A look into history
A look into history
What would constitute a period in history called a “Golden Age”? Would the prosperity seen and felt by people make the description adequate? Would a greater sense of freedom in the regions of the world fit the description? How can we describe a “Golden Age”? In the years of the so-called “Golden Era”, from 1950-1973, the world saw an unprecedented rise in term of growth, with global averages reaching 4. 9 percent in the period of national Keynesianism (Monthly Review). This period, however, was not an isolated one (Institute of Industrial Relations).
The period with the highest national growth rate, from 1935-1950, after an expansion in the previous economic period, 1918-1935, the distance between the two ends of the income distribution became smaller (IRI). Families of workers tried to adjust the loss of distance from the black community by downsizing in terms of number of additions to the family and the use of utilities (IRI). But in order for us to fully grasp the meaning why this period in time is called the Golden Age, we have to frame it beside two other growth periods, one before the age and the one just after it.
It must be also noted if there were changes in the period that contributed to the growth of the succeeding growth periods. Before the Golden Age Families in the United States used to see how they have progressed through the years by taking a peek at their family albums, remembering the early years of their parents’ hard life (Bob Davis & David Wessel). During the years of the Age, almost every tier of American life had been extended the benefit of a upbeat and climbing standard of living (Davis & Wessel). But again, we must peek farther than the time before this period of unprecedented growth.
In the past two centuries the world has seen an era of unhampered growth (Bart van Ark). In the years between 1820 and 1997, the gross domestic product around the world rose at around 2. 2 percent on the average (van Ark). This growth rate was around seven times the growth the world experienced from the preceding period, from 1500to 1820 (van Ark). But as time wore on, the disparity between the recipients of that high growth rate become more and more separated (van Ark). The world’s growth rate accelerated in 1870, and again at the beginning of the Golden Age, in 1950 (van Ark).
Since the growth of the world’s economy grew in that time frame, it is not ti be understood that everyone benefited from that growth in equal shares (van Ark). Great Britain, one of the leading powers during the era, learned very well from the lessons of the founder of the capitalist system, Adam Smith (Robert L. Bartley). Smith blieved that raising the economic bar could only be done by practising free and open market principles, that traders and merchants interacting with the consumers will lead to a better share of the economic benefits (Bartley).
Agnus Maddison, widely regarded as one of the premier authorities on long-term growth, gives us some insights into the growth engines at the time (Daniel Ben-Ami). In his studies, Maddison points to the year 1820 as one the more impotant inflection periods in the study of the world’s growth (Bartley). Global GDP per capita hadd increased from $420 dollars (1990 value) to about $545 by about the year 1820 (Bartley). The period of 1913-1950 would probably be the most interesting sections of the years before the Golden Age.
This period embraces the events of two world wars, the Great Depression, the economic upswing in the 1920’s (Bhanoji Rao), and one of the greatest political and bloody historical events in the modern era, the Bolshevik Revolution (Irma Adelman). Both World War one and two reversed the trends for the unrestrained movement of goods, money and migration of people (Rao). But in developing nations, the effects of these events were not felt as much, thus mirroring the differing aspects of the Wars and the Depression (Rao).
In the aftermath of the war, large influential movements had espoused the needs for reform, and the captains in the capitalist end of the world were afraid of a return to the time of the Depression (Crotty). What should be seen however in this time before and after the Industrial Revolution was not the disparity in growth rates (Adelman). What was evident during this time was the degree that events bought leading to worldwide economic insecurity and to the global economic framework as a a whole (Adelman). The initiatives aimed at halting the transfer of
the economic downturn led to the adoption of very strict global trading and payment methods (Adelman). As the initiatives took hold, tariffs and other quantity restrictions were soon implemented (Adelman). Tight constraints were implemented for the regulation on the movement of workers and capital (Adelman). The value of many currencies tended to be overvalued (Adelman). Rampant and widespread inflation led to the collapse of international payments (Adelman). This development led to the adoption of extreme government concern as to the stability of prices and foreign exchange as it relates to the level of unemployment (Adelman).
Shifting to the Golden Era The march toward the golden age of the world’s growth had been marked by a shift from a market-driven and guided economy to one that was basically a government managed type (James Crotty). The era of the Golden age can be characterized by one of swift and widely distributed growth, having for its foundations an increase of control over quality of the markets dictated by the market and vented through the state (Crotty). Rather than a time of markets being centralized, it was a time rather of the markets being embedded in the society, the state rather than an enforcer taking on the role of a guide (Crotty).
Agnus Maddison calculated that the world’s GDP rose to an average of 2. 9 percent, hitting 3. 9 percent in Europe and about 8 percent in the European continent (Bartley). The Second World War had spawned a time of demand that was pent -up during the time of the war, as capital and infrastructure was totally wiped out in Japan and on the Continent (Adelman). The command type of economy that was installed during the war, quickly gave way to the reinstitution of the usual framework of capitalism (Adelman).
