The Changing Economic Balances, 1950 to 1980

In July 1971, Richard Nixon repeated his opinion to a group of news-media executives in Kansas City that there now existed five clusters of world economic power—western Europe, Japan, and China as well as the USSR and the United States. “These are the five that will determine the economic future and, because economic power will be the key to other kinds of power, the future of the world in other ways in the last third of this century.”¹⁸⁸ Assuming that presidential remark upon the importance of economic power to be valid, it is necessary to get a deeper sense of the transformations which were occurring in the global economy since the early years of the Cold War; for although international trade and prosperity were to be subject to some unusual turbulences (especially in the 1970s), certain basic long-term trends can be detected which seemed likely to shape the state of world politics into the foreseeable future.

As with all of the earlier periods covered in this book, there can be no exactitude in the comparative economic statistics used here. If anything, the growth in the number of professional statisticians employed by governments and by international organizations and the development of much more sophisticated techniques since the days of Mulhall’s Dictionary of Statistics have tended to show how difficult is the task of making proper comparisons. The reluctance of “closed” societies to publish their figures, differentiated national ways of measuring income and product, and fluctuating exchange rates (especially after the post-1971 decisions to abandon a gold-exchange standard and to adopt floating exchange rates) have all combined to cast doubt upon the correctness of any one series of economic data.¹⁸⁹ On the other hand, a number of statistical indications can be used, with a reasonable degree of confidence, to correlate with one another and to point to broad trends occurring over time.

The first, and by far the most important, feature has been what Bairoch rightly describes as “a totally unprecedented rate of growth in world industrial output”¹⁹⁰ during the decades after the Second World War. Between 1953 and 1975 that growth rate averaged a remarkable 6 percent a year overall (4 percent per capita), and even in the 1973–1980 period the average increase was 2.4 percent a year, which was very respectable by historical standards. Bairoch’s own calculations of the “production of world manufacturing industries”—essentially confirmed by Rostow’s figures on “world industrial production”¹⁹¹— give some sense of this dizzy rise (see Table 39).

Table 39. Production of World Manufacturing Industries, 1830–1980¹⁹²
(1900 = 100)

As Bairoch also points out, “The accumulated world industrial output between 1953 and 1973 was comparable in volume to that of the entire century and a half which separated 1953 from 1800.”¹⁹³ The recovery of war-damaged economies, the development of new technologies, the continued shift from agriculture to industry, the harnessing of national resources within “planned economies,” and the spread of industrialization to the Third World all helped to effect this dramatic change.

In an even more emphatic way, and for much the same reasons, the volume of world trade also grew spectacularly after 1945, in contrast to the distortions of the era of the two world wars:

Table 40. Volume of World Trade, 1850-1971¹⁹⁴
(1913 = 100)

What was more encouraging, as Ashworth points out, was that by 1957, for the first time ever world trade in manufactured goods exceeded those in primary produce, which itself was a consequence of the fact that the increase in the overall output of manufactures during these decades was considerably larger than the (very impressive) increases in agricultural goods and minerals (see Table 41).

Table 41. Percentage Increases in World Production, 1948–1968¹⁹⁵

To some extent, this disparity can be explained by the great increases in manufacturing and trade among the advanced industrial countries (especially those of the European Economic Community); but their rising demand for primary products and the beginnings of industrialization among an increasing number of Third World countries meant that the economies of most of the latter were also growing faster in these decades than at any time in the twentieth century.¹⁹⁶ Notwithstanding the damage which western imperialism did to many of the societies in other parts of the world, the exports and general economic growth of these societies do appear to have benefited most when the industrialized nations were in a period of expansion. Less-developed countries (LDCs), argues Foreman-Peck, grew rapidly in the nineteenth century when “open” economies like Britain’s were expanding fast—just as they were the worst hit of all when the industrial world fell into depression in the 1930s. During the 1950s and 1960s, they once again experienced faster growth rates, because the developed countries were booming, raw-materials demand was rising, and industrialization was spreading.¹⁹⁷ After its nadir in 1953 (6.5 percent), Bairoch shows the Third World’s share of world manufacturing production rising steadily, to 8.5 percent (1963), then 9.9 percent (1973), and then 12.0 percent (1980).¹⁹⁸ In the CIA’s estimates, the less-developed countries’ share of “gross world product” has also been increasing, from 11.1 percent (1960), to 12.3 percent (1970), to 14.8 percent (1980).¹⁹⁹

