the dollar becoming a means of global
payment since the Americans were the only ones who could guarantee their convertibility into
gold. This has the consequence that the International Monetary Fund is created to ensure the
rules and maintain the fixed exchange rates of the currencies. To help the areas affected by
war, the World Bank is created.
In 1948, the Marshall Plan was launched by the Americans, so that the European
countries could carry out the reconstruction processes of the areas affected by the war. During
this year, the European Economic Cooperation Organization was also created to manage the
loans that the US offers. makes the countries of Europe.
One of the characteristics of the development of the capitalist economy of the early
twentieth century was the succession of periods of prosperity, followed by economic crises. But
it is in 1945 when a new form of economic development known as free trade appears, which
manages to create a great stage of expansion and continuous economic growth. This stage
comes to an end in 1973.
What characterizes this crisis is that there is at the same time a rise in prices and
unemployment with a static growth of production, this is known as stagnation.
In this way I could say that within this crisis can differentiate several moments, which
are: in the 70 great crisis, in the 80 there is a small growth and at the beginning of the 90s we
find a strong economic secession.
Factors to understand this situation:
- Economic instability. Following the Bretton Woods agreements, in order to agree on
a stabilization system for international payments, Americans are forced to put more
dollars into circulation due to a high number of public expenditures and international
investments. This makes the president of the United States, Nixon, definitively cancel
the agreements of the Bretton Woods system, resulting in the depreciation of the
dollar and the readjustment of the items.
After the agreements were suspended, a new system was created in 1976 known as
Jamaica Rules, where the value of the coins will be governed by supply and demand, which will
cause the currency to suffer strong variations in value and cause a great insecurity among
people. On the other hand, in Europe we are looking for the creation of a new system that
allows European countries to make transactions easier and this is how in 1979 the European
Monetary System was created, at the same time the ECU is created as a unit of account .
Energy crisis. At the end of the seventies, oil was the main source of energy for the
countries, which obtained it at a low price from the Persian Gulf deposits basically. But it will be
in 1973, when the Arab countries impose a rise in the price of oil, to put pressure on the
countries of Europe and the United States. for the support he offers Israel in the Yom Kippyr
war. The increase in the price of oil is one of the causes of the economic crisis of the seventies.
Because of all this, new energies, alternatives and the development of atomic energy
are beginning to be discovered.
In 1985 the price of oil declined and contributed to an improvement and growth of the
economy of the industrial countries in the eighties.
The freedom of trade and the unequal economic development. After the agreements of
the GATT an agreement is reached to lower the price of the customs that before was in a 40%
and step to 5%. At the same time, a market is being developed that is increasingly expanding,
the European Union.
Free trade in product exchange affected both producers and consumers, to the extent
that they benefited most, leading to competition among the different companies to see which
produced more and better products, which produces an increase in the international exchange
of products.
The drawback of the free market was that in the short term the layoffs would increase to
introduce more and more technological advances for production. New economists will also start
appearing with new ideas to establish the economic framework of the country. This situation
leads to the high number of unemployed or unemployed, especially older and younger; the
increase of the submerged economies, the crisis of the welfare state and the distrust in the
system.
The economic development of the popular democracies is characterized by the total
control of the State over companies, banks, etc. The authorities prepare an economic plan that
all sectors must follow. The companies that predominate in these countries are heavy industries
and military weapons.
The COUNCIL of Mutual Aid (COMECON) is also created to implement an autarky against
Capitalism.

COMMUNIST REGIMENS ECONOMIC PERFORMANCE

The main problems of the Socialist Bloc were that communist societies gradually
became a Party Dictatorship where a small minority concentrates all power in their hands and
has the greatest privileges of society.
Another problem is that it went from being a democracy to almost a dictatorship, that is,
the ideas of democracy were diverted to other completely different ideas. This process is known
as deviationism.
It should also be noted that a number of people tried to denounce the violation of human
rights, but the problem was that they were in a minority.
All these changes led to a series of social protests by people to improve their standard of
living or improve their current situation.
 The sites where these protests were most significant are Hungary (1956),
Czechoslovakia (1968) and Poland (1980).
Another point to note is the economic stagnation, mainly of the USSR, which sees its
economy going down and increases infant mortality, while reducing life expectancy.
