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Summary Economy: Europe Reading Notes Midterm
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All the readings for Economy: Europe midterm exam
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Economy: Europe Final week 7-12 Lecture notes and summary of Eichengreen and Aldcroft
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Economy: Europe notesREADINGS LECTURE 1. STRUCTURES OF THE EUROPEAN ECONOMY TO WWI ............................. 1
BEREND CH. 1 LAISSEZ-FAIRE AND PRE-WW1 .................................................................................................... 1
BEREND CH. 2 DECLINE OF LAISSEZ-FAIRE AND WAR ECONOMIES ........................................................................ 3
ALDCROFT CH. 1 THE END OF THE OLD ORDER ................................................................................................... 6
READINGS LECTURE 2. INTERWAR PERIOD: RECOVERY, CRASH AND CRISIS ............................... 9
BEHREND CH. 3 ECONOMIC DIRIGISME IN AUTHORITARIAN-FASCISTS REGIMES ................................................... 9
BEHREND CH. 4 THE CENTRALLY PLANNED ECONOMIC SYSTEM ........................................................................ 11
ALDCROFT CH. 2 RECOVERY AND INSTABILITY PROBLEMS IN THE 1920S ............................................................ 12
ALDCROFT CH. 3 ECONOMIC CRISIS AND RECOVERY, 1929-39 ......................................................................... 16
READINGS LECTURE 3. WAR AND INSTITUTIONAL RECONSTRUCTION: BRETTON WOODS AND
MARSHALL PLAN ..................................................................................................................................... 19
ALDCROFT CH. 4 WAR AND RECONSTRUCTION, 1940-1950............................................................................... 19
READINGS LECTURE 4. FROM POSTWAR RATIONING TO THE GOLDEN AGE IN W. EUROPE .... 22
BEREND CH. 5 MANAGED SOCIAL-MARKET SYSTEM IN AN INTEGRATING POST-WW2 WESTERN EUROPE ............. 22
ALDCROFT CH. 5 WESTERN EUROPE’S SUSTAINED EXPANSION 1950-1970 ....................................................... 23
EICHENGREEN CH. 3 THE POSTWAR SITUATION ................................................................................................ 25
READINGS LECTURE 5. EASTERN EUROPE: 1945-70, INSTITUTIONAL TRANSFORMATIONS...... 30
JUDT, POSTWAR CH. 5 THE COMING OF THE COLD WAR................................................................................... 30
JUDT, POSTWAR CH. 6 INTO THE WHIRLWIND .................................................................................................. 32
JUDT, POSTWAR CH. 7 CULTURE WARS ............................................................................................................ 34
READINGS LECTURE 6. EASTERN EUROPE: 1945-80, ECONOMIC STRUCTURES AND NATIONAL
COMMUNISM ............................................................................................................................................ 34
ALDCROFT CH. 6 THE SOCIALIST ECONOMIES OF EASTERN EUROPE 1950-70 ................................................... 34
EICHENGREEN CH. 5 EASTERN EUROPE AND THE PLANNED ECONOMY ............................................................. 37
Readings Lecture 1. Structures of the European Economy to WWI
Berend Ch. 1 Laissez-Faire and pre-WW1
Late 1800s introduction to the laissez-faire system;
-gold standard (Britain started): each currency unit had a fixed gold content
->currencies easily exchangeable
-pound sterling as international currency
-internationalization institutionalized
-laissez-faire the Zeitgeist by twentieth century
-free trade within many European countries emerged (no or low tariffs)
->international communication network (transoceanic trade)
-> European railroad system
Three banking revolutions
1st: early 1800s, during the British Industrial Revolution
-modern banking: National Bank in the center
, -commodity money -> bank notes
-commercial banks established in London + provincial banks in
the countryside
nd
2 : between 1830s and 40s, credit mobilier in France and Belgium.
-banks involved in investments
3rd: 1860s-70s in Germany. Led by Deutsche Bank, Dresdner etc.
-economic empires for universal banks
-took over industrial and other companies and organizing
industrial production
-banks and industry merged, banking sector the dominant
economic power
Two industrial revolutions
1st: Britain during the turn of the nineteenth century.
-mechanized factory and revolutionized the energy system
-coal economy and steam engine!!