Given the sheer number of people in the Third World, however, their share of world product was still disproportionately low—and their poverty horrifically manifest. The average GNP per capita in the industrialized countries was $10,660 in 1980, but only $1,580 per capita for the middle-income countries like Brazil, and a shocking $250 per capita for the very poorest Third World countries like Zaire.²⁰⁰ For the fact was that while their proportion of world product and manufacturing output was arising as a whole, the gain was not shared in equal proportion by all of the LDCs. Differences in wealth between some countries in the tropics were large even as the colonialists withdrew—just as they had been, in many cases, before the imperial era. They were exacerbated by the uneven pattern of demand for the countries’ products, by the varying levels of aid which each managed to secure, and by the vicissitudes of climate, politics, tampering with the environment, and economic forces quite outside their control. Drought could devastate a country for years. Civil wars, guerrilla activities, or the forced resettlement of peasants could reduce agricultural output and trade. Sinking world prices, say, of peanuts or tin could almost bring a single-product economy to a halt. Soaring interest rates, or a rise in the value of the U.S. dollar, could be body blows. A spiraling population growth, caused by western medical science’s success in checking disease, increased the pressure upon food stocks and threatened to wipe out any gains in overall national income. On the other hand, there were states which went through a “green revolution,” with agricultural output boosted by improved farming techniques and new strains of plants. In addition, the massive earnings recorded by those countries lucky enough to possess oil in the 1970s turned them into a different economic category—although even these so-called OPEC-LDCs suffered as oil prices tumbled in the early 1980s. Finally, in one of the most significant developments of all, there arose among Third World countries a number of what Rosecrance terms “the trading states”— South Korea, Taiwan, Singapore, and Malaysia, imitating Japan, West Germany, and Switzerland in their entrepreneurship and commitment to produce industrial manufactures for the global market.²⁰¹

This disparity among less-developed nations points to the second major feature of macroeconomic change over the past few decades—the differential growth rates among the various nations of the globe, which was as true of the larger, industrialized Powers as it was of the smaller countries. Since this trend is the one which—on the record of the preceding centuries—has ultimately had the greatest impact upon the international power balances, it is worth examining in some detail how it affected the major nations in these decades.

There can be no doubt that the economic transformation of Japan after 1945 offered the most spectacular example of sustained modernization in these decades, outclassing almost all of the existing “advanced” countries as a commercial and technological competitor, and providing a model for emulation by the other Asian “trading states.” To be sure, Japan had already distinguished itself almost a century earlier by becoming the first Asian country to copy the West in both economic and—fatefully for itself—military and imperialist terms. Although badly damaged by the 1937–1945 war, and cut off from its traditional markets and suppliers, it possessed an industrial infrastructure which could be repaired and a talented, well-educated, and socially cohesive population whose determination to improve themselves could now be channeled into peaceful commercial pursuits. For the few years after 1945, Japan was prostrate, an occupied territory, and dependent upon American aid. In 1950, the tide turned—ironically, to a large degree because of the heavy U.S. defense spending in the Korean War, which stimulated Japan’s export-oriented companies. Toyota, for example, was in danger of foundering when it was rescued by the first of the U.S. Defense Department’s orders for its trucks; and much the same happened to many other companies.²⁰²

