The End of Sustained Growth



After a chaotic period of postwar reconstruction, the capitalist world experienced a relatively sustained and rapid economic growth from about 1950 until 1973. Although there were recessions for instance in the US economy in 1953–4, 1957–8, 1960–61, 1966–7, 1969–71, each recession was not so serious and was quickly overcome. Especially in the 1960s, an economic system which could continuously achieve full employment seemed really to have been established by the Kennedy-Johnson regime in the USA, with the operation of Keynesian policies based upon a so-called ‘New Economics’. The economic growth in the capitalist world in 1950–73 was not merely sustained without serious crisis, but was also rapid compared to the long-run historical position. Armstrong, Glyn and Harrison who calculated the arithmetic average annual growth rate of output for seven advanced capitalist countries (USA, France, UK, West Germany, Italy, Japan and Canada) in 1950–73 as 4.9 per cent in comparison with 1.9 per cent in 1913–50, 2.5 per cent in 1870–1913, 2.2 per cent in 1820–70, stated impressively.1


Real Wage Capital Accumulation World Country Advanced Country Nominal Wage 
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  1. 1.
    P. Armstrong, A. Glyn, J. Harrison, Capitalism since World War II (London: Fontana Paperbacks, 1984), p. 167. There is a theoretical problem of how to interpret the difference in the growth-rate of output in different historical periods. As the composition of use-values of commodity products greatly changes with the alteration of leading industries in the long run, the different growth-rates of output across long historical periods are not commensurable in any strict sense. The heavily oil-consuming type of industries which led the long postwar boom must surely be more suitable for the rapid growth of physical output than any other preceding industrial structures. But the high rate of growth of output based upon such a type of industry in the long boom may not by itself signify rapidity or strength of accumulation of capital when measured in terms of another standard, say labour substance, in comparison with other historical periods such as the stage of liberalism where cotton industries were a leading sector. At the same time, the growth-rate would also be elevated by converting more and more services and labour from domestic life into the capitalist market in various forms, even with the same physical level of economic activity as a whole. These reflections may explain, as a corollary, why the lowered annual rate of growth of output of about 2.5 per cent in 1973–79 could still be higher than 2.2 per cent in 1820–70 in spite of the very depressive keynote in the current capitalistic economic activity in the world since 1973.Google Scholar
  2. 2.
    P. Sweezy, Post-Revolutionary Society (New York and London: Monthly Review Press, 1980);Google Scholar
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  4. 4.
    K. Oshima (ed.), [The Economic Course of the Post-war World] (Tokyo: University of Tokyo Press, 1968), p. 27.Google Scholar
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    As for the postwar impact of technological innovations upon economic development, see for instance, C. Freeman, J. Clark, L. Soete, Unemployment and Technical Innovation: A Study of Long Waves and Economic Development (London: Frances Pinter, 1982).Google Scholar
  6. 6.
    E. Mandel, Late Capitalism, translated by J. De Bres (London: NLB, 1975), Chapters 5, 6.Google Scholar
  7. 7.
    At the same time, ‘whereas between 1870 and 1950 GNP per capita rose sixfold for a mere doubling of per capita energy use, between 1950 and 1973 energy growth per capita actually exceeded the per capita growth in production’. P. Nore, ‘Oil and Contemporary Capitalism’, in F. Green and (P. Nore, Issues in Political Economy (London: Macmillan, 1979), p. 114).Google Scholar
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  12. 14.
    According to A. Maddison’s estimation, the impact of sectoral shift in employment on annual growth of GDP per person employed in 1950–73 was 1.3 per cent in 7.3 per cent of the actual growth rate per person in Japan, 0.5 per cent in 4.6 per cent in France, in 0.4 per cent in 4.9 per cent in Germany, 0.2 per cent in 2.4 per cent in the USA, although none in the Netherlands and the UK. A. Maddison, Phases of Capitalist Development, (Oxford: Oxford University Press, 1982, p. 119.)Google Scholar
  13. 15.
    S. Castle, Here for Good: Western Europe’s New Ethnic Minorities, (London: Pluto Press, 1984), p. 1. Towards the end of the 1960s, 6–7 per cent of the labouring population in France, West Germany and Italy was supplied by such foreign immigrant workers according to another estimate cited inGoogle Scholar
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    See E. Mandel, Late Capitalism (London: NLB, 1975) and other works referred to in note 13 in the previous chapter.Google Scholar
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    See M. Itoh, The Basic Theory of Capitalism (London: Macmillan, 1987) Chapter 8, Section 2, for more on the details of the basic theoretical relation between the rate of profit and that of interest.Google Scholar
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    See, for instance, J. Strachey, Contemporary Capitalism (London: Gollancz, 1956);Google Scholar
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    J. Steindl, ‘Stagnation Theory and Stagnation Policy’, Cambridge Journal of Economics, 3, 1979, p.9.Google Scholar
  23. 26.
    According to a statistical calculation, the annual rate of increase of labour productivity in the US economy as a whole went down from 2.7 per cent in 1950–65 to 2.0 per cent in 1965–73, and the same rate in the US manufacturing industry for durable goods went down from 2.5 per cent to 2.2. per cent. S. Nagashima [Cycles and Crises in Contemporary Capitalism] (Tokyo: Iwanami-shoten, 1981), p. 117.Google Scholar
  24. 27.
    US private direct capital investment abroad became 2.5 times larger in this decade, and amounted to $78.2 billion in 1970 from $31.9 billion in 1960. US Department of Commerce, Historical Statistics of the United States, 1975, Part 2, p. 868.Google Scholar
  25. 29.
    I. Fukamachi, [Contemporary Capitalism and International Currency] (Tokyo: Iwanami-shoten, 1981), p. 100, p. 140.Google Scholar
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    S. Miyasaki, S. Okumara, K. Morita, (eds), [A Handbook on the Modern International Economy], (Tokyo: University of Tokyo Press, 1981), p. 155. The data is compiled from Federal Reserve Bulletin. Google Scholar

Copyright information

© Makoto Itoh 1990

Authors and Affiliations

  1. 1.University of TokyoJapan

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