A great aid in the redevelopment of devastated Europe to get the continent up on its feet was the Marshall Plan (Adelman). With this Plan in place, the capital needs and infrastructure needed to jumpstart the economies of Europe were set in motion (Adelman). It was during this time, as stated earlier, that the world was experiencing a high degree of growth (Ben-Ami). In Japan, the Golden Age and the following decades after, the land of the rising sun was identified with the traits of efficiency and the highest levels of manufacturing standards (Terutomo Ozawa).
This was exemplified by the low cost in the production of their automobiles nd electronic products (Ozawa). In Europe, the road to recovery was much simpler (Barry Eichengreen). Europe at the time underwent an almost complete transformation in the way they conducted their lives. In the middle of the century, Europe’s households had heat from burning coal, kept their food fresh with ice, and had no semblance even of basic plumbing. At present, they have gas-fired furnaces for heating, refrigerators to keep their food stuffs, and an endless number of electronic items that will make one dizzy.
Incomes of an average European nearly went to three times their value by the turn of the century (Eichengreen). Also, working conditions and hours steadily improved, as time at work was reduced by at least a third, giving a boost to the leisure time of Europeans (Eichengreen). An upswing in the rates of the life expectancy in Europe’s residents was enhanced by new technological discoveries in health accompanied by a parallel advances in nutrition (Eichengreen). But all was not a pretty picture, as one would think. Levels of the ranks of the unemployed rose. Taxes levied on the people increased.
The effects of the destruction of the environment, state repression and consumer spending limits were the order of the day under Eastern Europeans’ repressive regimes dominated that part of Europe for the next for decades following World War 2 (Eichengreen). But what made the road to recovery relatively easy for Europe? Europe, for its part, didn’t have to plan anything new for its rebuilding; it just simply rebuilt. Europe just had to rebuild the damaged or destroyed infrastructure, reinvesting in its capital stock, and redeploying the men that were in the war effort to jobs in peacetime efforts (Eichengreen).
This “catch-up” mentality had demonstrated itself in the utilization of technologies that were not yet in the pipeline, so to speak (Eichengreen). These were the technologies that were developed in the period between the wars, and were used by Europe to sustain its economic juggernaut (Eichengreen). But in the 1930’s and 40’s, Europe was thrown into an atmosphere of a depressed investment environment (Eichengreen). It was in this period that the United States gained a bit of a headway against their European counterparts. The Americans had outpaced Europe in terms of overall production and levels of productivity.
By using the Americans’ technology, under license, adopting their business philosophies of American mass-production and personnel management, Europe could close the gap on the Americans. Hence was born the concept of “convergence”, fusing the levels of per capita income and levels of productivity to that of the United States (Eichengreen). But in the generation of wealth, particularly in the aspect of its distribution, not all of Europe could say that they were given an equal share of the pie, so to speak. For example, the northern parts of Europe were gaining faster than their southern counterparts.
The same trend went for Western Europe, outpacing Eastern Europe. Eastern Europe’s woes came a failure of the central planning strategy that was common in the authoritarian governments that dominated that part of the continent. Though these are also important features of the Golden Age in Europe, nevertheless the period marked an era of expanded growth and change on the continent (Eichengreen). The economic machine of the Japanese economy, after the brilliant star of its economic achievements faded, had gone from one that was admired to one that was dealt with indifference, even one thrown pity (Ozawa).
This was bought about by the virtues of the Japanese to put into secure positions some of the political interests rather than focusing on the real problems that had dogged the nation’s economy (Ozawa). In its early steps to climb out of the destruction wrought upon it in the 2nd World War, Japan had adopted its industry to a road of industrial improvement, moving from low value industrial output, gradually moving up to higher levels of value-added goods (Ozawa).
But as the years passed, Japan began to remove the protection it afforded to its industries, essentially preparing them for competition (Ozawa). These industries that were left unsheltered were the ones that are the reason for the current state of the Japanese economy’s morass (Ozawa). Most of the world had been under the Bretton Woods Agreement (Adelman). This agreement was instrumental to the reintroduction to the regime of fixed rate payments, all payments to be based on the value of the dollar (Adelman).
This regime was supported by a number of international organizations with the goal of giving some form of flexibility and in the management of foreign exchange inconsistencies (Adelman). After the Golden Era, the period of another growth slowdown was about to rear its head. After the Bubble burst After the Bretton Woods agreement had collapsed and countries and adopted more flexible foreign exchange rates, coupled with the skyrocketing of the price of oil, all these led to the indication that the Golden era was officially over (Rao).
