The Golden Age of Global Economic Growth 1950–1970: Characteristics, Dimensions and Impacts on European Countries

Abstract

This paper examines the period of rapid economic growth that followed World War II. The main focus of the analysis is on the factors that contributed to this era of prosperity, including economic reconstruction through the Marshall Plan, Keynesian policies of full employment and state intervention, and technological advancements that increased productivity and boosted international trade. At the same time, the paper explores the expansion of the welfare state, which improved living conditions, raised wages, and ensured social stability. The present research analyses economic inequalities between social groups and countries, the intersection between environmental degradation and intense industrial development, and structural weaknesses that arose during the studied period. Particular reference is also made to the social and political tensions associated with the labor movement and the rise in social demands, as well as the geopolitical challenges of the Cold War. Finally, the paper connects the Golden Age with the subsequent economic instability of the 1970s, marked by the collapse of the Bretton Woods system and the oil crises. While the 1950–1970 period left a positive legacy, it also revealed the limitations of a development model that was not entirely sustainable, leading to a gradual transition towards a new economic reality.

1. Introduction

The period from 1950 to 1970 has been widely recognized in historiography and economic analysis as the “Golden Age” of global economic growth. It represents a phase of unprecedented prosperity and stability, particularly for the developed industrial countries of Western Europe, the United States, and Japan. This era is characterized by high rates of economic expansion, a sharp increase in industrial production, near-full employment, and significant improvements in living standards (Maddison 2001; Eichengreen 2007). At the same time, it marked the beginning of important social and institutional transformations, especially the strengthening of the welfare state and a more interventionist role of the state in economic activity (Esping-Andersen 1990). Europe’s recovery in the post-war period was driven by various initiatives, namely the Marshall Plan, the improvement of the institutional framework that promoted investment financing, monetary stability, and international trade, and the establishment of international institutions and organizations, including the World Bank and the International Monetary Fund (IMF) (De Long and Eichengreen 1991; Eichengreen 1995; Reinhart and Trebesch 2016). Apart from these initiatives, the establishment of the European Economic Community (EEC) in 1957 also played a crucial role in European integration, along with technological development, mass production, and the widespread use of automation, which boosted productivity (Milward 1984; Gillingham 2003).

The present research aims to investigate the Golden Age of the global economy, paying attention to the European countries and examining the main features of economic growth, the structural transformations of this period, its political and institutional characteristics and the paradoxes that emerged. Based on the above, the research is not limited to analyzing the factors and the conditions that contributed to the development model, but extends to the investigation of the limitations and their impact on the path of European economies in the post-Golden Age era.

To investigate contradictions, dynamics, and structures of economic growth during the Golden Age (1950–1970), a multidisciplinary framework was applied. The framework included time-period and historical analyses, and critical literature review, focusing on the European countries. This qualitative methodology was chosen to identify dominant themes, philosophical skills, and policy patterns that transformed the economic governance during the Golden Age. Based on the methodological approaches applied by previous studies (e.g., Tosh 1993; Flora and Heidenheimer 1981), the present research identifies key concepts, namely “growth”, “productivity”, “integration”, and “welfare”, to reveal structural interactions and underlying assumptions.

The manuscript is structured to present a comprehensive perspective of the studied period. Therefore, Section 1 includes the literature review while Section 2 includes the methodology, and Section 3 presents a critical reassessment of the Golden Age, focusing on milestones of the period, namely the oil crises and the collapse of the Bretton Woods system. In Section 4, the discussion of the key findings is presented, arguing that the development model was historically successful, but unsustainable in the long-term period.

2. Methodology

To investigate contradictions, dynamics, and structures of economic growth during the Golden Age (1950–1970), a multidisciplinary framework was applied. The framework included time-period and historical analyses, and critical literature review, focusing on the European countries. This integrative strategy was applied to achieve a full understanding of the socio-economic, political, and institutional achievements of the post-war era, which modified the direction of the European economies. The present research is based on a historical analytical approach, which aims to explain the economic developments of the studied period within the geopolitical and temporal framework. This approach is motivated by previous studies (e.g., Hobsbawm 1994; Eichengreen 2007), which highlighted the importance of investigating economic transitions within long-term political conditions and structural reforms. Through this lens, the post-war reconstruction, the institutionalization of Keynesian policies, and the emergence of welfare capitalism are examined not as isolated phenomena, but as historically embedded responses to the crisis of the interwar period and the devastation of World War II (Judt 2005; Milward 1984).

Complementing the historical analysis, a period analysis enables the study to focus specifically on the bounded interval of 1950–1970. These twenty years are treated as a distinct economic and political cycle, marked by high growth, relative stability, and institutional consolidation. The selection of this period is not arbitrary: it is based on a broad academic consensus that views it as a unique phase of post-war capitalism, before the structural ruptures of the 1970s (Crafts and Toniolo 1996; Maddison 2001). By analyzing this discrete historical period, the study can assess both the causes and consequences of rapid growth, as well as the limitations of the model that supported it.

Finally, this study follows a critical literature review, by combined period and historical analysis by discussing the key research already undertaken and that we have positioned our study clearly within the wider context. This will inevitably mean being able to identify the relevant and significant theories and recognized experts in relation to the topic (Saunders and Rojon 2011).

The triangulation of these three methods enhances the analytical depth of the research. Historical analysis offers a macro-historical perspective; period analysis focuses the inquiry on a clearly defined era; and critical literature review provides the main arguments, concepts and theories of the study issue (Jesson and Lacey 2006). Together, they provide a robust framework for understanding the complexities of post-war development and for evaluating the legacy of this period in contemporary economic thought and policy.

Ultimately, this methodological synthesis aligns with the broader goal of the article: to move beyond descriptive accounts and offer a nuanced, critical interpretation of the Golden Age. It provides the necessary tools to assess not only what occurred between 1950 and 1970, but also how and why it happened, and with what enduring implications.

