Introduction | The free market
The Great Depression | Boom | Globalisation
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Boom

World War II transformed the global economy, confirming the domination of the US, with Britain crippled by debt and Germany, Japan and the Soviet Union completely devastated.

New economic order

The new economic order was created by the Americans. Under the Bretton Woods Agreement of 1944, they set up the World Bank and International Monetary Fund (IMF) and attempted to create a world trading system that encouraged free trade and investment. In 1947, the General Agreement on Tariffs and Trade (GATT) restored free trading between nations. Gone were the isolationist and protectionist policies of the 1930s.

As a result of free trade, the availability of American money and the need to rebuild economies shattered by war, the world economy entered what would prove to be a long boom, lasting from 1945 to 1973.

Nationalisation

Although liberal policies encouraged private initiatives, many governments also stepped in to own and regulate some industries. For example, Britain nationalised its steel industry, rail system and mines and set up a state-owned free-at-the-point-of-delivery health service; in 1961, Egypt and Syria (then joined together as the United Arab Republic) also nationalised some industries.

Everywhere, state expenditure – for example, on arms in the US – fuelled economies, employing millions of people in industries. As a result, the bureaucracies of central and local government, as well as state activities such as education, expanded.

Transformation of everyday life

Domestic demand for consumer goods, such as fashionable clothes, washing machines and televisions, pushed the economies of the West into overdrive, changing the entire fabric of life, with the effects rippling into medicine, travel and culture. In 20 years after the end of World War II, everyday life was transformed more than in the previous 150 years. Countries became increasingly urbanised as human workers were replaced by machines on the land, and office jobs began to replace factory work as new technologies began to be introduced.

In the 1960s, Western workers were moving away from smoky industrial towns to the new suburbs. The working day was becoming shorter, holidays longer and pension rights and social security gave people greater rewards. Union activity rose, especially in Europe, with workers demanding, and often getting, higher wages and better conditions.

Outside the home

Women, in some areas, began to get the same wages as men – although, in many jobs, they were still badly paid and exploited. As consumer goods made domestic chores easier, more and more women went outside the home to work, especially in Britain. However, much of women's work was part-time and often temporary.

As industrial manual work became less important, there was more demand for skills in light industry and in office work, as expanding bureaucracies needed reliable workers. Similar conditions were also found in the Communist Soviet Union and eastern Europe, although, there, the freedom to strike or choose your job was much more restricted. But everywhere, one problem began to affect everyone's pocket – inflation.

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