World Economic Developments
Golden Age of CapitalismThe Post-World War II economic expansion, also known as the Golden Age of Capitalism, spanned from 1945 until 1973. During this time there was a high world wide economic growth. Countries experienced unusually high and sustained growth, as well as full employment. The boom ended due to many events in the early 1970s:
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CausesKeynesian economists argue that the boom was caused by the adoption of Keynesian economic policies, particularly government spending. However, free market economists believe that the post war boom was largely the result of free market reforms and deregulation. Free market economists also argue that Keynesian post-war plans were thwarted by the sudden death of President Roosevelt, the inexperience of the new president Harry Truman, and conservative control of Congress. Also, in 1948 the Marshall Plan pumped over $12 billion to rebuild and modernize Western Europe. Combining all of this the INstitutional economists point to the international institutions established in the post-war period. The Allies established the Bretton Woods system that set up international institutions designed to ensure stability in the world economy. This was achieved through a number of factors, including promoting free trade, instituting the Marshall Plan, and the use of Keynesian economics. In the United Sates, Congress set the goal of achieving full employment, production, and stable prices in the Employment Act of 1946. It also created the Council of Economic Advisers by the to provide objective economic analysis and advice on the development and implementation of a wide range of domestic and international economic policy issues.
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