3. Literature Review

3.1. Εconomic Reconstruction

In the post-World War II period (1950–1970), the economic reconstruction of Europe and other conflict-affected countries was vital to achieve economic growth. Certain regions and countries, namely Western Europe and Japan, were characterized by high uncertainty, attributed to deindustrialization, the destabilization of national currencies, and the collapse of infrastructure. Various reconstruction efforts were applied to address these issues, which included international support mechanisms and domestic structural adjustments, including the Bretton Woods system and the Marshall Plan (Milward 1984; Eichengreen 1996; Achenui 2021). The success of this reconstruction process depended on the financial support, as well as on the administrative capacity and institutional trust, which contributed to public legitimacy and policy implementation (Del Castillo 2008; Klemm and Mauro 2021).

The European Recovery Program, known as the Marshall Plan, launched in 1948, was the basis of this reconstruction process. It provided over $13 billion in economic support to Western European countries to support the physical rebuilding and promote policy coordination and economic cooperation (Achenui 2021). The Marshall Plan presented unique features, arguing that it was an instrument for long-term structural reforms and a package of economic incentives that boosted export-led growth and productivity gains (De Long and Eichengreen 1991). It was not only a symbol of humanitarianism and American generosity (Jackson 1979) but a strategic action that improved the political and economic conditions in Europe in the early Cold War era (Milward 1984). Previous studies concluded that countries that received higher economic support achieved greater productivity gains and faster investment recovery, which proved the transformative structural effect of the plan (Vonyó 2021; Crafts 2016).

Apart from the financial aid, the establishment of new institutional frameworks also played a crucial role. The foundation of the Organization for European Economic Cooperation (OEEC) in 1948 simplified the cooperation among the recipient economies and promoted trade liberalization within the European countries. Meanwhile, the establishment of the World Bank and the IMF as a result of the Bretton Woods Conference in 1944 provided economic aid for development and balance-of-payments and contributed to the stabilization of the exchange rates (Eichengreen 2007; Ruggie 1982; Kugler and Straumann 2020). These institutions aligned with the national development plans and promoted open markets and ensured monetary stability. Moreover, they established the multilateral cooperation principles and the rules-based economic governance, which play a vital role in the modern economic system (Kentikelenis and Babb 2019; Oatley 2013).

Nevertheless, the post-war reconstruction was not limited to material rebuilding but extended to the promotion of political legitimacy and social stability, mainly through rising real wages and reducing unemployment (Maddison 2001). The reconstruction strategy set the scene for institutional innovation, namely government-led investments and better social insurance policies, which were fundamental to the Keynesian model in the post-war period (Esping-Andersen 1990; Hall 1986). Additionally, the reconstruction process facilitated the transition towards welfare capitalism and contributed to the establishment of the “social investment states”, which combined both inclusive development and economic growth (Morel et al. 2012; Hemerijck 2013).

Unfortunately, it should be noted that the reconstruction plan was not equally successful in every region. As mentioned, Japan and the Western European countries achieved rapid revitalization, but, at the same time, several Eastern European countries faced limited access to Western technology and capital, and constraints by centrally planned economies (Berend 2013). It is argued that international institutions were designed to favor Western interests, and, consequently, they could not satisfy the developmental needs of less industrialized economies (Stiglitz 2002). Recent studies confirmed these asymmetries, suggesting that the post-war financial institutions were characterized by long-term structural biases, which resulted in inconsistent development (Ban and Gallagher 2015; Babb and Kentikelenis 2021).

In conclusion, the economic reconstruction in the post-war period provided the fundamentals for the Golden Age. The period 1945–1950 included institutional reforms, policy innovations, and financial aid, and it could be characterized as transformational, paving the way for the sustained development of the Western world in the following years.

3.2. Technological Progress and Productivity

The technological progress, which significantly affected productivity, was a milestone of the post-war economic expansion. The period from 1950 to 1970 witnessed the widespread diffusion of innovations developed during and immediately after World War II, which were gradually integrated into industrial production, transportation systems, energy networks, and consumer goods manufacturing (Maddison 2001; Abramovitz 1986). These innovations boosted productivity while, at the same time, they transformed organizational structures, labor procedures, and the foundations of the Western capitalist economies. It is observed that the post-war period was characterized by high rates of total productivity growth due to the application of the general-purpose technological systems (Gordon 2016; Bergeaud et al. 2014).

The productivity was intensified across key sectors, including construction and manufacturing, mainly due to automation and mechanization, which contributed to the transition to mass production. At the same time, the Fordist assembly line was adopted, the key elements of which were scale economies, standardized outputs, and assembly lines, and led to higher output volumes and reduced unit costs (Chandler 1990; Zeitlin 2000). This transformation process was reinforced by the scientific management strategies, which improved workflows and rearranged labor, focusing on control and efficiency (Broadberry 1997). Under these circumstances, large firms exploited external linkages and internal economies of scale, establishing their market leadership and overall growth. It should be noted that these firms were able to absorb and adapt foreign technologies, which enabled them to achieve national productivity convergence, mainly within the EEC (Bassanini and Scarpetta 2020).

Furthermore, the technological progress in distribution and energy production was important as well. New forms of consumption were created after the transition from coal to oil and the expanding role of electricity, which resulted in more flexible sources of power, a well as industrial productivity gains (Landes 1969). Meanwhile, investments in infrastructure, mainly in the transportation sector, including logistics and road networks, enabled the cheaper and faster distribution of products, and the further economic integration at the national and regional level (Freeman and Soete 1997). The infrastructure development of this period boosted productivity as well as the expansion of consumer markets within the European economies and the spatial economic integration (Martí-Henneberg 2013; Crafts and Klein 2018).

