Contextualizing the consolidation

In order to properly set the scene for the below more mechanism-based argumentation, it makes sense to first provide a brief contextual overview of some of the main cross-cutting historical properties and well-known descriptive trends associated with the GA consolidation period. To a large extent, the GA label can be understood as an attempt at conceptually capturing the relatively speaking temporally coherent coexistence of an array of important so-called statistically correlated and mutually interacting

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macro-social characteristics. Most importantly, of course, the GA periodization – and specifically the period 1950–1973 – is characterized by a historically ‘exceptional’ average economic growth rate in Western Europe (Eichengreen 2008: 15-20; Crafts & Toniolo 2010: 299-301; Piketty: 72-99).

Compared to both previous periods, for example 1913–50, and the post-1970s era, the average annual growth rate of GDP (both as per capita and not) of Western Europe in the GA period is simply historically unique (Eichengreen 2008: 16-7; Crafts & Toniolo 2010: 299; Piketty 2014: 94).¹⁷⁰ Of course, this generalized extensive cumulative/compound GDP expansion varied in intensity across the Western European countries; the frontrunners were countries like (West) Germany, Italy, Austria and France, whereas countries like Switzerland, the UK, Norway, Denmark, Sweden and Ireland demonstrated a relatively speaking lower growth performance. With regards to the two countries chosen for the later in-depth case study analysis, namely the UK and Sweden, it is worth pointing out, as I shall also address later, that even though GDP expansion in the two countries in the 1950-73 period was lower than in some of the other comparable Western European cases, both the UK and Sweden’s growth performance was much greater than in any of their respective previous periods as well as subsequent phases (Eichengreen 2008: 16-7; see also Hansen 2001: 314).¹⁷¹

Unemployment rates in the GA period were historically speaking very low and, as opposed to the post-1970s period, most of the Western European polities managed to secure so-called ‘full employment’ throughout this phase (e.g., Eichengreen 2008: 263-5; see also Judt 2005: 332).¹⁷²

As Piketty’s (2014: particularly 316-20, 323-4) now seminal quantitative-historical economic analysis of inequality trends shows,¹⁷³ income inequality across the advanced Western world has generally followed a ‘u-shaped’ pattern since the early 20^th century, involving a ‘period of decreasing

170 This is so whether the post-1970s period is measured as 1973-2005, 1973-2000, 1970-1990, 1990-2012 or 1980-2012.

171 Average annual GDP growth in the UK in the GA period was for example comparable to that of the United States (or North America) in the same period (e.g., Hansen 2001: 314; Piketty 2014: 96-99) – a period that is arguably conceived, at least in the contemporary public debate in the US, as one of economic

expansion/prosperity.

172 Full employment is here understood in the classical Beveridgian sense of a circa 3% unemployment rate (on this, see, e.g., Robinson 1945: 71).

173 Piketty (2014: 16) generally focuses on two main forms of inequality, namely wealth-related inequality and income-related inequality.

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inequality followed by one of increasing inequality’.¹⁷⁴ Looking back, against Simon Kuznets’

optimistic data-driven prophesy that ‘income inequality would automatically decrease in advanced phases of capitalist development’ (Ibid.: 11) – Kuznets’ pioneering postwar work, operating so to speak at the bottom of the actual ‘U-curve’, erroneously but meaningfully extended the available historical data showing a fall in income inequality into the future, giving rise to a hypothetical ‘bell curve’ – the postwar period’s relative compression of inequality has (so far) turned out to be a peculiar historical anomaly (Ibid.: 11-15, 24).

The world population growth rate peaked in the postwar period; as Piketty’s (2014: 78) numbers show, ‘the period 1950– 1970’ saw the ‘the absolute historical record of 1.9 percent’ average annual growth. While the population growth rates generally slowed down from around the 1960s, the Western European population grew heavily in the GA period (Judt 2005: 331; World Bank 2016d).¹⁷⁵ Also, childbirths/fertility experienced a quick upswing in Western Europe in the early years after WW2, life expectancy levels rose and infant mortality rates decreased (Judt 2005: 331; Baines et al. 2010: 404-6, 407-9).

Across the Western European countries, both interregional and total exports (measured as average annual growth rates) were higher in the 1950-1973 period than in the years of 1974-2002 (Eichengreen 2008: 25). The Western European export/GDP share exploded after 1950 and its share in world exports increased (Eichengreen & Boltho 2010: 268-9), correlating with a bolstering of this regions’ overall so-called ‘terms of trade’ status vis-à-vis the ‘Third World’ (Judt 2005: 326). Compared to, for example, the interwar period, investment rates across the European countries also generally saw an upswing in the GA period (Eichengreen 2008: 22; Hansen 2001: 316).

Tax-financed social expenditure (focused on unemployment, education, health, pensions, housing, family dynamics) became a both popularly and institutionally-organizationally formalized and stably increasing fiscal phenomenon after WW2 – a firm nationally cross-cutting (i.e., Western

174 Obviously, as is very often the case, (1) national and regional variations, and very different starting points, can be observed – the UK and Sweden appear in each end of the spectrum in the European setting – and (2) the US represents an extreme case of the overall development (Piketty 2014: e.g., 324).

175 For example: the population in the UK grew by 13%, while that of Sweden grew by 29% in the years 1950-1970 (Judt 2005: 331).

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wide) development that continued until circa 1980, where a general stagnation or only slight increase, but not a fall, in social transfers (as a % of GDP) can be observed (Lindert 2004: 6, 11-15; see also Baines et al. 2010: 392-396). Obviously, national and regional variations on this general postwar pattern can be observed: for example, both quantitatively and qualitatively the heavy mushrooming of social expenditure in the GA period, a process gradually initiated already around 1880 (Lindert 2004:

11), seems to have clustered around certain regionally-situated socio-economic configurations – whether such clustering actually points to the existence of, for example, three ‘regimes’ (Esping-Andersen 1990) or, strictly within the European setting, four ‘groups’ (Baines et al. 2010: 394;

European Commission 1995: 9-10) or not.