-modern textile and iron industries
2nd: Germany
-scientific discoveries
-electricity!! : renewal of transportation
-tramlines, telephone
-airplanes in war efforts
European economies free, integrated and ‘Europeanized’, however some parts of the world
completely out of the world economic system
-intra-European trade met European needs
-from 1879s new competitors emerged to European dominance in the world
economy (US, Canada etc)
Agricultural sector dominant still in the 19th century
-Britain an exception (explains, to some extent, the dominance)
-Industrial revolution moved Europe away from the agricultural sector
European domination in the world economy
-competitive rivals for world leadership -> expansionism and race in colonial
empire building (early 20th century)
-“mission civilisatrice”
-role of colonies changed: not much economic importance in the 20th century!
-glory, nationalism
Rising inequalities with laissez-faire
-wealth accumulation, yet wages stagnated until 1860-70s
Improvements the end of 19th century
-welfare institutions, social legislation
-yet, inequalities increased again at the turn of the century
-ONLY WEST: peripheries relatively worse off in 1913 than they were in 1820-70
, -unable to generate successful industrialization with laissez-faire -> state
interventionism
-also, depression in 1870s began its dissolution
-moderate tariffs in Europe, state intervention in non-
industrialized countries
Berend Ch. 2 Decline of laissez-faire and war economies
Decline of laissez-faire and the rise of regulated market system
-Keynes in 1920s: The End of Laissez-Faire essay
-After WW1 an important change: from laissez faire to protectionism, state interventionism
and a regulated market system in all of Europe
-Germany experimented with a state regulation of the war economy -> model for all
combatant countries
-Economic nationalism and self-sufficiency over the new international system
-State interventionism played a crucial role in creating modern capitalism !!!
-advanced countries only embraced laissez-faire after becoming economically strong and
when free trade served their interests the best
-European peripheries rediscovered protectionism during the turn of the 20th century
-> became the norm “globally” again after Great Depression
War economies
-War economies dominated from the 1930s after the Great Depression aka economy run by
the state in most of Europe
-in the peripheries a new possibility to cope with economic tasks by multiplying
the countries’ efforts
-nationalism; self-defense and economic independence emphasized
-1914-1915 laissez-faire over in Britain, government regulated supply of most goods,
protective tariffs etc
-War economy financed by the state: new taxes and revenues (doubled during the war) ->
budget deficit (covered by government borrowing), currency notes issued and increasing
circulation
-> Britain abandoned the gold standard
-German war economy even more centralized – a new economic model
-free market prices abolished in 1914
-KRA; fixed prices, allocation of materials, Ersatz (substitute) products
-1916 regulation of food supply
-mobilization of labor: compulsory labor service for males
-entire economy regulated by the German state
-financed by war loans, short-term state debts via treasury bills, increased taxes
-> last resort: printing paper money -> inflation
Interwar economy
-unable to return to the “normality” of laissez-faire
-Europe faced a population deficit
-most European countries had to pay back their war debts
-loss of agricultural land etc
-> declines in agricultural and industrial production
, ->runaway inflation
-loss/gain of land posed new economic circumstances for many countries
-neutral countries emerged with a stronger economy and higher incomes (Netherlands, Spain,
Norway, Switzerland)
-however, shortages of market possibilities, energy etc, setbacks for them too
-new countries = more economies and more currencies in Europe
Revolutions in the East challenge the capitalist system
-meanwhile, right-wing extremism born
-> wave of counterrevolutions and authoritarian nationalist regimes were born
across Europe
Economic consequences of the political setting of interwar period
-peripheries refused to follow prewar export-led industrialization
-> import substitution industrialization
-> self-sufficiency, prohibition of imports and replacement by domestic
products as the ideal; wanted to avoid competition from the west in a free
market as west more advanced
Attempt to stabilize currencies and restore the gold standard by 16 countries in 1923-26
-yet, the international economic system was ruined
-lack of economic leadership, weak cooperation
-attempts to reconstruct prewar conditions failed
-League of nations powerless
-Gold Standard Act 1925 restored the prewar exchange rate of pound; overvalued
-most of Europe followed
-exports more expensive
-great powers wanted to restore prewar int. conditions
-free trade -> mobilized League of Nations to reconstruct it
-> failed
-state had a role in organizing and restoring destruction -> e.g. nationalized railways
-agricultural protectionism wanted by farmers (powerful political bloc -> government
preference)
Social Democracy
-gained ground after WW1
-contributed to rise of regulated market system
-decisive political factors in West Europe
-unions and workers’ organizations, large-scale public works programs
Great Depression
-price of agricultural commodities declined
-drying up of American investments and credits
-The black Thursday of the American Stock Exchange a turning point
-int. financing stopped
-European countries had to pay back loans to US within a few weeks
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