The role of innovation also became decisive in the agricultural industry, as improved seed varieties, chemical fertilizers, and mechanization reduced labor intensity, improved food production, and oriented the workforce towards the industrial sector (Grigg 1982; Gardner 2002). The so-called “Green Revolution” was particularly noticeable in the Western European economies, which presented comparable rates of industrial and productivity growth (Maddison 1995). Additionally, technological advances in the sector contributed to poverty alleviation and demographic shifts towards labor markets in urban regions (de Pleijt and van Zanden 2021).

This technological shift was characterized by its cumulative characteristics. High growth rates were attributed to the interconnection among innovation, skill development, and capital accumulation (Abramovitz 1986). During the studied period, the educational systems were also improved, which resulted in the implementation of new technologies by a more skilled and capable workforce (Esping-Andersen 1990). The interaction between technological advances and the workforce contributed to quantitative growth and qualitative reforms in labor and production. It is argued that investments in Research and Development (R&D) and human capital development were complementary actions, and intensified the long-term benefits of the spread of technologicy (Diebolt and Hippe 2019; Barro and Lee 2013).

Nonetheless, the diffusion of technology was uneven. While countries like Germany, France, and Japan managed to close the productivity gap with the United States through rapid adoption and adaptation of innovations, Southern and Eastern European economies often lagged due to institutional weaknesses and limited access to capital and research networks (Crafts and Toniolo 1996; Berend 2013). Recent comparative analyses highlight that technological spillovers were highly dependent on national innovation systems and the capacity of local institutions to translate foreign technologies into productivity gains (Fagerberg et al. 2010).

Viewed in context, the technological advancements of the Golden Age did not merely underpin the rapid economic growth of the time—they also laid the foundation for the modernization of European societies. As will be discussed in the following sections, the productivity gains achieved during this period had far-reaching implications for labor markets, income distribution, and the structural transformation of post-war economies.

3.3. Emphasis on Economic Institutions

The Golden Age was characterized by economic prosperity, which was not attributed solely to post-war reconstruction and technological progress. On the contrary, the establishment and development of a stable international institutional framework advanced this goal and promoted trade expansion, coordinated development, and economic stability. To prevent pre-war instability, the governments focused on the economic institutions and, mainly, on economic cooperation, stability, multilateralism, and formal governance (Ruggie 1982; Eichengreen 1996; Crafts 2018). It is argued that global economic governance and institutional quality contributed to long-term growth, stabilized policy environments, and guaranteed international commitments (Babb and Kentikelenis 2021; Broome et al. 2018).

The Bretton Woods system, established in 1944, was a pedestal in this institutional context, setting a fixed exchange standard between gold and the U.S. dollar. Both the World Bank and the IMF supported the establishment of the Bretton Woods system, which contributed to international liquidity, currency stability, and the financial support of countries experiencing balance-of-payments disequilibrium (Kindleberger 1986; Bordo 1993; Eichengreen 2007). The IMF was responsible for the short-term financial support and fostering macroeconomic discipline, and served as a lender of last resort. At the same time, the World Bank promoted long-term development and financed several reconstruction and infrastructure projects, mainly in conflict-affected countries in Asia and Europe (Milward 1984; De Long and Eichengreen 1991; Del Castillo 2010). The contribution of these institutions was vital, arguing that the IMF and the World Bank promoted the post-war development, reduced systemic risk through establishing policy coordination mechanisms, and encouraged capital mobility (Bordo 2017; Gallagher and Ocampo 2013).

Meanwhile, the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947 eliminated protectionist barriers and promoted trade liberalization. After the successful completion of the negotiation rounds, GATT provided a rules-based system to resolve trade controversies and promote commercial predictability, which boosted the development of transnational trade during the 1950s and 1960s (Irwin 2017; Findlay and O’Rourke 2007). Innovation was diffused across countries, and capital was moved across borders, as a result of trade openness, which increased competition in domestic markets and improved productivity. GATT ensured an institutional framework which established the liberal international order and increased integration of global value chains for decades (Allee et al. 2017; Hoekman 2015).

At the regional level, the establishment of the European Coal and Steel Community in 1951 and the EEC in 1957 signaled the origin of institutionalized economic integration in Western Europe. These transnational frameworks facilitated trade among the European countries and resource allocation, and promoted stability and political cohesion in the war-affected region (Milward 1992; Moravcsik 1998). The goal of the EEC was to ensure a coordinated policy-making and a common market, which would lead to political and economic integration as the foundation of the European Union. The EEC provided geopolitical and financial benefits, established a legal order and common standards among member states, and facilitated convergence (Linsi and Mügge 2019; Schramm 2025).

The establishment of these regional and international institutions led to the stabilization of national economic policies. They were aligned with the Keynesian macroeconomic model and contributed to the creation of stable conditions, which helped states strive for welfare expansion, full employment, and public investment, unaffected by trade barriers and fear of currency crises (Esping-Andersen 1990; Hall and Soskice 2001). Based on the above, the dominant model was characterized by embedded liberalism, which included social protection, open markets, and domestic regulation (Ruggie 1982). This paradigm provided a historically specific settlement between transnational cooperation and state sovereignty, and it was exceptionally stable until the crises of the 1970s (Helleiner 2019; Rodrik 2011). In conclusion, in the post-war period, the institutional measures influenced the trajectory of European and international economic growth. They also promoted stability and cooperation, influenced long-term strategies of the involved states, and determined the equilibrium between state intervention and market forces in the changing capitalist situation.

3.4. Expansion of the Welfare State

Another characteristic of the Golden Age was the expansion of the welfare state, which contributed to the wider social and economic reforms during the period 1950–1970. Motivated by the Keynesian model and the need for inclusive reconstruction, Western European countries managed to secure social protection, reduce inequalities, and stabilize domestic demand. The integration of the welfare institutions enhanced social cohesion, mitigated the effects of economic fluctuations, supported consumption, and ensured the sustainability of economic growth (Esping-Andersen 1990; Baldwin 1990). The so-called “social investment turn” was prioritized in the European growth paradigm, leading to social integration and economic modernization (Hemerijck 2013; Vandenbroucke et al. 2011).