This historical rise in social spending obviously correlates with a rise in tax revenues (Lindert 2004); looking at the three European countries of Sweden, France and Britain (together with the US), a long-term sharp rise in total tax revenue (as a % of GDP) can be observed since around 1910 (starting at circa 10%), which continues throughout the postwar period and then starts to stagnate around the 1970s (ending somewhere between 30-50%) (Piketty 2014: 457).

At the international political economic level, it is likely that a combination of both (1) the Bretton Woods system – the postwar international monetary system, which triggered the two major entities of the IMF and the World Bank (formerly IBRD) and importantly sought to simultaneously maintain both stable/fixed (‘pegged’) and adjustable exchange rates – (2) the GATT – the postwar agreement set up to regulate, organize and liberalize international trade, which would later find formal corporate institutional-organizational expression in the WTO – and (3) ongoing European economic integration – gradually organizationally developing from the 1951 European Coal and Steel Community (ECSC) and the 1957 (Treaty of Rome signed) ‘Common Market’ or European Economic Community (EEC, later EC) towards the 1993 establishment of the European Union (EU) and its ‘Single Market’ – served to bolster the rise in exports and trade (on this argument, see, e.g., Eichengreen 2008: 24, 40, 198; cf.

Eichengreen & Boltho 2010; more generally, see Hansen 2001: 269-73).

The GA period, at least until divorce rates started to increase and marriage rates started to fall in the industrialized countries around the late 1960s/early 1970s (OECD 2009, 2016a), was generally constituted by a gendered ‘breadwinner-homemaker household’ – epitomizing the so-called ‘nuclear family’ – which became an increasingly widespread phenomenon from the mid-19^th century and

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onwards as women and children gradually disengaged from direct (labour) market activities (de Vries 1994: 262).

Along with rising wages and household purchasing power, the Western European populace experienced the emergence-cum-consolidation of a prosperous toy industry, a mass-based ‘tourist boom’ in the 1950s, increasingly indispensable domestic devices such as the fridge, the washing machine and, in the 1960s, the television (Judt 2005: 338-9, 342, 345). Of course, as I shall examine in detail in the later case study analysis, to put it in Tony Judt’s (Ibid.: 339) words, ‘[t]he greatest single measure of European prosperity’ – which ‘had its most significant impact not in the home but outside’ – had to be ‘the revolution wrought by the family car.’ ‘Young people’ and ‘teenagers’ appeared on the scene – as both conceptual categories, sociological entities and increasingly targeted advertising segments – together with an increasingly penetrating cultural-capitalist form of ‘Americanization’

accelerated through popular commodities, music, movies, commercials, etc. (Ibid.: 347-8, 350-3).

‘Consumer society’ also became solidified across the advanced liberal-capitalist democratic polities after WW2 through the emergence-cum-consolidation of consumer movements and heavily state-facilitated consumer protection regimes (Hilton 2007).¹⁷⁶

Although not necessarily as Friedrich Hayek (1944) pessimistically foresaw it, WW2 did profoundly condition the general postwar orientation towards the capitalist economy; it both left the Western European polities with war-torn but principally fiscally mobilizable citizenries, industries and bureaucracies (e.g., Judt 2005) and, as mentioned, helped bring to life national account systems, the GDP measure and a macroeconomic framework. The new generalized postwar political economic outlook,¹⁷⁷which has sometimes been described as ‘interventionist’, ‘Keynesian’, ‘mixed’, ‘managed’, etc. – labels that given the overall state-crafting perspective of this study of course almost appear as pleonasms – obviously appeared in nationally/regionally specific formats (see notably Shonfield 1965).

176 Of course, despite it being a generalized trend, and the fact that a great deal of it would become harmonized/standardized through international/supranational organizations and bodies (notably the EU),

consumer protection naturally emerged and developed in nationally/regionally specific forms in the 1950s (Hilton 2007).

177 Writing in the pre-WW2 period, the sociologist Karl Mannheim was certain that ’planning was inevitable’; as he saw it, ’there is no longer any choice between planning and laissez-faire, but only between good and bad planning’ (Mannheim as cited in Smith 1979: 70, emphasis in original).

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More generally, pace Hayek, warfare/military defense, bureaucracy, organization, management, etc. – in short planning – is both historically and logically irreducibly linked to modern capitalist market dynamics (e.g., Weber 1978, 1948: chapter VIII; Sennett 2006: 20-23; Chang 2011: especially 199-209). Arguably, the WW2 case, in particular, reveals (in an extreme manner) the way in which and the degree to which, as argued, states’ generally backgrounded but always already lurking and occasionally fully activated violence-security-sovereignty functions are intricately connected to foregrounded fiscal-functional dynamics.

Looking back, as opposed to both previous and subsequent eras, the Western European (and the US) postwar consolidation period was constituted by a reciprocal and emergent economic configuration simultaneously combining (1) high productivity, exports and investments with (2) a steady-going relatively dispersed growth in real wages (e.g., Eichengreen 2008; Piketty 2014).¹⁷⁸ Arguably minimally somewhat materially underpinned by a generalized basic Keynesian (or ‘Left Keynesian’), and specifically wage/income/consumption-focused, ‘aggregate demand’ perspective (for a theoretical discussion of this perspective, see notably Bhaduri & Marglin 1990), postwar fiscal considerations became increasingly infatuated with the behavior of consumers and the intensity of their preferences (see also more generally Przeworski & Wallerstein 1982: 54-58).