Introduction

Compared with the pre-industrial era, the long-term success of capitalism in providing rapid growth in output and per capita incomes is undisputed. The share of this growth in the golden age was very large, even when compared with earlier rapid growth periods. For example, between 1901 and 1913 industrial output in Western Europe rose by about 50 per cent; between 1950 and 1962, it doubled (Shonfield, 1965, p. 10). Examination of longer periods reveals that capitalism provides growth in episodes, punctuated by failures such as the Great Depression (see, for example, table 2.1). Were it not for the golden age, more recent events – the inflation of the 1970s, the stagnant productivity growth that followed, and the still continuing high unemployment – would not appear exceptional by historical standards. But the golden age demonstrated the altogether more agreeable possibility that some of capitalism's problems could be avoided, allowing its benefits to be realized on a grand scale and enjoyed by all segments of society.

The wartime destruction of productive capacity presented an opportunity for modernization. The determination of national governments to put their economies back on a normal footing, and the readiness after 1947 of the USA to assist them, ensured that the acquisition of new capital and the spread of modern production methods would go speedily forward.