This was the era of the “stagflation” that hit the world in the mid-1970’s (Ben-Ami). The Bretton agreement had become quite inadequate in meeting the liquidity requirements of most nations (Adelman). When the agreement eventually broke down, the system was replaced by a unstable, fluctuating means of foreign exchange (Adelman). The currencies of many countries went through a period of devaluation against the American currency (Adelman). But this was only the precursor of the coming storm.
Oil prices had tripled their price in 1974, cereals doubled their prices by 1973, and gold prices doubled in the years of 1971-1973 (Adelman). Other problems were beginning to crop up for the world as the age ended. According to the International Labor Organization in its 1995 report on world unemployment, does not dispute the fact the upswing in the world’s economic standing, but it also emphasizes that the world, after the Golden Era, witnessed its GDP cut in half, and the levels of unemployment had reached levels never before seen or to be even though of during the era (Canadian Auto Workers Union).
For this reason, economists divide the era into two parts (CAW). The first 25 years at the turn of the century has been called the “Golden Era”, the second part is called “The Age of Permanent Insecurity” (CAW). The effects of the downturn were quite visible. Growth rates had been sliced in half, good jobs were the exception rather than the norm, wages did not go up, surpluses were wiped out and social programs introduced at the end of the golden age, were dismantled at a slow but steady pace (CAW).
Within a generation, the rate of growth fell to half its previous level, unemployment rates doubled, and decent jobs became the exception. Real wages stopped growing, budget surpluses turned into chronic deficits, and social programs which were proudly introduced near the end of the first period were dismantled in the second – slowly at first, but then at an accelerating pace (CAW). The labor market in Canada and other industrialized nations also took a hit, as the unemployment rates hit 9 percent in the latter part of the turn of the century, as compared to the 4.
5 percent average registered in the first half (CAW). In the United States, the Federal budget registered a budget surplus from 1946 to 1970 (CAW). In the years following the Golden Era, the Federal government has never once posted a budget surplus (CAW). The Federal government, for every dollar that it allots for programs, it pays about 63 cents of its earnings to pay for the interest of its debt (CAW). The period after the War was one of significant unheralded growth, born out of the combination of several factors (CAW).
Among them was the combination of the development of emerging technologies tapped during the War, the retooling of the war time workplace to be reused for peacetime work, reconstruction of the war torn areas of Europe and in Japan, the demand held in check for so long after the Great Depression and the restraints bought on by the war, and the new found competitive situation that it has found with Communist states (CAW). The War had asked from the citizens a great amount of sacrifice, these sacrifices led to the demand for the upgrading for the people’s living conditions, equity and concerns for their security concerns (CAW).
These concessions were won over by the labor movement from very jittery corporations (CAW). But how does this relate to the downturn of the Golden Era? After The Golden Era, what happened? The concessions that the workers had gained from the corporations had produced a contradiction for them (CAW). In the case of Japan and Europe, after they had reconstructed from the destruction of the war and had strengthened their economies, was building a contradictory effect for the corporations (CAW).
Once the economies were put back on line, the competition of the industrialized countries again began once again on the uptake (CAW). This upswing of the economies of capitalist industries put some amount of pressure on the companies’ profits (CAW). The companies in turn tried all efforts to put up a hedge around their profits (CAW), which companies then transferred these pressures from competition on the workers themselves (CAW).
Since the workers felt secure and bold enough to challenge any initiative to be pressured in the workplace, the companies transformed these workers from mainly being employees to consumers, increasing their prices to keep their profit margins (CAW). The workers, feeling the pinch of the higher prices, asked the companies for the increases in their wages to match the increases that the companies imposed (CAW). This initiated the cycle of price escalation (CAW). The price increases had a negative impact on the global competitiveness of the corporations (CAW).
As a result of such developments, inflationary pressures set in (CAW). The companies had to find ways to stay viable while contending with the workers, who were becoming hindrances to the company in terms of supervision over the workplace. As such, the companies had to choose, between the companies’ insatiable drive for profit and the needs of the society and the workers, the workers and society lost (CAW). Here is the start of the end of the Golden Era, where the share of the wealth began to be hoarded, rather than shared.
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“Trading state-led for market led stagnation: from the golden age to global neoliberalism”. <http://www. people. umass. edu/crotty/dymski-isn-ford. pdf> Davis, Bob & Wessel, David. “The Golden Age: the rise of the American middle class”. <http://www-rohan. sdsu. edu/~rbutler/prosperity2. htm> Eichengreen, Barry. “The European Economy since 1945”. The New York Times 2007 March 25. <http://www. nytimes. com/2007/03/25/books/chapters/0325-1st- eich. html? pagewanted=all> Monthly Review. “Notes from the Editors”. Monthly Review 2007 Septem
Subject: Golden Age,
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 18 December 2016
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