Postwar Reconstruction

1
Postwar Reconstruction

• Domestic Politics

2
Contrasts to the post-World War I Period

• More planning and forethought
• Deliberate effort to avoid the mistakes of the
  failed peace and the interwar period
• Very different outcome
• Domestic peace
• Following reconstruction, unprecedented
  prosperity and economic growth

3
Domestic politics

• Impact of war and depression
• Realization that it was unacceptable to go back
  to mass unemployment
• Resistance experience
• Openness to new coalitions -- initial
  incorporation of Communists
• Desire for change
• End of earlier taboos on government intervention,
  involvement in the economy

4
Impact of Cold War

• Reinforces American determination to remain
  involved in Europe
• Does so in ways which not only divide Europe
  between east and west, but also shape postwar
  economic boom
• e.g. Marshall Plan

5
Britain

• Comes through the war exhausted and indebted
• But also determination to improve the position of
  its citizens
• Labour wins parliamentary majority in 1945
• Attlee replaces Churchill
• Free to implement its programme, including
• nationalization of basic industries
• Establishment of universal welfare state
  including pensions, unemployment insurance, and
  after 1948, National Health Service (NHS)

6
France

• Liberation in 1944
• Initially governed by victorious forces Free
  French Army, Communists, Socialists, Christian
  Democrats (MRP)
• Establishment of 4th Republic
• Exclusion of Communists
• Shifting coalitions -- divided cabinets
• Successful economic planning despite weak
  cabinets

7
Italy

• Demise of fascism, establishment of a liberal
  democratic regime
• Reconciliation of Church and Italian state
• Dominant role of Christian Democracy
• Rapid economic growth
• But still wide gaps between north and south, as
  well as rich and poor

8
Germany

• Fate determined by defeat, allied occupation,
  cold war
• Allies initial desire
• to return Germany to its pre-1870 agrarian state
  cf. Morganthau Plan
• Wartime agreement on four power occupation but
  little else

9
Germany contd

• Partition occurs as
• British, American, and then French zones
  assembled into an economic and then political
  unit
• Berlin blockade, airlift intensify rift between
  west and east
• Federal Republic of Germany (FRG) Liberal
  democratic regime, established in the 3 western
  zones
• German Democratic Republic (GDR) established in
  Soviet zone

10
Federal Republic of Germany

• Liberal democratic constitution with explicit
  safeguards to prevent return to totalitarianism
• Emphasis on rights of citizen
• Federalism
• Limitations on presidential power
• Extensive measures to ensure that there would
  always be a government
• Provisions to ban anti-democratic forces
• Incorporation of Germany into western alliance,
  links to western economies

11
Social market economy in Germany

• Public-private coordination of investment in
  different sectors of the economy
• Economy nominally decentralized
• However investment banks assume major role in
  coordinating the economy
• Expansion of pre-existing welfare state
• Co-determination in industry workers involved
  in management of firms especially in coal and
  steel

12
Explaining the welfare state

• War and depression experience
• Recognition that people expected better
• Advent of new tools -- Keynsian economics in
  place of classical liberal economics
• Coming together of political forces willing to
  assume an active government role in the economy

13
The postwar economic miracle

• Reconstruction in Germany and Italy facilitates
  employment
• Availability of workers taking up slack
• Availability of new markets workers, middle
  classes
• Advantages of mass production
• Stabilizing role of United States US finances
  by extending credits, allowing favourable
  exchange rates