The World Word II (1939-1945) became the largest political and economic disaster of the 20th century. It involved more than 60 states and about 80% of all people on the planet.Military operations were conducted in 40 states, 55 million of people were killed, and hundreds millions of people were left disabled. As well as after the World War I, the greatest economic losses incurred the European economy, while the U.S. withdrew from the war economically strong and further consolidated its dominance in the global economy. The U.S. finished WWII being the undisputed leader of the capitalist world. Even before the war it had a huge economic power and was the richest state.However, it was World War II that contributed to strengthening of the United States power and led to their dominance in the postwar world.
U.S. after the WWII
During the World War II the U.S. national income and industrial production have doubled.The country used an efficient production mechanism based on the capacious internal and international markets.Publicly funded supplies of raw materials, food and military equipment for allies promoted the renewal of fixed capital. The amount of military governmental contracts was 175 billion of dollars and the net income of U.S. monopolies was 70 billion of dollars.The process of production concentration has intensified: the number of large enterprises increased sevenfold.
The war accelerated the process of agricultural intensification: mechanic and chemical production was stimulated by huge demand for American food, which allowed farmers to increase dramatically their revenues (Adams 120).
The military actions were not carried out on the territory of the United States and therefore there wasn’t any distraction. The resources of the U.S. with a population nearly 150 million people was larger in several times then resources of other capitalist states.As a result, the U.S. after the war made 60% of industrial products of the capitalist world.They accounted for 50% of world coal production, 64% of oil production, 53% of steelmaking, 17% of grain production, and 63% of corn production. The United States concentrated in their hands two thirds of gold stock and a third of exports of the capitalist world.
U.S. economic dominance was based on their financial strength.The Bretton Woods conference established a system of gold exchange standard in 1944. The dollar was assigned the role of global convertible currency; its gold content was defined in 35 dollarsfor 1 ounce of gold.The dollar became the accounting and reserve currency unit, along with gold it was a guarantor of the banknotes value.At the same time the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) were created, which were largely dependent on the United States (it provided them with seed capital).
With the end of the war the country faced the problem of reconversion, i.e. transferring the economy from war to peace course. It assumed a military demobilization and dismantling of the emergency military control and regulation. Reconversion took place under state control.In November 1945 President Harry Truman signed legislation to cut taxes on the 6 billions of dollars. The sale of government war plants and the supply of food to private business were accelerated.With the help of the government large corporations in a relatively short period of time transferred military enterprises for the production of civil goods. Demand for new equipment, that gradually replaced worn or outdated over the years of crisis and war, has increased.Small and medium businesses could take advantage of the situation and engage in reconversion of areas where previously it was hard to compete with big business. Similar was the situation in agriculture, where favorable market conditions continued in 1945 – 1947 (Walker 5-11).
After the Second World War the United States managed to avoid the crisis of reconversion.This is explained by the fact that as a result of the so-called demand-functioning, the country had about 129 billion dollars ofliquid stocks ready to create an incentive for the production of consumer goods and for capital construction.
The onset of peace-time resulted in a curtailment of emergency management. However, this did not mean reducing the impact of state on economy. The impact has taken other forms.In 1946 a law on employment was passed. It officially proclaimed a state’s responsibility for the economical situation.It was supposed to provide maximum employment, production and purchasing power.In accordance with the law the Council of Economic Advisers (CEA), obliged to monitor the economic affairs of the country and submit an annual report to the president, was created.The Head of State had in turn to direct annual economic report along with the SEC documents, to the U.S. Congress.The report should analyze the state of the economy and make recommendations to both government and private entrepreneurs.Congress established a Joint Economic Committee to study the President’s report and drafting the necessary legislative proposals.
One of the problems of reconversion was rapidly rising inflation.It was caused by price increases that followed the abolition in late 1946 the state control over prices and wages.Stopping inflation was called by president a prior task in 1948.
In the same year the U.S. economy, having exhausted stimulating impact of war and postwar conditions, entered a stage of economic downturn. In an effort to prevent the crisis, the Republican administration of Truman has proposed the reform program named Fair Deal.It included the raising of minimal wage, low-cost housing for low-income families, assistance to farmers, financial support to states for education, the introduction of health insurance, etc. Implementation of the program was aimed at increasing consumer demand, whichconsidered by neo-Keynesians as one of stabilizing factors of the American economy(Fordham 106).
Some measures have been implemented.Thus, the minimal wage increased from 40 to 75 cents an hour, the amount of insurance benefits has increased, pension system has additionally covered 10 million of people; also a legislation to build 800 thousand apartments for low-income families within six years was adopted.
Marshall Plan contributed greatly to the lessening of the post-war recession.Marshall Plan or program for the revival of Europe was proposed by U.S. Secretary of State J.Marshall in his speech at Harvard University in June 1947. It provided assistance to European nations on conditions that it would be used for production growth and financial stability, cooperation withother countries in reducing trade barriers, delivery of scarce materials to the United States, preservation and promotion of private U.S. investment and the provision of annual reports to Congress.The Marshall Plan involved 16 European countries, including those of Great Britain, France, Italy, West Germany, etc. During the four years of a Marshall Plan the Congress of the United States has allocated 13 billion of dollars, the greater part of which was used on purchases of American goods.Thanks to the Marshall plan the U.S. disposed the surplus products that were not are sold domestically, and also could increase investment in European economies. Implementation of the Marshall Plan helped the penetration and retention of American monopolies in the markets of the member countries, has led to increased militarization of the economy and the growth of military spending. The military side of the Marshall Plan gradually became more and more prevalent. The Marshall Plan and Truman Fair Deal were main the doctrines of the U.S. that prepared the creation of NATO in 1949 (Schain 44).
Thus, during the first postwar decade the United States preserved and strengthened its position in the capitalist economy. The role of government in regulating economic life of the country has increased. That was especially evident in the period of reconversion and post-war cyclical recession.
The consequences of World War II, affecting in one way or another all countries of the world, concerned also the U.S. Though away from the main events, the U.S. took part in the hostilities themselves, and the subsequent redistribution of zones of economic and political influence.In order to minimize the adverse effects coupled with the loss of traditional economic partners, weakened by military ruin, as a basis for U.S. action was adopted the Marshall Plan – a plan to support the economy of European countries, participants of the Second World War, which has as its aim the strengthening of U.S. positions on the European continent and the establishment of worlddomination.
Implementing the Marshall Plan provided a significant economic effect for the U.S. An increase of American exports (the United States have found markets for surplus food and industrial products) have expanded their overseas investments. Aid to European countries has accelerated the renewal of technological base of American industry.
U.S. effectively used the current economic environment resulting in the war years. In the end, after the Second World War, the U.S. became the owners of two-thirds of industrial production and gold reserves of the world, they accounted for one third of world exports.No doubt, it was also the technological superiority of the country.
World War II had a great impact on the history of the United States. It becomes the leading country of the world due to its economic, financial, political and military force. The most striking manifestation of the increasing economic power of the U.S. was the post-war change in the world monetary system. The U.S. has grown economically stronger after the war and still retains its position as a leader.
Adams, Michael C. The Best War Ever: America and WWII. The Johns Hopkins University Press, 1994.
Fordham, Benjamin O. Building. The Cold War Consensus: the Political economy of the U.S. National Security. University of Michigan Press, 1998.
Norton, Mary B., Sheriff Carol, Katzman, David, M. A People and Nation: A History of the U.S. Wordsworth, 2008.
Schain, Martin. The Marshall Plan: Fifty Years After. PALGRAVE, 2001.
Walker, John F. History of the U.S. Economy since World War II. M. E. Sharpe, Inc., 1996.