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 4 th 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 – cont’d 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