In the post-World War II period, several European states applied a protective and interventionist policy. The welfare state was based on solvency, redistribution, and universality, promoted trust in democratic institutions, and prevented social disruptions of the past. It was characterized as a settlement among capital, the state, and labor, highlighting social rights as the foundation of citizenship (Flora and Heidenheimer 1981). Nevertheless, this settlement was different across countries, which led to different but functionally equivalent paradigms to promote social stability (Ferrera 2012; Obinger and Starke 2019).

A key characteristic of the welfare expansion was the development of health care, unemployment benefits, pensions, and a universal protection system. Countries such as the United Kingdom, France, and Germany implemented far-reaching reforms that extended coverage, increased benefit levels, and reduced eligibility restrictions (Esping-Andersen 1999). At the same time, public education was further promoted, focusing on secondary and tertiary education, social mobility was facilitated, and the workforce skills were improved to align with the demands of modern society (McCracken 1998). Investments made in education and welfare led to long-run economic efficiency and equity (Cantillon and Vandenbroucke 2014; OECD 2018).

The economic basis of the welfare expansion was the Keynesian economic theory, which highlights the role of public spending to ensure aggregate demand and full employment. Welfare costs served as automatic stabilizers, balancing cyclical downturns and improving household incomes. Meanwhile, the states applied employment policies, including aid for industrial development and public work strategies, to ensure that productive spending was aligned with social spending (Hall 1986; Crafts and Toniolo 1996). This coordinated capitalistic model improved the macroeconomic stability and resilience, mainly compared to liberal market countries (Baccaro and Pontusson 2016).

In addition, the welfare expansion represented political dynamics. Christian and social democratic parties shaped post-war welfare systems and incorporated them into their national development policies. The Cold War further boosted the political legitimacy of welfare states, and Western countries aimed to differentiate the paradigm of inclusive capitalism from the centralized control of socialist states (Judt 2005; Hobsbawm 1994). Based on the above, the welfare state is characterized as a geopolitical and domestic plan that aligns social justice with transnational credibility and economic efficiency. These features proved the strategic role of social policy in fostering ideological competition, legitimacy, and loyalty during the early Cold War (Slobodian 2018).

Nevertheless, the welfare expansion was unequal across different European countries. In particular, the Southern European economies, which presented weaker institutions and different labor market structures, faced difficulties in building overall comprehensive welfare systems (Esping-Andersen 1990; Berend 2013). Additionally, concerns were later raised about the long-term economic sustainability of welfare states, mainly related to the economic reconstruction in the post-1970 era and the demographic changes. Clientelistic politics in Southern European countries shaped and fragmented the early welfare development, resulting in continuous regional disparities (Guillén and León 2011).

Finally, the expansion of the welfare state during this period was the basis for the social contract in the post-war era. It contributed to poverty alleviation, better living conditions, and the integration of different social groups in a common framework of responsibilities and rights. As the next sections will show, these developments had profound implications for the stability and legitimacy of Western European societies.

3.5. Economic Inequalities Between Countries

Despite the generalized perception of the Golden Age (1950–1970) as a period of sustained prosperity and convergence among Western economies, significant economic inequalities between countries persisted, and in some cases, widened. The pace and scope of post-war recovery and growth were far from uniform, shaped by structural, institutional, and geopolitical factors that created stark contrasts both within Europe and between the industrialized North and the developing South (Maddison 2001; Berend 2013). Recent comparative analyses confirm that while the period witnessed convergence among a core group of high-income countries, divergence trends prevailed at the global level, with limited catch-up by developing regions (Bourguignon 2015; Piketty 2020).

Within Western Europe, countries such as West Germany, France, and the Netherlands experienced rapid industrialization and export-driven growth, bolstered by early access to Marshall Plan funding, advanced infrastructure, and favorable institutional conditions (Milward 1984; De Long and Eichengreen 1991). West Germany, in particular, emerged as a model of reconstruction success, undergoing the so-called Wirtschaftswunder (economic miracle) through a combination of productivity increases, social partnership, and disciplined monetary policy (Abelshauser 2005). Contemporary research emphasizes the role of coordinated market economies and strong vocational training systems as crucial enablers of this success (Hall and Soskice 2001; Dustmann et al. 2014).

In relation to West Germany, the Eastern German economy started to stall and regress to its old growth path of the 1950s and 1960s. Eastern Germany has followed a two-thirds growth path compared to Western Germany, which shows that the structural problems of communist rule have not been overcome. Eastern Germany fell back to the long-term growth path it was following between the 1950s and the early 1970s—which was at 70% of western levels. Eastern Germany experienced two simultaneous adaptation shocks: globalization and unification. Initial impressions were that it would be able to master both (Blum 2019). Between 1949 and 1961, an estimated 2.7 million people migrated from East to West Germany. East Germany had a communist government with a socialist economy and was a satellite state of the Soviet Union, whereas West Germany was a liberal democracy with a capitalist economy, and western autonomy increased over time. Because of this difference, West Germany was a much freer society with more economic opportunities. During the German partition, the population of the west grew, from 51 million in 1950 to 62.7 million in 1989, whereas the population of East Germany declined from 18.4 million to just 16.4 million during this time (O’Neill 2024)

In contrast, Southern European economies—including Greece, Spain, and Portugal—lagged in terms of both output and productivity. Although they too benefited from elements of reconstruction and modernization, their growth trajectories were hindered by lower levels of capital accumulation, limited access to advanced technologies, weaker institutional frameworks, and often authoritarian regimes that did not prioritize inclusive development (Crafts and Toniolo 1996; Berend 2013). As Bairoch (1988) emphasizes, these disparities were particularly visible in terms of industrial output, urbanization rates, and integration into international trade networks. More recent literature also links the slower convergence of Southern Europe to underinvestment in education, late industrial transition, and limited innovation systems (Andreoni and Chang 2019).

