Post-War Era

In the context of western usage, the phrase post-war era refers to the time after the end of World War II. In a more holistic sense, the post-war period is the interval immediately following the end of the war. A post-war period can become an interwar period when war between the same parties resumes at later date. By contrast, the post-war period marks the cessation of armed conflict entirely.

Post-war Era

The Second World War was a global conflict that lasted from 1939 until 1945. The vast majority of the world’s governments formed two competing military alliances: the Allies ( Britain, France, Soviet Union, and the US) and the Axis forces (Nazi Germany, Japan, and Italy). In a complete war, the major players committed their whole economic, industrial, and scientific capacities behind the war effort. Aircraft played a significant part in the fight, allowing for the strategic bombardment of population centers as well as the only two uses of nuclear bombs in warfare. 

World War II was the worst conflict in human history, around 60 million people were killed, or 3 percent of the world population in 1939, the vast majority of whom were civilians. Millions of people were killed by genocides (including the Holocaust), famines, murders, and sickness. Following the Axis defeat, Germany and Japan were occupied. The war cost a lot of economic devastation and social disruptions.

Postwar reconstruction was shaped by two key forces. The first was America’s ascension to become the world’s dominant economic, political, and military power. The second was the Soviet Union’s supremacy. It had made huge sacrifices to beat Nazi Germany, converting itself from a backward agrarian country into a world power amid the Great Depression that had gripped the capitalist world.

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Economic Lessons from World War

• An industrial civilization centered on mass production cannot exist without mass consumption. However, in order to secure widespread consumption, large and stable salaries were required. Income cannot be stable if the job is insecure. As a result, solid revenues necessitated consistent, full-time employment. However, markets alone cannot guarantee full employment. Government has to step in to minimize fluctuations of price, output and employment.
• Full employment could only be attained if governments had the ability to control the movements of goods, capital, and labor. Thus, the main motif of post-war international economic system was to conserve the economic stability and full emplpoyment in the industrial world. This structure was agreed upon at United Nations Monetary and Financial Conference  held in July 1944 at Bretton Woods in New Hamsphire, USA.

Bretton Woods Institutions

The major goal of the postwar international economic system was to maintain economic stability and full employment in the industrial world. Its structure was established at the UN Monetary and Financial Conference in July 1944 at Bretton Woods, New Hampshire, USA.

The Bretton Woods Conference established International Monetary Fund (IMF) to cope with its member countries’ external surpluses and deficits. The International Bank for Reconstruction and Development (popularly known as World Bank) was established to finance postwar reconstruction. The IMF and World Bank are referred to as Bretton Woods Institutions. Post- War International economic system is also referred to as Bretton Woods System.

In 1947, they began financial activities. Decision-making in these institutions is controlled by Western industrial powers. The USA effectively holds a veto over crucial IMF and World Bank decisions. The international monetary system connects national currencies and monetary systems. Fixed exchange rates were the foundation of the Bretton Woods system. National currencies were linked to the dollar at a fixed exchange rate under this arrangement. The dollar was put against gold at a fixed price of $35 per ounce of gold.

The Early Post-war Years

Between 1950 and 1970, growth was consistent, with some exceptions. There was kind of unprecedented growth in trade and income for western international nations and Japan. The rate of world trade grew over 8 percent between 1950 and 1970 and incomes at nearly 5 percent. For example, the Unemployment rate in most industrial countries was low (<5%). The developing world was eager to catch up with the advanced industrial countries so they spent a lot of capital importing industrial plants and equipment with cutting-edge technology. When World War II ended, large swaths of the globe remained under European colonial power. Most Asian and African colonies became independent nations over the years. But they were burdened by poverty and a scarcity of resources, and their economies and societies were hampered by extended periods of colonial domination.

These years saw the worldwide spread of technology and enterprises. Developing countries were in a race to catch up with advanced industrial countries. Therefore, vast amounts of capital, importing plants and equipment featuring modern technology. The design of the IMF and World Bank were made to meet the financial needs of industrial countries. The countries were not equipped to cope with the challenges of poverty and there was a void due to a lack of development in former colonies. On the other hand, Europe and Japan had rapidly rebuilt their economies and grew less dependent on IMF and World Bank. Because of this from the late 1950s the Bretton Woods institutions began to shift their attention more toward developing countries.

