Before WWII, the Depression did a great deal to prepare the way for the recovery. Capital was devalorized or scrapped. Business had to get more efficient.
Terrible way to go and a terrible price to pay, but when the Depression ended, business could produce the same GDP with 16% less capital. One great contradiction of capitalism is that it needs crises to create the level of competition needed to become more efficient. Afterwards, the War provided the aggregate demand (which was also necessary for a recovery). Rationing left people accumulate savings. The War wiped out much foreign competition as Patrick mentioned. That momentum was enough to propel the economy through the Golden Age, during which business did not face much competition, making it easy for other countries to catch up. By the late 1960s, such slack conditions left the economy to stagger about, still making it through the oils shocks and the dot.com boom, until now the contradictions have come home to roost. -- Michael Perelman Economics Department California State University Chico, CA 95929 530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com g _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