Even within the more advanced economies, regional imbalances remained a pressing issue. In countries like Italy, for example, the “North-South divide” reflected deep historical inequalities in infrastructure, education, and labor markets, with the industrialized north advancing rapidly while the agrarian south remained marginalized (Fauri 2010; Ginsborg 1990). These internal divergences challenged national governments to adopt redistributive policies and regional development plans, with varying degrees of success. Empirical evidence suggests that while some policies had temporary redistributive effects, structural convergence remained limited in the long run (Rodríguez-Pose 2018).

Beyond Europe, the global picture was even more complex. The divide between the Global North and the Global South intensified during this period, despite the rhetoric of development and modernization. While newly industrialized countries such as Japan and, to a lesser extent, some parts of Latin America made significant strides, much of Africa, Asia, and the Middle East remained excluded from the dynamics of sustained economic growth (Findlay and O’Rourke 2007; Rodrik 2011). This asymmetry was partly a legacy of colonial structures and partly the result of global market integration that tended to privilege capital-rich and industrialized economies (Singer 1950; Lewis 1954). Current scholarship emphasizes the long-lasting institutional legacies of colonialism, including extractive governance and weak capacity-building, as central explanations for persistent underdevelopment (Acemoglu and Robinson 2012).

Additionally, the governance of international institutions—such as the IMF, World Bank, and GATT—was heavily influenced by the interests of developed nations, often failing to address the structural constraints of poorer countries. As Stiglitz (2002) notes, this imbalance in global economic governance contributed to persistent underdevelopment and economic dependency in many parts of the world, undermining the goal of equitable growth. Recent critiques argue that the institutional architecture of the post-war global economy lacked inclusive mechanisms for developmental states, leading to structural asymmetries that persist even in the post-Bretton Woods era (Gallagher and Kozul-Wright 2021; Kentikelenis and Babb 2019).

Taken as a whole, the Golden Age was characterized by strong overall performance in economic terms, but this growth was unevenly distributed. The persistent and in some cases widening inequalities between countries serve as a reminder that aggregate prosperity can mask deep developmental divides—an issue that would gain increasing prominence in the decades following the 1970s, especially as global economic integration deepened further.

3.6. Geopolitical Tensions and Social Movements

While the Golden Age (1950–1970) is often celebrated for its economic dynamism and social progress, it unfolded within a broader geopolitical context marked by persistent global tensions and the emergence of powerful social movements. The post-war period was defined by the Cold War—a bipolar confrontation between the United States and the Soviet Union—that influenced not only foreign policy and military strategy but also shaped economic planning, ideological narratives, and domestic political agendas across Europe and beyond (Judt 2005; Furet 1995). More recent geopolitical analyses argue that the Cold War functioned not only as a military standoff but also as a framework for legitimizing competing economic models and development strategies (Westad 2017; Slobodian 2018).

Western Europe found itself at the heart of this ideological and strategic divide. The U.S. extended economic and military assistance to European allies not only to promote recovery but also to contain Soviet influence. Initiatives such as the Marshall Plan and the formation of NATO in 1949 served both as tools for reconstruction and as instruments of geopolitical alignment (Milward 1984; Eichengreen 2007). The perceived threat of communism reinforced the legitimacy of capitalist democracies and led to consensus-building around centrist economic and social policies, including the expansion of the welfare state and support for full employment (Esping-Andersen 1990). Scholars today stress that this consensus was underpinned by a “geopolitical Keynesianism” that reconciled market growth with social security as a bulwark against ideological radicalism (Tooze 2021; Sandbrook 2014).

However, the intensification of Cold War tensions, particularly after the Korean War (1950–1953), led to increased defense spending and a climate of political conformity, which often suppressed dissent. At the same time, the geopolitical competition accelerated technological innovation, particularly in aerospace and communication, which indirectly benefited civilian industries through spillover effects (Maddison 2001; Landes 1969). Recent research underlines that dual-use innovation during this period significantly boosted productivity in sectors such as electronics and aviation, laying the groundwork for future globalization (Misa 2011; Edgerton 2019).

On the domestic front, the long period of economic growth did not prevent the surfacing of significant social and political unrest, particularly in the late 1960s. As economic prosperity stabilized middle-class expectations, new generations began to challenge traditional authority structures, demand greater political participation, and advocate for civil rights, gender equality, and peace (Hobsbawm 1994; Tilly 2004). The student and worker uprisings in France in May 1968 epitomized the convergence of economic discontent with cultural and ideological aspirations, revealing deep-seated frustrations with bureaucratic capitalism, state paternalism, and the limits of post-war consensus politics (Mazower 1998). Contemporary interpretations highlight how these movements were part of a “global 1968,” in which youth activism, anti-imperialism, and new social imaginaries emerged simultaneously across continents (Kurlansky 2018; Klimke 2010).

These movements were not confined to France. Across Western Europe, trade unions grew stronger, calling for improved working conditions, higher wages, and democratic participation in the workplace. In Italy and West Germany, social mobilization became a key feature of public life, leading to labor reforms and political realignments (Ginsborg 1990; Hall 1986). Moreover, the rise in second-wave feminism, environmental awareness, and anti-nuclear activism signaled a broadening of the political agenda beyond purely economic concerns (Carson 1962; McNeill 2000). Recent feminist historiography shows that these movements also questioned the gendered foundations of the post-war settlement and pushed for greater recognition of care work, reproductive rights, and intersectional justice (Fraser 2016; Evans and Lépinard 2020).

The impact of these social movements extended into institutional frameworks. The governments applied different strategies to satisfy the new demands in the post-war capitalism, namely, co-optation, reforms, and repression. These tensions signaled the crisis of the Keynesian model and the shift towards neoliberalism (Harvey 2005). The late 1960s are considered a signal moment and turning point that highlighted the sociopolitical limits of the post-war order (Gago and Mezzadra 2017; Brenner 2019).