Many less developed countries and regions of the world have been part of the western empires as colonies. Now, as newly independent countries facing urgent pressures to live in their poverty, they came under the guidance of international agencies dominated formerly by colonial powers. Former colonial powers still controlled vital resources such as minerals and land in many former colonies. Large corporations of other powerful countries, like the US, also managed to secure rights to exploit developing countries’ natural resources cheaply.

Around the same time, most developing countries did not benefit from the fast growth the western economies experienced in the 1950s and 1960s. Therefore, they have organized themselves into Group of 77 ( or G-77)- to demand a new international economic order. By this system, they meant to experience real control over their natural resources, more development assistance, fairer prices of raw materials, and better access to manufactured goods in the market of developed countries.

End of  Bretton Woods and Beginning of “Globalization”

The years of stable and rapid growth were not all well in the post-war world. From the 1960s, rising costs of overseas involvements weakened the finances of the US and its competitive strength. The US dollar no longer commanded confidence as the world’s principal currency, as it couldn’t maintain its value in relation to gold. This led to the gradual collapse of the system of fixed exchange rates and the introduction of a system of floating exchange rates.

From the mid-1970s international financial system also changed in important ways. Earlier developing countries could turn to international institutions for loans and other assistance. But now they are forced to borrow only from western commercial banks and private lending institutions. This led to increasing in periodic debt crises an increased poverty and low incomes, especially in Africa and Latin America.

The industrial world also was hit by unemployment which began to rise in the mid-1970s and remained high till the 1990s. In the late 1970s, MNCs also began to shift production operations to low-wage Asian Countries.

China was cut off from the post-war world economy since the revolution in 1949. But new economic policies in China and the collapse of the Soviet Union and Soviet-style communism in Eastern Europe brought many countries back into the world economy fold. As the wages were comparatively low in countries like China, they became attractive locations for investment by foreign MNCs competing to capture world markets.

Relocation of the industry to low-wage countries like China stimulated world trade and capital flows. Last two decades of world’s economic geography has been transformed in countries like India, China, and Brazil have undergone rapid economic transformations.

Second and third waves of globalization

The end of World War II signaled a fresh start for the global economy. Under the leadership of a new hegemonic, USA, and supported by Second Industrial Revolution technologies such as the automobile and airplanes, global trade began to rise. Initially, it was divided into two zones of influence in two different ways. With the fall of the Iron Curtain in 1989, globalization became a truly global phenomenon.

EU and other free trade vehicles championed by the USA were responsible for much of the expansion of international trade in the early decades after World War II. A similar expansion in trade occurred in the Soviet Union but through centralized planning rather than the free market. The impact was enormous. World commerce rose to pre-World War I levels: exports accounted for 14 percent of global GDP in 1989. It was accompanied by a sharp increase in middle-class salaries in the West.

FAQs on Post-War Era

Question 1: What happened in post-World war 2 periods?

Answer:

Western Europe and Asia were rebuilt through the American Marshall Plan, Central and eastern europe fell under the soviet sphere of influence, europe came to be divided into US- led Western Bloc and USSER-led Eastern Bloc.

Question 2: What is the post-World War II era called?

Answer:

In western usage, the phrase used is post-war era.

Question 3: What are 3 things defined the Post-war world?

Answer:

First is U.S. power, second is the rise of China as center of global industrial growth based on low wages and third is reemergance of Europe as massive economic power.

Question 4: In what sense was post-World War II is golden age?

Answer:

“The Golden Age of Capitalism” is what post-war period is referred to as, because there was growing of middle class, increased spending on infrastructure, demand for goods like automobiles and household appliances and housing construction booms.

Question 5: How did World War II affect the economy of the United States?

Answer:

The war brought fuller employment and fairer distribution of income. Blacks and women entered workforces for first time.