There was, of course, much more to the “Japanese miracle” than the stimulant of American spending during the Korean War and, again, during the Vietnam War; and the effort to explain exactly how the country transformed itself, and how others can imitate-its success, has turned into a miniature growth industry itself.²⁰³ One major reason was its quite fanatical belief in achieving the highest levels of quality control, borrowing (and improving upon) sophisticated management techniques and production methods in the West. It benefited from the national commitment to vigorous, high-level standards of universal education, and from possessing vast numbers of engineers, of electronics and automobile buffs, and of small but entrepreneurial workshops as well as the giantzaibatsu. There was social ethos in favor of hard work, loyalty to the company, and the need to reconcile management-worker differences through a mixture of compromise and deference. The economy required enormous amounts of capital to achieve sustained growth, and it received just that—partly because there was so little expenditure upon defense by a “demilitarized” country sheltering under the American strategic umbrella, but perhaps even more because of fiscal and taxation policies which encouraged an unusually high degree of personal savings, which could then be used for investment purposes. Japan also benefited from the role played by MITI (its Ministry for International Trade and Industry) in “nursing new industries and technological developments while at the same time coordinating the orderly run-down of aging, decaying industries,”²⁰⁴ all this in a manner totally different from the American laissez-faire approach.

Whatever the mix of explanations—and other experts upon Japan would point more strongly to cultural and sociological reasons, not to mention that indefinable “plus factor” of national self-confidence and willpower in a people whose time has come—there was no denying the extent of its economic success. Between 1950 and 1973 its gross domestic product grew at the fantastic average of 10.5 percent a year, far in excess of that of any other industrialized nation; and even the oil crisis in 1973–1974, with its profound blow to world expansion, did not prevent Japan’s growth rates in subsequent years from staying almost twice as large as those of its major competitors. The range of manufactures in which Japan steadily became the dominant world producer was quite staggering—cameras, kitchen goods, electrical products, musical instruments, scooters, on and on the list goes. Japanese products challenged the Swiss watch industry, overshadowed the German optical industry, and devastated the British and American motorcycle industries. Within a decade, Japan’s shipyards were producing over half of the world’s tonnage of launchings. By the 1970s, its more modern steelworks were turning out as much as the American steel industry. The transformation of its automobile industry was even more dramatic—between 1960 and 1984 its share of world car production rose from 1 percent to 23 percent—and in consequence Japanese cars and trucks were being exported in their millions all over the world. Steadily, relentlessly, the country moved from low-to high-technology products—to computers, telecommunications, aerospace, robotics, and biotechnology. Steadily, relentlessly, its trade surpluses increased—turning it into a financial giant as well as an industrial one—and its share of world production and markets expanded. When the Allied occupation ended in 1952, Japan’s “gross national product was little more than one-third that of France or the United Kingdom. By the late 1970s the Japanese GNP was as large as the United Kingdom’s and France’s combined and more than half the size of America’s.”²⁰⁵ Within one generation, its share of the world’s manufacturing output, and of GNP, had risen from around 2–3 percent to around 10 percent—and was not stopping. Only the USSR in the years after 1928 had achieved anything like that degree of growth, but Japan had done it far less painfully and in a much more impressive, broader-based way.

By comparison with Japan, every other large Power must seem economically sluggish. Nonetheless, when the People’s Republic of China (PRC) began to assert itself in the years after its foundation in 1949, there were few observers who did not take it seriously. In part this may have reflected a traditional worry about the “Yellow Peril,” since the sleeping giant in the East would clearly be a major force in world affairs just as soon as it had organized its 800 million population for national purposes. More important still was the very prominent, not to say aggressive, role which the PRC adopted toward foreign Powers almost since its inception, even if that may have been a nervous response to its perceived encirclement. The clashes with the United States over Korea and Quemoy and Matsu; the move into Tibet; the border struggles with India; the angry break with the USSR, and military confrontations in the disputed regions; the bloody encounter with North Vietnam; and the generally combative tone of Chinese propaganda (especially under Mao) as it criticized western imperialism and “Russian hegemonism” and urged on people’s liberation movements across the globe made it a much more important, but also more incalculable, figure in world affairs than the discreet and subtle Japanese.²⁰⁶ Simply because China possessed one-quarter of the world’s population, its political lurches in one direction or another had to be taken seriously.

