The Political Economy of Postwar Capitalism and the Making of the Gulf

The global economy emerged transformed in the decades following the destruction of World War Two. A key underlying cause of the war—encouraging both the rise of fascism and the clash of European powers—had been the period of stagnation and crisis that preceded the conflagration. The years before the war had been marked by low profits caused by the overaccumulation of capital—few profitable outlets for capital investment leading to intensified struggle between different world powers for control over markets and resources. War had a remarkably palliative effect. The leveling of factories, housing, and infrastructure across much of Europe and Asia served, in the words of David Harvey, as “the ultimate mechanism of capital devaluation,” inaugurating one of the greatest economic upswings in the history of capitalism (Harvey 2001, p. 310). This economic boom—or “Golden Age” as many economic historians now describe it—had begun by 1950 and was to last until the late 1960s. One study of the US economy shows the profit rate rising from around 10 percent in the early 1930s to 45 percent in the postwar period, and remaining high (from 30–40 percent) until the late 1960s, from whence it began a secular decline (Duménil, Glick, and Levy 1992).1 Growth rates in Western Europe and North America averaged 4 percent annually in the 1950s and 5 percent in the 1960s, way above the anemic 2 percent they were to fall to by the 1980s (Marglin 1991, p. 1).