Economic Crisis

In: Business and Management

Submitted By ditech
Words 320
Pages 2
The WWII was like one of Houdini’s tricks that capitalism has come up with in its history to escape the economic crisis of depression that followed the WWI.
Before the war, the policies implemented by Roosevelt were decedent and successful, but the economy was still suffering as the unemployment rate was very high. The war effort was a the main factor behind making a busy economy that lifted the US labor into full employment through the rising output growth resulted by investments and factories which means more income which then re-enters the system and gives an edge in productivity. The key behind this dynamic growth was initially driven by industrial production, then by expending this production for export and that what made the Golden Age of post WWII capitalism between the 1940’s to the 1970’s.
To understand what happened during that period, it is important to know that the global economy has created the best conditions for high investment rates and high output rates, which means low unemployment rate and of course low inflation. This climate has helped the profit rate to continue to grow each year. But diving a little bit further, the real cause behind the growing rates was a pattern of technical change which is reflected in an important shift of the cyclical process driven by economic competition in which producers invest more and more in new machinery. That change has helped the labor-productivity to rise at increasing rates while keeping capital productivity at solid rates of growth.
Brief, the so called Golden Age was associated with important rise in profits, investment, output growth and employment rates that led the groundwork toward a set of institutional modifications that urged capitalism into mixed economies. Yet, the threats coming from communism and the victory of the United States in WWII has created the Pax Americana term which increased the…...

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