Post-War Capitalist Economy: US Dominance, Europe's Recovery and Social Change

The capitalist economy situation after the Second World War made the United States the first economic power in the world. In contrast to Europe, which was ruined by the war, the United States emerged strengthened.

The Bretton Woods System and the Global Economic Order

In 1944, the Bretton Woods agreement established a new monetary order based on the US dollar, which was convertible to gold, and on other currencies linked to the dollar. Its main objectives were to stabilize exchange rates and to create the International Monetary Fund and the World Bank, institutions that would offer credit and loans to countries that needed them.

The First Period of Growth: The 1950s and 1960s

During the 1950s and 1960s, the world experienced its first period of economic expansion. This growth was driven by several factors:

• Continued demographic growth.
• Changes in the economic structure.
• Access to cheap raw materials and energy.
• The development of price stability.
• The Third Industrial Revolution, based on the chemical, electronic and computer sectors.

US hegemony benefited the country, which supplied fuel for the second growth cycle. From the 1960s until 1945, the country dominated the world economy, controlling roughly half of world production and half of international trade.

Technological Leadership and Business Management

Its leadership allowed the economy to become dynamic. The United States used and controlled the most advanced technology and applied very effective business management methods. Productivity increased, and business concentration grew as multinational corporations were formed. These large firms could assume high prices and invest in research, eliminating competition.

Competition from Japan and Germany

The Japanese economic miracle and German competition challenged this dominance. After the Second World War, the reconstruction of both countries was spectacular. Japan and Germany suffered two great losses: their economies and infrastructures were destroyed. By the end of the 1950s, however, their economies began to become competitive.

Meanwhile, the United States, because of its financial support to Western Europe and its military spending, saw its resources diverted from industry to society. Although the country's economic well-being grew, it did not reach the entire population. Only a part of the population benefited, while minority groups, especially African Americans, suffered marginalization and racism.

The Civil Rights Movement

Racism was confronted by mobilizations led by Martin Luther King, Jr. In 1963, he gave his famous speech. In 1964, the government approved the Civil Rights Act, which put an end to racial segregation and opened new ways for the African American population to access education and employment.

Social Peace Breaks Down in Western Europe

Following the economic recovery of Western Europe after the war, social peace began to break down. Demands and labor protests increased, pushing for further democratization of society, the strengthening of institutions, and the recognition of trade union freedoms and labor rights.

The student revolt of May 1968 in Paris was followed by agitation at universities around the world. It was a symptom of the nonconformity of young people, the first anti-society movement among the youth of the bourgeoisie, and a reaction to economic imbalances. Its movement was anti-authoritarian and made the generational conflict evident.