Prosperity and Upheaval: The World Economy, 1945-1980

621 Pages·1986·8.527 MB·English

by  Herman Van Der Wee

PROSPERITY
AND UPHEAVAL
THE WORLD ECONOMY
!945-i98o
Herman Van der Wee
Translated by
Robin Hogg and Max R. Hall
UNIVERSITY OF CALIFORNIA PRESS
Berkeley • Los Angeles

University of California Press
Berkeley and Los Angeles, California
Copyright © 1983 and 1984 Deutscher Taschenbuch Verlag GmbH & Co. KG.
Translation © 1986 Robin Hogg and Max R. Hall
All rights reserved
LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA
Wee, Herman Van der.
Prosperity and upheaval.
(History of the world economy in the twentieth
century; v. 6)
Translation of: De gebroken welvaartscirkel.
Bibliography: p.
Includes index.
i. Economic history-------1945— I. Title.
II. Series.
HC59.W38513 1986-----33°-9'°4-----85-22282
ISBN 0-520-05709-0 (alk. paper)
ISBN 0-520-05819-4 (pbk.)
Printed in Great Britain

For Monique, Miek, and Babs: with love

CONTENTS
LIST OF TABLES 15
LIST OF GRAPHS 17
PREFACE 19
PART ONE ECONOMIC GROWTH: SUCCESSES
AND PROBLEMS
I WAR AND RECOVERY, 1945-50
1 War Losses 25
2 Positive Effects of the War 29
3 The New Economic Ideology 32
4 The Fight against Post-War Inflation 36
5 The Dollar Shortage and the Marshall Plan 42
II ECONOMIC GROWTH AS THE MAINSPRING OF
GOVERNMENT POLICY
1 The ‘Silver Fifties’ and the ‘Golden Sixties’ 48
The Acceleration of Growth Rates 48
The ‘Catching-Up’ Dynamic and its
Components 50
8 Prosperity and Upheaval
The Dynamics of Post-War Growth in the West 54
Growth in the Eastern Bloc and the Third World 56
From Business Cycle to Growth Cycle in Europe 62
The Growth Cycles in Japan and the United States 66
Explanations for the Remaining Instability of the
World Economy, 1945-73 70
Explanations for the Mild Nature of the Recessions,
1945-73 74
2 From Unstable Growth to Stagflation: the
Seventies 79
The Seeds of Change 79
The Wage Explosions of 1968-9 and the Overheating
of the World Economy 81
From Recession to Stagflation 84
Stagflation: Cyclical or Structural Crisis? 87
III THE MALTHUSIAN DIMENSION
1 The Problem of‘Demographic Transition’ 95
Population Trends in the West after the Second
World War 95
The Demographic Revolution in the Developing
Countries 100
2 World Food Supplies 104
The Malthusian Vision 104
The Second Agricultural Revolution 108
The Green Revolution in the Developing
Countries 112
3 The Exhaustion of Minerals 115
The Report of the Club of Rome 115
The Politicization of the Mineral Problem 118
Long-Term Solutions 124
4 The Energy Question 127
The Explosion in Energy Consumption 127
Energy and World Politics 132
Contents 9
IV LABOUR AND CAPITAL AS GROWTH FACTORS
1 Marginal Explanation versus Structural Analysis 138
The Growth Accounting of E. F. Denison 138
Denison’s General Conclusions 140
The Criticism by Structuralists of
Denison’s Growth Accounting 146
2 The Flexibility of the Supply of Labour 149
The Post-War Labour Supply, Seen Quantitatively 149
The Post-War Labour Supply, Seen Qualitatively 169
3 The Labour Reserve as a Basis for Explaining Growth 174
The Lewis Model and its Application for
the Industrial West 174
Kindleberger’s Explanation of Western
European Growth 177
The More Structural Visions of J. Cornwall
and G. Vaciago 186
4 Growth and the Employment of Capital 190
The Importance of Gross Investment 190
Industrialization and Deindustrialization
in the Post-War West 192
V INNOVATION AS A GROWTH FACTOR
1 The Explosion in Industrial Research 200
Professionalizing Research and Institutionalizing
Progress 200
Industrial Research and Development Compared
Internationally and Sectorally 202
Industrial Research and the Technological Gap 208
Research and Development, the Technological Gap, and
Foreign T rade 21 o
2 The‘Managerial Revolution’ 213
The American Lead in Organization 213
The European and Japanese Backwardness 217
Characteristics of Modern Business Management 221
3 Innovation and Growth: Convergence or Divergence? 225
The Keynesian Decades 225
The Rehabilitation of J. A. Schumpeter 227
IO Prosperity and Upheaval
VI THE IMPERATIVE OF DEMAND
1 The Founding of the Modern Consumer Society 233
Turning-Points in the Relationship between Labour and
Capital 233
The Rising Wage Income 236
The Rising Share of Wages and Salaries in the National
Income 239
2 The Effects of Income Increases on Domestic Demand 242
The Higher Propensity for Consumption and
Investment 242
Union Activity at the National Level 245
Union Activity at the Company Level 247
Income Distribution and Affluence Demand 251
An Overview of Income Distribution by Country 254
3 Export as a Dynamic Demand Factor 258
The Explosion of World Trade 258
The Geographical Distribution and the Composition of
World Trade 262
Explanations for the Structure of the Growth in
World Trade 269
PART TWO THE INSTITUTIONAL
FRAMEWORK
VII THE CONSTRUCTION OF THE MIXED ECONOMY
1 The Lessons of the Past 281
2 The Mixed Economy as Economic System 286
The Theoretical Starting-Points of the Mixed
Economy 286
The Neo-Collectivist Variant 290
The Neo-Free-Market Variant 302
The Central Consultation Variant 31 o
VIII THE MIXED ECONOMY UNDER PRESSURE
1 The Change in the Institutional Environment 314
2 The Failure of Government Planning and of Central
Consultation 320