Nevertheless, measured on strictly economic criteria, the PRC seemed a classic case of economic backwardness. In 1953, for example, it was responsible for only 2.3 percent of world manufacturing production and had a “total industrial potential” equal only to 71 percent of Britain’s in 1900!²⁰⁷ Its population, leaping upward by tens of millions of new mouths each year, consisted overwhelmingly of poor peasants whose per capita output was dreadfully low and rendered the state little in terms of “added value.” The disruption caused by the warlords, the Japanese invasion, and then the civil war of the late 1940s was not stopped when the peasant communes took over from the landowners after 1949. Nevertheless, economic prospects were not entirely hopeless. China did possess a basic infrastructure of roads and light railways, its textile industry was substantial, its cities and ports were centers of entrepreneurial activity, and the Manchurian region in particular had been developed by the Japanese during the 1930s.²⁰⁸ What the country required, if it was to enter the stage of industrial takeoff, was a long period of stability and massive infusions of capital. Both conditions were achieved to some degree—because of the dominance of the Communist Party, and the flow of Russian aid—as the 1950s evolved. The Five-Year Plan of 1953 consciously imitated those Stalinist priorities of developing heavy industry and of increasing steel, iron and coal production. By 1957, industrial output had doubled.²⁰⁹ On the other hand, the amount of ready capital for industrial investment, whether raised internally or borrowed from Russia, was quite insufficient for a country of China’s economic needs—and the Sino-Soviet split brought Russian financial and technical aid to an abrupt halt. In addition, Mao’s fatuous decisions to achieve a “Great Leap Forward” by encouraging thousands of cottage-sized steelworks and his campaign for the “Cultural Revolution” (which led to the disgrace of technical experts, professional managers, and trained economists) slowed development considerably. Finally, throughout the 1950s and 1960s, the PRC’s confrontationist diplomacy and its military clashes with almost all of its neighbors meant that far too large a proportion of the country’s scarce resources had to be devoted to the armed forces.

The period of the Cultural Revolution was not all bad in economic terms; it did at least emphasize the importance of the rural areas, stimulating small-scale industries as well as improved farming techniques, and bringing basic medical and social care to the villages.²¹⁰ Nevertheless, significant increases in national product could come only from further industrialization, infrastructural improvements, and long-term investments—all of which were aided by the winding down of the Cultural Revolution and by the growth of trade with the United States, Japan, and other advanced economies. China’s own coal and oil resources were being swiftly exploited, as were its stocks of many precious minerals. By 1980, its steel output of 37 million tons was well in excess of that of Britain or France, and its consumption of energy from modern sources was twice that of any of the leading European states.²¹¹ By that date, too, its share of world manufacturing production had risen to 5.0 percent (from 3.9 percent in 1973), and was closing upon West Germany’s.²¹² This heady recent growth has not been unattended by problems, and the party leadership has had to readjust downward the targets for the country’s “four modernizations”; it is also worth repeating that when any of China’s statistics of wealth or output are presented in per capita terms, its relative economic backwardness is again revealed. Yet, notwithstanding those deficiencies, it became clear over time that the Asian giant was at last on the move and determined to build an economic foundation adequate for its intended role as a Great Power.²¹³

The fifth region of economic power identified by Nixon in his July 1971 speech had been “western Europe,” which was of course more of a geographical expression than a unified assertive Power like China, the USSR, and the United States. Even the term itself meant different things to different people—it could be all of those countries outside the Russian-dominated sphere (and therefore include Scandinavia, Greece, and Turkey), or it could be the original (or enlarged) European Economic Community, which at least possessed an institutional framework, or it was often used as a shorthand for that cluster of formerly great states (Britain, France, Germany, Italy) which might need to be consulted, say, by the U.S. State Department before the latter initiated a new policy toward Russia or in the Middle East. Even that did not exhaust the possibilities of semantic confusion, since for much of this period the British regarded “Europe” as beginning on the other side of the English Channel; and there were, moreover, many committed European integrationists (not to mention German nationalists) who regarded the post-1945 division of the continent as a merely temporary condition, to be followed in the future by a joining of the countries of both sides into some larger union. Politically and constitutionally, therefore, it has been difficult to use the term “Europe” or even “western Europe” as more than a figure of speech—or a vague cultural-geographical concept.²¹⁴

