The golden age miracle and the quest for stability

The post-war era was a period of institutional building. The national welfare state, the Bretton Woods institutions, the IMF and the World Bank (WB), the Organization for Economic Cooperation and Development (OECD) and the European Community were all established with an eye to avoiding depression and war. Measured by any yardstick of institution building, the Golden Age of welfare capitalism, class compromise, and embedded liberalism was a tremendous success. It buttressed democratic governance and complemented the market economy with human solidarity. Affluence contributed to a high standard of living, full employment, decent wages, universal access to education and healthcare, rights to income for the elderly, ill, disabled, unemployed, and poor, and a significant reduction of poverty and inequality. Each advanced polity put forward its own country-specific brand of the mixed economy and welfare capitalism (Esping-Andersen, 1990). Far from being polar opposites, open markets and organized solidarity prospered together. With the help of Keynesian macroeconomics and Bretton supranational cooperation, national political economies were, moreover, adequately shielded from too much foreign competition. The painful memories of the Great Depression and World War II remained ever present in the minds of post-war policymakers. In this respect, the impetus for the pathbreaking establishment of the male-breadwinner welfare state, protected by the international regime of embedded liberalism after 1945, was as much progressive in design, based on organized labour support and class compromise, as it was conservative in intent. As Charles Maier (1987) notes, post-war reconstruction reflected, above all, a quest for normalcy and a search for stability.

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