Considered in this context, the Golden Age is considered a contested and complex period, characterized by activism and geopolitical pressures, that shaped the limits of social change and economic development.

4. Critique of the Golden Age Based on the Analysis

4.1. General Information

Although the period from 1950 to 1970 is often characterized as a time of unprecedented economic prosperity, social progress, and institutional stability, particularly within Western Europe, it is essential to approach the so-called “Golden Age” with a critical lens. Behind the narrative of continuous growth and social harmony lay important structural imbalances, asymmetries, and tensions that would become increasingly evident by the end of the 1960s. As scholars such as Hobsbawm (1994) and Judt (2005) have argued, the apparent consensus of the post-war decades often concealed deep-seated contradictions in the political economy of advanced capitalist societies.

One of the core critiques concerns the uneven distribution of growth, both within and between countries. While nations such as West Germany and France experienced rapid industrial expansion, others, particularly in Southern and Eastern Europe, struggled to replicate this trajectory due to institutional weaknesses, capital shortages, and authoritarian political structures (Crafts and Toniolo 1996; Berend 2013). At the same time, growth often relied on unsustainable patterns of consumption, fossil fuel dependency, and mass production systems that contributed to environmental degradation (Carson 1962; McNeill 2000).

Another key critique relates to the limits of the Keynesian welfare model, which, despite its initial success, began to face fiscal pressures, labor market rigidities, and declining productivity by the late 1960s (Esping-Andersen 1990; Hall 1986). Social tensions—manifested through strikes, youth movements, and political polarization—revealed growing dissatisfaction with existing institutions and values, signaling a broader legitimacy crisis (Tilly 2004; Mazower 1998).

Viewed in this light, the Golden Age appears not as a timeless ideal, but as a historically specific configuration of growth, governance, and compromise—effective, yet inherently fragile.

4.2. Bretton Woods

The Bretton Woods system, established in 1944, constituted a cornerstone of the international economic order that underpinned the Golden Age of capitalism. Its foundational principles—fixed but adjustable exchange rates, capital controls, and institutional oversight through the IMF and the World Bank—sought to combine monetary stability with national economic sovereignty and global cooperation (Eichengreen 1996; Ruggie 1982). While the system initially succeeded in promoting growth, trade liberalization, and currency stability, it also exhibited structural vulnerabilities that became more apparent toward the end of the 1960s, ultimately leading to its collapse in the early 1970s.

One of the key criticisms of the Bretton Woods framework concerns the asymmetric nature of the dollar-gold standard, which granted the United States a privileged position within the global monetary hierarchy. As the U.S. dollar became the primary reserve currency, the system relied heavily on American economic and fiscal discipline to maintain global stability. However, by the late 1960s, mounting U.S. deficits—exacerbated by the Vietnam War and expansive domestic spending—led to a crisis of confidence in the dollar’s convertibility to gold (Kindleberger 1986; Eichengreen 2007). This phenomenon, described by Triffin (1960) as the “Triffin dilemma,” highlighted the inherent contradiction between short-term domestic objectives and the long-term sustainability of the international system.

Furthermore, the rigidity of fixed exchange rates proved increasingly incompatible with the changing dynamics of national economies. As productivity differentials widened and inflationary pressures emerged, especially in countries experiencing high growth, the adjustment mechanisms of the system became inadequate. Countries either accumulated unsustainable trade imbalances or were forced into deflationary policies to defend their exchange rates, often at the expense of employment and social stability (Crafts and Toniolo 1996).

Another structural critique pertains to the limited inclusivity of global governance institutions. Although Bretton Woods aimed to provide a multilateral framework for economic coordination, decision-making within the IMF and the World Bank remained dominated by the industrialized West, particularly the United States (Stiglitz 2002). Developing countries had little influence over policy design, while the conditionalities attached to financial assistance often prioritized fiscal discipline over developmental needs. This imbalance undermined the system’s legitimacy and reinforced global inequalities (Rodrik 2011; Singer 1950).

The collapse of the Bretton Woods system in 1971—marked by the unilateral suspension of the dollar’s convertibility into gold by the Nixon administration—exposed the fragility of the post-war monetary order. The transition to floating exchange rates in the subsequent years created a more volatile global financial environment, which challenged the assumptions of stability and predictability that had characterized the previous decades (Obstfeld and Taylor 2004).

In retrospect, Bretton Woods was both a stabilizing force and a source of latent tension. Its initial success in fostering economic recovery and integration cannot be denied, yet its structural contradictions and political asymmetries ultimately limited its long-term viability. The collapse of the Bretton Woods system introduced a monetary transition and fundamental changes in the economic paradigm, oriented towards market-driven globalization and away from embedded liberalism (Eichengreen 1996; Harvey 2005; Grewal 2018).

4.3. Oil Crises

The outbreak of the two oil crises in the 1970s was one of the most important turning points in the post-war period, signaling the end of the Golden Age. These crises disrupted the process of the global economy, revealed structural weaknesses, and reformed the assumptions of the development model built on in the post-1945 period. The Golden Age included stable input costs, cheap energy, and high productivity gains, but, on the contrary, these shocks revealed a new situation, characterized by inflation, uncertainty, and geopolitical vulnerability (Maddison 2001; Eichengreen 2007; Patidar et al. 2024).

The first oil crisis was triggered by the Yom Kippur War and the subsequent decision of the Organization of Petroleum Exporting Countries (OPEC) to impose an oil embargo on Western nations seen as supporting Israel. This act, coupled with a coordinated increase in oil prices, led to a quadrupling of oil costs within a few months. The result was a profound economic shock, particularly for the advanced industrial economies that had developed a high dependence on fossil fuels during the previous two decades (McNeill 2000; Berend 2013).