At the economic level, however, there did seem to be a basic similarity in what was being experienced across Europe in these years. The most outstanding feature was the “sustained and high level of economic growth.”²¹⁵ By 1949–1950, most countries were back to their prewar levels of output, and some (especially, of course, the wartime neutrals) were significantly ahead. But there then followed year after year of increased manufacturing output, of unprecedented levels of growth in exports, of a remarkable degree of full employment and historically high levels of disposable income as well as of investment capital. The result was to make Europe the fastest-growing region in the world, Japan excepted. “Between 1950 and 1970 European gross domestic product grew on average at about 5.5 percent per annum and 4.4 percent on a per capita basis, as against world average rates of 5.0 and 3.0 percent respectively. Industrial production rose even faster at 7.1 percent compared with a world rate of 5.9 percent. Thus by the latter date output per head in Europe was almost two and a half times greater than in 1950.”²¹⁶ Interestingly enough, this growth was shared in all parts of the continent—in northwestern Europe’s industrial core, in the Mediterranean lands, in eastern Europe; even the sluggish British economy grew faster during this period than it had for decades. Not surprisingly, Europe’s relative place in the world economy, which had been declining since the turn of the century, soon began to expand. “During the period 1950 to 1970 her share of world output of goods and services (GDP) rose from 37 to 41 percent, while in the case of industrial production the increase was even greater, from 39 to 48 percent.”²¹⁷ Both in 1960 and in 1970, the CIA figures were showing—admittedly on statistical evidence that can be disputed²¹⁸— that the “European Community” possessed a larger share of gross world product than even the United States, and that it was twice as large as the Soviet Union’s.

The reasons for Europe’s economic recovery are, on reflection, not at all surprising. For too long, much of the continent had suffered from invasions, prolonged fighting and foreign occupation, bombings of towns, factories, roads, and railways, shortages of food and raw materials caused by blockade, the call-up of millions of men and killing off of millions of animals. Even before the fighting, Europe’s “natural” economic development—that is, growth which evolved region by region, as new sources of energy and production revealed themselves, as new markets took off, as new technology spread—had been distorted by the actions of the nationalistically inclined Machtstaat²¹⁹ Ever-higher tariff barriers had separated suppliers from their markets. Government subventions had kept inefficient firms and farmers protected from foreign competition. Increasingly large amounts of national income had been devoted to armaments spending rather than commercial enterprise. It was thus impossible to maximize Europe’s economic growth in this “climate of blocks and autarky, of economic nationalism, and of gaining benefits by hurting others.”²²⁰ Now, after 1945, there were not only “new Europeans” like Monnet, Spaak, and Hallstein determined to create economic structures which would avoid the mistakes of the past, but there was also a helpful and bénéficient United States, willing (through the Marshall Plan and other aid schemes) to finance Europe’s recovery provided it was done as a cooperative venture.

Thus, a Europe whose economic potential had been distorted and underutilized by war and politics now had a chance to correct those deficiencies. There was a broad determination to “build anew” in both eastern and western parts of the continent, and a willingness to learn from the follies of the 1930s. State planning, whether of the Keynesian or socialistic variety, gave a concentrated thrust to this desire for social and economic improvement; the collapse (or discrediting) of older structures made innovation easier. The United States not only gave billions of dollars of Marshall Plan aid—“a shot in the arm at a critical time,” as it was aptly described²²¹—but also provided a defense umbrella under which the European states could shelter. (It was true that both Britain and France spent heavily on defense during the Korean War years and the period before their decolonizations—but they, and all their neighbors, would have had to devote much more of their scarce national resources to armaments had they not been protected by the United States.) Because there were fewer trade barriers, firms and individuals were able to flourish in a much larger market. This was especially so since trade among developed countries (in this case, the European states themselves) was always more profitable than trade elsewhere, simply because the mutual demand was greater. If the “foreign” trade of Europe rose faster than anything else in these decades, therefore, it was chiefly because much more buying and selling was going on among neighbors. In one generation after 1950, per capita income increased as much as it had during the century and a half prior to that date!²²² The socioeconomic pace of this change was truly remarkable: the share of West Germany’s working population engaged in agriculture, forestry and fishing dropped from 24.6 percent in 1950 to 7.5 percent in 1973, and in France it fell from 28.2 percent to 12.2 percent in the same period (and to 8.8 percent in 1980). Disposable incomes boomed as industrialization spread; in West Germany per capita income soared from $320 in 1949 to $9,131 in 1978, and in Italy it rose from $638 in 1960 to $5,142 in 1979. The number of automobiles per 1,000 of population rose from 6.3 in West Germany (1948) to 227 (1970), and in France from 37 to 252.²²³However one measured it, and despite continued regional disparities, the evidence of very real gains was clear.

