The European Economy since 1945: Coordinated Capitalism and Beyond

The European Economy since 1945: Coordinated Capitalism and Beyond

The European Economy since 1945: Coordinated Capitalism and Beyond

The European Economy since 1945: Coordinated Capitalism and Beyond

Synopsis

In 1945, many Europeans still heated with coal, cooled their food with ice, and lacked indoor plumbing. Today, things could hardly be more different. Over the second half of the twentieth century, the average European's buying power tripled, while working hours fell by a third. The European Economy since 1945 is a broad, accessible, forthright account of the extraordinary development of Europe's economy since the end of World War II. Barry Eichengreen argues that the continent's history has been critical to its economic performance, and that it will continue to be so going forward.


Challenging standard views that basic economic forces were behind postwar Europe's success, Eichengreen shows how Western Europe in particular inherited a set of institutions singularly well suited to the economic circumstances that reigned for almost three decades. Economic growth was facilitated by solidarity-centered trade unions, cohesive employers' associations, and growth-minded governments--all legacies of Europe's earlier history. For example, these institutions worked together to mobilize savings, finance investment, and stabilize wages.


However, this inheritance of economic and social institutions that was the solution until around 1973--when Europe had to switch from growth based on brute-force investment and the acquisition of known technologies to growth based on increased efficiency and innovation--then became the problem.


Thus, the key questions for the future are whether Europe and its constituent nations can now adapt their institutions to the needs of a globalized knowledge economy, and whether in doing so, the continent's distinctive history will be an obstacle or an asset.

Excerpt

This book was written at sunrise. Most of the work coincided with a home renovation project, making the best time for writing early in the morning, before the hammering began. It is an outgrowth of two previous projects. The first was the chapter on institutions and European economic growth commissioned by Nick Crafts and Gianni Toniolo for their volume Economic Growth in Europe since 1945 (Cambridge University Press, 1996). It was in the context of writing that piece that I first experimented with the interpretation of corporatist institutions and European integration as solutions to the coordination problems that needed to be overcome in order to initiate and sustain economic growth. A seminar at the University of Lund organized in conjunction with this project enabled me to test these ideas and explore, with help from the authors of the other papers, how they might be applied to different European countries.

In 1997, I was invited by Mary Fulbrook to contribute a chapter on the economy to Europe since 1945 (Oxford University Press, 2001), a volume in the Short Oxford History of Europe series. This allowed me to further develop my interpretation of the first post– World War II quarter century as a period of extensive growth and of Europe's growing economic difficulties as manifestations of the difficulty of making the transition from extensive to intensive growth. This chapter, the second precursor to the current book, was written during a sabbatical semester at the Center for Advanced Studies in the Behavioral Sciences, whose hospitality is acknowledged with thanks (no sawing and hammering there). This work was gratifying but also frustrating, given the impossibility of covering so much ground in fifty pages. That frustration was part of what convinced me of the need to treat the same issues at greater length.

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