The sudden rise in energy costs had immediate and far-reaching consequences. Inflation surged while real wages stagnated, creating the phenomenon of stagflation—a combination of stagnant growth and high inflation—that could not be explained or resolved through traditional Keynesian tools (Hall 1986; Harvey 2005). As production costs increased, firms reduced investment, employment fell, and governments struggled to maintain previous levels of social spending and public investment. The crisis thus exposed the limitations of the post-war consensus, particularly the belief in permanent full employment and predictable macroeconomic management (Esping-Andersen 1990).

The second oil shock in 1979, triggered by the Iranian Revolution and further instability in the Middle East, reinforced these effects. This second wave of energy price increases deepened existing structural weaknesses and contributed to a global economic slowdown. As Eichengreen (1996) notes, these crises not only destabilized national economies but also eroded confidence in the international economic order, accelerating the transition away from the Bretton Woods system and toward floating exchange rates and financial liberalization.

In addition to their economic impact, the oil crises had significant geopolitical and institutional implications. They revealed the increasing power of resource-exporting nations in shaping global macroeconomic trends and undermined the dominance of Western-led institutions like the IMF and World Bank. Moreover, they forced Western governments to reconsider their energy policies, resulting in strategic diversification efforts, investment in nuclear power, and the promotion of energy efficiency, though with uneven results (Carson 1962; McNeill 2000).

From a general perspective, the oil crises signaled the weaknesses of the post-war growth model and moved towards a neoliberal paradigm, which included a tight monetary policy, deregulation, and market efficiency over government intervention. This period disrupted the balance between society, market, and state, launching a new era of global capitalism, shifting away from the embedded liberalism of the Golden Age (Harvey 2005).

In sum, the oil crises were more than exogenous shocks; they were catalysts that exposed and intensified the internal contradictions of the post-war economic system. Their legacy shaped not only economic policymaking in subsequent decades but also the trajectory of global development well into the late twentieth century.

4.4. Other Significant Developments

Beyond the widely acknowledged disruptions of the collapse of the Bretton Woods system and the oil crises of the 1970s, several additional but equally critical developments unfolded in the final years of the Golden Age. These processes, often structural and cumulative, contributed decisively to the erosion of the post-war economic model’s viability. They reveal that the crisis of the 1970s was not merely the result of external shocks, but rather the culmination of systemic tensions that had been building throughout the previous two decades.

A central issue was the gradual decline in productivity growth in many advanced economies by the late 1960s. The initial post-war period had witnessed extraordinary gains in productivity, largely due to reconstruction, industrial modernization, and the diffusion of wartime technologies (Abramovitz 1986; Maddison 1995). However, as these sources of growth reached their limits, the pace of innovation slowed, and the capacity of capital-intensive production models to deliver sustained output gains diminished. In countries like the United Kingdom and France, productivity growth began to lag behind that of West Germany and Japan, raising concerns about long-term competitiveness (Broadberry 1997; Crafts and Toniolo 1996).

Simultaneously, inflationary pressures began to build, initially fueled by rising wages and full employment policies. The Phillips Curve trade-off between inflation and unemployment, which had guided Keynesian macroeconomic policy, became increasingly unstable as both inflation and joblessness rose—a phenomenon later termed “stagflation” (Hall 1986). The fiscal strain from expanding welfare commitments further aggravated these pressures, particularly as demographic aging and growing demands on social services placed unprecedented stress on public finances (Esping-Andersen 1990; Flora and Alber 1981).

Another key development was the intensification of global competition. While Western European economies had dominated global manufacturing during the early post-war years, this dominance came under pressure from emerging industrial powers, especially Japan. Leveraging advanced technology, efficient production systems, and export-oriented strategies, Japan managed to surpass many European economies in terms of output quality and market penetration (Maddison 2001; Berend 2013). This shift signaled the beginning of a global redistribution of industrial capacity, which undermined traditional employment sectors in Europe and sparked early concerns about deindustrialization.

At the same time, sociopolitical tensions grew increasingly prominent. The post-war social consensus, built on class compromise, state intervention, and collective bargaining, began to fracture under the weight of new demands. The student protests of May 1968 in France, the Italian Autunno caldo (Hot Autumn) labor strikes, and anti-authoritarian movements across Western Europe reflected a growing dissatisfaction with bureaucratic institutions, rigid labor structures, and the limited scope of democratic participation (Tilly 2004; Ginsborg 1990). These movements often targeted not only economic inequality but also broader cultural and existential questions, including gender roles, civil rights, and personal autonomy (Hobsbawm 1994; Judt 2005).

In addition, the emergence of environmental consciousness introduced a new axis of critique against the dominant growth paradigm. Rachel Carson’s (1962) Silent Spring and the landmark report The Limits to Growth (Meadows et al. 1972) challenged the long-standing assumption of infinite economic expansion. The post-war model presented environmental externalities, and it was associated with ecological degradations, which were revealed by deforestation, industrial pollution, and overconsumption (McNeill 2000). In the 1960s, interest was oriented towards the environmental movement in industrialized countries, arguing that environmental policy was not prioritized until then.

Additionally, the labor market was significantly influenced by technological progress. The increasing automation of industrial production, while initially boosting productivity, gradually led to labor displacement, especially in low-skilled sectors. The process brought to early attention concerns related to technological unemployment and paved the way to employment insecurities, which were intensified in the following years (Piore and Sabel 1984; Brynjolfsson and McAfee 2014).

Overall, these developments exposed the internal weaknesses of the Golden Age paradigm. The features of the post-war prosperity, namely social welfare, full employment, mass consumption, and industrial intensification, were unsustainable due to the global changes, ecological barriers, reduced productivity, and sociopolitical mobilizations. Rather than a sudden collapse, the end of the Golden Age should be understood as the outcome of intersecting processes that gradually undermined the foundations of post-war economic and social order.

