When we left history, we had World War II and the demise of imperialism. Nobody thought capitalism was a good idea any more, but everyone realized government could do far worse than the free market – or in the case of Russia, China, and India, they were about to get a rude and brutal education. But in the West, guided by social reorganization and a newfound willingness to follow one leader, economies were about to grow beyond the imagination of the prewar period.
So what happened? For one, far more moderate and consistent growth. The interwar period was characterized by wild fluctuations in energy demand and coal/steel production, affected by the US recession, the French occupation of the Ruhr, the British abandonment of the gold standard, and coal strikes around the world just prior to the Depression. After World War II, Europe falls to shit for the first three years as economies have no money to rebuild, until the US passes the Marshall Plan and provides Europe with the best bailout ever. Coal production never returns to full prewar levels, but it’s okay because economies have switched to gasoline as their main source of energy.
What makes this era interesting is that you don’t see purely economic fighting over resources any more, but the situation becomes more complicated with social and political groups fighting over pieces of the pie. In the 19th century, nobles fought amongst themselves and had no unifying interests; in the 20th century, social groups such as women, minorities, unions, the military, farmers, etc. are beginning to unite to fight as collectives.
You also see bargaining on issues – people are too sophisticated for a zero-sum, winner-take-all fight, but stick to long-term wars of attrition on social values and politics to prove that they’re tough. You continue to see this trend through today – black rights, feminists on abortion, gay rights activists, these are all groups that have been gnawing at the social fabric for decades, fighting for every inch. Their strategy amounts to hoping their pain tolerance and toughness is greater than the other side and claiming that their struggle makes them stronger.
The initial social battles are highly successful, as poor groups claim the burden of the awful 1910-1940 suffering as their own. The elite classes drove millions of poor young people to the slaughter, so demands like universal suffrage and the liberal bill of rights (i.e. housing, Social Security, college education) can’t be denied. The other big factor is that many of these young people have gained skills on the battlefield that used to be reserved for the elite- qualities of leadership, managerial skill, and performance under pressure were forged from the trenches. In World War II, many young people ended the war with technical skills – women worked in factories, for example. In the postwar free market, they become important contributors and many have the ability to become rich on their new merits. It creates a sense of meritocratic fairness – people who work hard and play by the rules should be rewarded.
Meritocracy begets progressive thought, as the meritocratic nouveau riche begets a sense of social justice. Talent and hard work is rewarded with wealth, but society shouldn’t punish the foolish and lazy – the new rich reject social darwinism and pass the seeds of egalitarianism to their children (the Baby Boomers). You see activists willing to see government disrupt the free market for the sake of high employment and social insurance, and a newfound struggle to balance meritocracy and egalitarianism. Even fascism and communism are various permutations of government-enforced merit and equality. But in the 1950s, people want a softer, nicer, more accountable government that enforces these qualities but doesn’t beat them with a rifle butt. Ultimately, what people want is a government that doesn’t allow them to make bad decisions, rewards merit, makes everyone equal, and favors their social group.