After World War II, there was almost universal agreement in Europe that social and economic conditions had played a major role in allowing dictators like Mussolini and Hitler to seize power. Political leaders on both sides of the Iron Curtain were determined to make sure that Europe’s postwar societies would be prosperous enough to keep populations from turning to extremist movements. Through the Marshall Plan, inaugurated in 1947, the United States encouraged the western European nations to work together to encourage trade and economic development.
The countries of western Europe continued to have capitalist economies, but they made important modifications to the free-market system to prevent a recurrence of anything like the Great Depression. In many western countries, key industries were nationalized and turned into public services. France adopted a system of centralized economic planning. In most western countries, trade unions were given a voice in the running of large companies. These policies were adopted to try to make sure that economic decisions benefited the entire community, and not just a few wealthy investors.
The movement toward European unification began as an effort to promote economic cooperation and prosperity among western European nations. In 1951, six western European countries (France, West Germany, Italy, Belgium, Netherlands, Luxembourg) created the European Iron and Steel Community, the first major economic agreement. In 1956, these six nations made a broader agreement, creating the European Economic Community or Common Market. New member states joined in subsequent decades, and the purpose of the group broadened from purely economic cooperation to an effort to create a common sense of European identity. Renamed the European Union in 1992, the community is now committed to expanding to 26 members over the next few years.
The decades between the wars had also shown how unstable democracy could be if citizens did not feel that their governments responded to their needs. New social policies adopted after the war were intended to guarantee a satisfactory level of life to every member of the population; the result came to be known as the welfare state. Social programs varied from country to country, but usually included health insurance, free public education, generous unemployment insurance, old age pensions, and subsidized cultural activities. Tax policies were deliberately designed to promote greater social equality by transferring income from rich to poor.
Advocates of the welfare state had not anticipated how rapidly European economies would recover from the damage of the war. By the 1960s, western Europe had become a wealthy consumer society. Most European families could now afford things that had been luxuries for the rich until 1939: household appliances, private automobiles, foreign travel. Critics began to complain that European values were being overwhelmed by materialism, a process they sometimes blamed on Americanization. The sexual revolution of the 1960s, made possible by the introduction of birth control pills, added to this impression that old values were being abandoned for the pursuit of purely individual desires.
The long period of postwar prosperity ended in the early 1970s. Europe did not experience a shock like the Great Depression, but economic growth stagnated and unemployment surged throughout the Continent. Welfare state measures prevented mass unrest, but critics charged that the high taxes needed to pay for them discouraged investment and initiative. Political candidates like Margaret Thatcher in Britain (1979-94) won elections by promising to limit social spending, lower taxes on the wealthy, and privatize national industries.
I. The European Economic Recovery
A. The Economic situation at the end of WWII
1. legacy of the Depression
2. impact of the war
B. Reasons for recovery
1. Europe’s hidden resources
2. nationalizations and planning
3. the role of American aid
C. From recovery to postwar growth
1. the postwar baby boom
2. European economic unification
II. Welfare State and Consumer Society
A. The motives for the welfare state
1. protection against depression and political extremism
2. the argument for social justice
B. Features of the welfare state
1. support ‘from cradle to grave’
2. educational and cultural opportunities
C. The growth of consumer society
1. a new standard of living
2. materialism and hedonism
3. the end of public life?
III. Welfare State and Consumer Society in a Period of Economic Stagnation
A. The economic shocks of the early 1970s
B. Thatcherism and neo-liberalism
1. privatization of nationalized industries
2. the crisis of the welfare state
A few postwar statistics
Increase in total economic production (agriculture and industry) in Europe, 1938-1964: 250%
Private car ownership in Europe: 1948: 5,000,000 1965: 44,000,000