This combination of general economic growth, together with wide variations in both the rate of change and its effects, can clearly be seen if one examines what happened in each of the former Great Powers. South of the Alps, there occurred what journalists hyperbolically termed “the Italian miracle,” with the country’s GNP in real terms rising nearly three times as fast after 1948 than it had during the interwar years; indeed, until 1963, when growth slowed, the Italian economy rose faster in these years than that of any other country except Japan and West Germany. Yet perhaps that, too, is not surprising in retrospect. It was always the least developed of the European “Big Four,” which is another way of saying that its potential for growth had not been as fully exploited. Freed from the absurdities of fascist economic policies, and benefiting strongly from American aid, Italian manufacturers were able to utilize the country’s lower wage costs and strong reputation in design to boost exports at an amazingly fast rate, especially within the Common Market. Hydroelectricity and cheaply imported oil compensated for the lack of indigenous coal supplies. Motor construction was a great stimulant. As local consumption levels boomed, FIAT, the domestic automobile producer, occupied an unchallenged position for many years in this home market, giving it a strong base for its export drive north of the Alps. Traditional manufactures, like shoes and fine clothes, were now joined by newer products; Italian refrigerators outsold any others in Europe by the 1960s. This was not, by any means, a story of unqualified success. The gap between north and south in Italy remained chronic. Social conditions, both in the inner cities and in the poorer rural areas, were far worse than in northern Europe. Governmental instability, a large “black economy,” and a high public deficit, together with a higher than average inflation rate, affected the value of the lira and suggested that this economic recovery was a fragile one. Whenever European-wide comparisons of income, or industrialization, were made, Italy did not compare too well with its more advanced neighbors; when growth rates were compared, things looked much better. That is simply another way of saying that Italy had started from a long way behind.²²⁴

By contrast, Great Britain in 1945 was a long way ahead, at least among the larger European states; which may be part of the explanation for its relative economic decline during the four decades following. That is to say, since it (just like the United States) had not been so badly damaged by the war, its rate of growth was unlikely to be as high as in those countries recovering from years of military occupation and damage. Psychologically, too, as has been discussed above,²²⁵ the fact that Britain was undefeated, that it was still one of the “Big Three” at Potsdam, and that it regained all of its worldwide empire made it difficult for people to see the need for drastic reforms in its own economic system. Far from producing newer structures, the war had preserved traditional institutions such as trade unions, the civil service, the ancient universities. Although the Labor administration of 1945–1951 pushed ahead with its plans for nationalization and for the creation of a “welfare state,” a more fundamental restructuring of economic practices and of attitudes to work did not occur. Confident still in its special place in the world, Britain continued to rely upon captive colonial markets, struggled in vain to preserve the old parity for sterling, maintained extensive overseas garrisons (a great drain on the currency), declined to join in the early moves toward European unity, and spent more on defense than any of the other NATO powers apart from the United States itself.

The frailty of Britain’s international and economic position was partially disguised in the early post-1945 period by the even greater weakness of other states, the prudent withdrawals from India and Palestine, the short-term surge in exports, and the maintenance of empire in the Middle East and Africa.²²⁶ The humiliation at Suez in 1956 therefore came as a greater shock, since it revealed not only the weakness of sterling but also the blunt fact that Britain could not operate militarily in the Third World in the face of American disapproval. Nonetheless, it can be argued that the realities of decline were still disguised—in defense matters, by the post-1957 policy of relying upon the nuclear deterrent, which was far less expensive than large conventional forces yet suggested a continued Great Power status; and in economic matters, by the fact that Britain also shared in the general boom of the 1950s and 1960s. If its growth rates were about the lowest in Europe, they were nevertheless better than the expansion of previous decades and thus allowed Macmillan to claim to the British electors, “You’ve never had it so good!” Measured in terms of disposable income, or numbers of washing machines and automobiles, that claim was historically correct.