As the following section will demonstrate, the post-1970 transition was not only a response to external crises but also an attempt to reconfigure the very framework of capitalism that had emerged after 1945.

4.5. To the Post-1970 Transition

The period between 1950 and 1970, widely described as the “Golden Age” of global economic development, is often viewed through the lens of prosperity, stability, and institutional coherence. However, a broader examination of the underlying structures, policy frameworks, and socioeconomic consequences reveals a more complex landscape—one shaped by both historic opportunities and systemic limitations. The present section synthesizes the above-presented analysis and examines the extent to which the Golden Age introduced an inclusive and sustainable model of development, mainly for the European countries in the post-1970 transition.

A core mechanism of the post-war economic development was the large-scale economic reconstruction process, mainly in Japan in Europe. The Western European countries seized the opportunity of motivated coordination and financial aid, which were provided by the Marshall Plan to support modern infrastructures and industrial recovery (De Long and Eichengreen 1991; Milward 1984). These investments contributed significantly to the restoration of production capacity, expansion of trade, and institutional stabilization, forming the backbone of the new economic order.

In parallel, technological progress and innovation radically transformed the nature of production. The integration of automation, energy-intensive machinery, and advances in transport and communication technologies enabled mass production and distribution on an unprecedented scale (Abramovitz 1986; Freeman and Soete 1997). These developments enhanced productivity, fostered competitiveness, and laid the groundwork for higher wages and expanded consumer markets, particularly within Western industrialized nations.

Equally decisive was the creation and consolidation of international economic institutions, such as the IMF, the World Bank, and the GATT, which underpinned global trade liberalization and financial stability (Eichengreen 1996; Ruggie 1982). Their role in mediating currency stability, reducing tariffs, and offering developmental financing enabled a relatively predictable economic environment, crucial for rebuilding confidence in post-war international cooperation. However, these institutions were often criticized for reinforcing Western economic dominance, particularly through governance structures that marginalized developing countries (Stiglitz 2002; Rodrik 2011).

Domestically, the expansion of the welfare state played a central role in fostering social cohesion and equitable growth. The implementation of comprehensive social protection systems—including health care, education, pensions, and unemployment insurance—reduced poverty and enhanced living standards for large segments of the population (Esping-Andersen 1990; Flora and Heidenheimer 1981). These measures not only improved individual well-being but also stimulated demand and contributed to overall economic stability.

Nonetheless, while the post-war model succeeded in many respects, it was far from universally inclusive. Economic inequalities between countries persisted and, in some cases, deepened. While Western European economies rapidly industrialized, many regions in Southern and Eastern Europe, as well as most of the Global South, remained structurally disadvantaged. The global division of labor continued to favor capital-intensive exporters, while primary-producing countries faced deteriorating terms of trade and limited access to capital and technology (Singer 1950; Lewis 1954; Berend 2013).

Moreover, geopolitical tensions and social unrest intensified in the latter half of the 1960s, highlighting the fragility of the apparent post-war consensus. The Cold War structured political alignments and shaped economic priorities, often subordinating democratic reform to strategic considerations (Judt 2005; Furet 1995). At the same time, growing public dissatisfaction with bureaucratic governance, social inequalities, and cultural rigidity sparked widespread protests and labor movements, as seen in the French May of 1968 and the Italian workers’ mobilizations (Tilly 2004; Mazower 1998).

Environmental degradation also emerged as a key concern toward the end of the period. The intensive industrialization and consumption-driven model promoted during the Golden Age led to pollution, resource depletion, and ecological imbalance—issues raised notably by Carson (1962) and Meadows et al. (1972), whose work would influence the rise in environmental movements in subsequent decades.

Ultimately, the discussion reveals that the Golden Age, while characterized by impressive economic and social achievements, was not a universally replicable or indefinitely sustainable model. Its successes were contingent on specific historical conditions, including geopolitical alignment, resource availability, and a coordinated institutional framework. The studied period created the foundation for the development of welfare institutions and long-term structural evolution, while, at the same time, the Golden Age revealed the limitations related to mid-20th-century capitalism, which were intensified with the emergence of a new economic paradigm and the outbreak of the oil crises.

5. Conclusions

The Golden Age (1950–1970) was characterized by global economic growth, and it was a historically unique era. During this period, the European countries were reconstructed, Japan achieved economic resurgence, international cooperation was strengthened, and technological advances diffused, leading to social stability and extraordinary prosperity. The cumulative effect of institutions, technological progress, and public investments provided several benefits, namely reduction in unemployment, expansion of the middle class, and higher productivity and growth rates.

An environment for social cohesion was also created as a result of the improved social protection mechanisms and the foundation of the welfare state. Meanwhile, peace and development were maintained through the integration process in Europe and transnational cooperation. The role of international economic institutions was also a catalyst, arguing that they created a stable environment for investment and trade, which contributed to the macroeconomic equilibrium.

The Golden Age, however, also presented various challenges and contradictions, namely developmental disparities among regions and countries, environmental damage, social conflicts, and reliance on certain production models, which revealed the weaknesses of the economic paradigm. Furthermore, prosperity was not distributed equally among social classes and geographical regions, and the institutional mechanisms failed to solve environmental problems and global issues, which intensified towards the end of the 1960s.

The collapse of the post-war development paradigm proved that no economic strategy is globally effective or perpetually sustainable. The period offers significant lessons, arguing that it highlighted the important role of strong institutions, technological adaptability, transnational cooperation, and social equilibrium. Meanwhile, the Golden Age emphasized the need for political will and flexibility to reform development systems when they do not align with the societal and economic needs of the evolving environment.

Finally, this period presents two aspects: on the one hand, the Golden Age introduced a paradigm of social and economic progress, while on the other hand, a warning that even the most successful models should evolve to ensure equability and viability in the constantly changing landscape.