What role did regulations and pricing policies play in European countries since the end of the World War? How does it fit within the ideas of Hayek and Keynes? Use the stagflation of the 70s as an example.
The post–World War II the postwar economic boom, also known as economic expansion, the long boom, and the Golden Age of Capitalism, and the Age of Keynes in western countries after the end of World War II in 1945. It was a high worldwide economic growth in Western European that had been devastated by the war such as unusually high and sustained growth, together with full employment. By the end of World War II, much of Europe was devastated. The region's trade flows had been disrupted. Food shortages were severe in all over the Europe. The 1930’s Great Depression in Europe production had fallen far below even than usual for the entire decade due to failure of market forces to restore demand to normal levels. Hence, the biggest panic after WWII was the return of the Great Depression during 30s. After the war, the major powers were determined not to repeat the mistakes of the Great Depression. Governments might have been slow to dismantle wartime allocation controls, and so have severely constrained the market mechanism. However, Politicians were predisposed toward intervention and regulation, their principle was: no matter how damaging “government failure” might be to the economy, it had to be better than the “market failure” of the Depression. After WWII, the slightest regulations and policies are derived from The Keynesian Economy. Keynesian economists claim that the boom was caused by the adoption of Keynesian economic policies, particularly government spending. The basic idea of Keynesian thinking was to have pure free market policies rather than the mixed economy which require a significant role for government intervention. Efforts against Keynesianism took place on three fronts – in the academic world, in politics, and in the wider world of...
Please join StudyMode to read the full document