This is mainly due to the problems of centralized planning and agrarian collectivization
that cause paralysis and economic inefficiency.
But the link of the structural differences as well as the problem of the opening to the
international trade, will be created in the socialist countries some progresses and of economic
secession.
EUROPEAN COOPERATION IN ECONOMY AND THE FORMATION OF THE EU
After the Second World War, Europe had to start its economic and political
reconstruction practically from scratch. To do this, a set of circumstances that will impel it
towards a process of European integration through the community will be given.
Between 1945 and 1951 different possible strategies of union of European peoples were
defined:
Pan-European Union attempts: these institutions were established.
1947 "Economic Commission for Europe" (Regional Organization of the United
Nations based in Geneva)
1948 "The Treaty of Brussels" (has a defensive character, and is signed by the
United Kingdom, France, Belgium, the Netherlands and Luxembourg).
1948 "NATO" (Organization of the North Atlantic Treaty), which included the
countries of the Brussels Treaty plus the United States, Canada, Denmark, Norway, Portugal,
Iceland and Italy.
1954 "The Brussels Treaty will be revised to become the Western European Union
(WEU), in which Italy and Western Germany were incorporated, the latter being also admitted to
NATO.
In response, the Soviet Union, in 1954, created the Warsaw Pact (a military grouping of
European communist countries subject to Soviet power).
The rest of the Western European countries had the following incentives for integration:
- Fear of the military threat of the USSR.
Conditioning of American aid (Marshall Plan) to the establishment of a certain level
of the European Union.
- Economic advantages of a larger market
- Need for an authentic reconciliation between France and Germany.
The strictly intergovernmental cooperation strategy.
In Western Europe, it was believed:
 1948. - (OECE) European Organization for Economic Cooperation. It had
economic character and is responsible for the distribution of American aid (Marshall plan).
1949. - "Council of Europe" It has a political character. It was created after the
European Congress of The Hague (1948).
The federal strategy.
It was to defend, simply and simply the creation of a united states of Europe, above the
nation-states, considered "the great villains" of European history and directly responsible for the
two world wars, called, "European civil wars" by the federalists.
The Hague Council of 1948 was a great meeting of Europeans, supporters of a federal
Europe, creators of the so-called European movement and subsequently disappointed by the
purely intergovernmental nature of the OEC and the Council of Europe.
The communitarian strategy.
It is that of the European community and has been the most successful formula among
the different ideological approaches in favor of the European Union.
It is a new formula, a successful mixture of functionalism (typical of the British and
Scandinavians) and federalism (typical of the so-called "Europeans", those who wanted to go
further in the path of supranationalism). Community strategists thought that Europe cannot be
done all at once, or according to a single general plan, but that it will be built through concrete
achievements, which will first create a de facto solidarity (SCHUMAN statement, 1950).
The community project was, therefore, gradual, functionalist in the short term and
without setting specific dates.
Jean Monnet said that the important thing was that the common institutions were
developing common policies, "to point to the end, a certain type of political union that over time
will define."
Something also interesting to mention are these words that he wrote "human nature
does not change, but when nations and men accept the same rules and institutions to make
sure that they are applied, their behavior towards others changes; This is the very process of
civilization. "
The CEE is the most important of the three European communities because of its scope
of action, which covers the following aspects:
1- Establishment of a customs union between the member states.
2- Elimination of non-tariff barriers, avoiding discrimination in the matter of indirect taxes,
state aid, state monopolies, public purchases, administrative and technical obstacles, cartels
and concentrations of companies.
3- Free movement of people, services and capital. Freedom of establishment.
4- Coordination (general economic policy, social policy, regional policy), harmonization
(fiscal policy, approximation of laws) and unification (agricultural, transport, commercial, energy
and competition policy) of economic policies.
 The two fundamental pillars, within the set of objectives proposed by the EEC, were the
following:
1- The customs union, which guaranteed the free movement of goods and stimulated
industrial free trade.
2- The common agricultural policy (CAP), protectionist.
In this way the EEC became a kind of Janus god, with two clearly opposite sides: a free-
market industrialist and another, agricultural, protectionist and interventionist.
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