The postwar period

The basics

[I]n 1944…the world's leading nations met in Bretton Woods, New Hampshire, to map out the post-war global economy. Under the influence of Keynes, who served as Britain's chief negotiator, the Bretton Woods conference delegates devised an international financial system that would, among other things, seek to promote international trade. And they succeeded; trade flourished in the decades that followed. In fact, what's new about the trade deals today isn't that they promote trade. What's new is that they promote trade (and investment)—at the expense of everything else. By contrast, the delegates meeting at Bretton Woods had more balanced objectives. While keen to promote trade, they also were committed to the principle of democratic governance, and were anxious to ensure that democratic governments would have policy autonomy in the post-war global economy. (Yes, they also created the IMF and the World Bank, but these institutions have turned out very differently than Keynes and the chief U.S. negotiator, Harry Dexter White, had planned.) Specifically, Keynes and White viewed financial institutions and corporations as powerful special interests, and considered it necessary for governments to have sufficient power to regulate and control them in the interest of protecting the public. The impact of Keynes and White was significant in shaping the post-war international economy in a way that imposed limits on the power of the financial elite.

- Linda McQuaig, All You Can Eat

Sixty years ago, the key sectors of Americans society — business, labor, and government — often worked well together to grow the U.S. economy. CEOs understood that giving workers a fair of the wealth they created was good business, since it motivated labor to do its absolute best. Elected officials of both parties understood that government's role was to fan growth by building the public structures that undergird prosperity — like state university systems and the Interstate Highway System.

For several decades, up until the 1970s, this powersharing arrangement — "corporatism" — worked. America's economy boomed and everyone got rich together. A new middle class had plenty of spending money, thanks to getting its fair share of the pie, and that led to the rise of a new mass consumerism that powered growth.

Then the model broke down amid globalization and a shift rightward by business, which began cutting labor out of its fair share of the pie. The rest of the story — about soaring inequality, a hollowing out of the middle class, and slowing growth — is well known.

- The New Case for Corporatism: "Inclusive Capitalism" Works Better | Demos

[T]he basic thrust of public policy in the West during the first few decades after the Second World War was towards using the collective power of government to regulate the marketplace and ensure a more equitable distribution of resources among citizens. By imposing higher taxes on the well-to-do, governments were able to redistribute income to those lower down the ladder, and to establish national programs for delivering public services to all. While the post-war system kept capital ism intact, it modified it considerably in the name of protecting the public. There was a widely shared belief that the public interest—as represented by the government—should be given precedence over the powerful private interests that dominated the economic sphere, that ultimately power should rest with the people and their democratically elected representatives. This amounted to what Polanyi described as an attempt to "re-embed" the economy back into society—that is, to make the economy serve the interests of society, not the other way around.
…[It would] be a mistake to understate how different the attitudes of policy-makers and the public were in those decades. The trend seemed to be clearly, if slowly, moving in the direction of expanding the democratic rights and sense of economic entitlement of ordinary people.
From the late 1940s to the 1970s, capitalism had been subject to considerable restraint…. Under this reined-in capitalism, designed by the late British economist John Maynard Keynes, governments asserted a significant amount of control over the economy—an approach that enjoyed widespread support. While there was plenty of discord over specific policies and politicians, there was also, to an extent unimaginable today, popular support for the role of government and a belief in the capacity of government to represent the public's interests and even serve the public good. Before capitalism could be returned to its purer, more rigorous form, this popular support for government, and for collective solutions in general, had to be eroded

- Linda McQuaig, All You Can Eat

It's fairly obvious that the period following the Second World War was (for white U.S. males) the least class-ridden of all time. Disparities of wealth were at an all-time low and the middle class, flush with WWII savings, good wages and GI Bill-fostered competitiveness, experienced a generation of utter dominance over the American experience. A confident dominance that got woven into popular culture through TV and all other media.

Instead of the classic human social pattern — pyramid-shaped with a tiny, fierce nobility lording it over peasant multitudes — ours was diamond-shaped with a well-off middle that actually outnumbered the poor! A miracle nobody in all the past ever foresaw. Except perhaps Smith. Certainly not Karl Marx! In fact, nothing so undermined the honey-seductive mantras of Marxism so much as the living example of the U.S. middle class. Which the whole world wanted to join.

…. Our post-WWII flattened-diamond pattern did not quash or undermine competitive capitalism! Not at all. In fact, never before or since has there been such fecund, vigorous entrepreneurialism as during the flattest and most "level" social order the world ever saw.

Those who proclaim these two things - social flatness and vigorous market competitiveness - to be inherent opposites, in perpetual conflict, are simply fools or historical ignoramuses — or outright liars. They are pushing the sick illogic of the zero sum game. Indeed, Adam Smith himself contended, in both The Wealth of Nations and The Theory of Moral Sentiments, that a relatively flat social order — combined with lots of opportunities for the poor to get education, so the total number of competitors is maximized — can vastly increase the total number of people who get rich in the best way, by delivering innovative goods and services.

- David Brin, CONTRARY BRIN: "Class War" and the Lessons of History


These look promising

  • Lowe: Savage Continent
  • Post-war consensus - Wikipedia, the free encyclopedia
  • Ben Steil, The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order
    • "When turmoil strikes world monetary and financial markets, leaders invariably call for 'a new Bretton Woods' to prevent catastrophic economic disorder and defuse political conflict. The name of the remote New Hampshire town where representatives of forty-four nations gathered in July 1944, in the midst of the century's second great war, has become shorthand for enlightened globalization. The actual story surrounding the historic Bretton Woods accords, however, is full of startling drama, intrigue, and rivalry, which are vividly brought to life in Benn Steil's epic account. Upending the conventional wisdom that Bretton Woods was the product of an amiable Anglo-American collaboration, Steil shows that it was in reality part of a much more ambitious geopolitical agenda hatched within President Franklin D. Roosevelt's Treasury and aimed at eliminating Britain as an economic and political rival. At the heart of the drama were the antipodal characters of John Maynard Keynes, the renowned and revolutionary British economist, and Harry Dexter White, the dogged, self-made American technocrat. Bringing to bear new and striking archival evidence, Steil offers the most compelling portrait yet of the complex and controversial figure of White—the architect of the dollar's privileged place in the Bretton Woods monetary system, who also, very privately, admired Soviet economic planning and engaged in clandestine communications with Soviet intelligence officials and agents over many years."
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