Measured against the much faster progress being made elsewhere, however, the country appeared to be suffering from what the Germans unkindly termed “the English disease”—a combination of militant trade unionism, poor management, “stop-go” policies by government, and negative cultural attitudes toward hard work and entrepreneurship. The new prosperity brought a massive surge in imports of better-designed European products and of cheaper Asian wares, in turn leading to balance-of-payments difficulties, sterling crises, and devaluations which helped to fuel inflation and thus higher wage demands. Price controls, legislation on wage increases, and fiscal deflation were employed at various times by British governments to check inflation and create the right circumstances for sustained growth. They rarely worked for long. The British automobile industry was steadily undermined by its foreign competitors, the once-booming shipbuilding industry grew to depend almost solely upon Admiralty orders, the producers of electrical goods and motorbikes found that they could no longer compete. Some companies (like ICI) were notable exceptions to this trend; the City of London’s financial services held up well, and retailing remained strong—but the erosion of Britain’sindustrial base was remorseless. Joining the Common Market in 1971 did not provide the hoped-for panacea: it exposed the British market to even greater competition in manufactures, while tying Britain into the expensive farm-price policies of the EEC. North Sea oil also proved less than a godsend: it brought Britain massive foreign-currency earnings, but that so drove up the price of sterling that it hurt manufacturing exports.²²⁷

The economic statistics offer a measure of what Bairoch terms “the acceleration of the industrial decline of Great Britain.”²²⁸ Its share of world manufacturing production slipped from 8.6 percent in 1953 to 4.0 percent in 1980. Its share of world trade also fell away swiftly, from 19.8 percent (1955) to 8.7 percent (1976). Its gross national product, third-largest in the world in 1945, was overtaken by West Germany’s, then by Japan’s, then by France’s. Its per capita disposable income was steadily overtaken by a host of smaller but richer European countries; by the late 1970s it was closer to those of Mediterranean states than to those of West Germany, France, or the Benelux countries.²²⁹ To be sure, much of this decline in Britain’s shares (whether of world trade or world GNP) was due to the fact that special technical and historical circumstances had given the country a disproportionately large amount of global wealth and commerce in earlier decades; now that those special circumstances had gone, and other countries were able to exploit their own potential for industrialization, it was natural that Britain’s relative position should slip. Whether it should have slipped so much and so fast is another issue; whether it will slip further, relative to its European neighbors, is equally difficult to say. By the early 1980s, the decline seemed to be leveling off, leaving Britain still with the world’s sixth-largest economy, and with very substantial armed forces. By comparison with Lloyd George’s time, or even with Clement Attlee’s in 1945, however, it was now just an ordinary, moderately large power, not a Great Power.

While the British economy was languishing in relative decline, West Germany was enjoying its Wirtschaftswunder, or “economic miracle.” Once again, it is worth stressing how “natural,” relatively speaking, this development was. Even in its truncated state, the Federal Republic possessed the most developed infrastructure in Europe, contained large internal resources (from coal to machine-tool plants), and had a highly educated population, perhaps especially strong in managers, engineers, and scientists, which was swollen by the emigration of talent from the east. For the past half-century or more, its economic powers had been distorted by the requirements of the German military machine. Now that the national energies could (as in Japan) be concentrated solely upon commercial success, the only question was the extent of the recovery. German big business, which had accommodated itself fairly easily to the Second Reich, to Weimar, and then to the Nazi period of rule, had to adjust to the new circumstances and pick up American management assumptions.²³⁰ The big banks were once again able to play a large role in the direction of industry. The chemical and electrical industries soon reemerged to be the giants of European industry. Massively successful automobile companies, like Volkswagen and Mercedes, had their inevitable “multiplier effects” upon hundreds of small supplier firms. As exports boomed—Germany became second only to the United States in world export trade—increasing number of firms and local communities needed to bring in “guest workers” to meet the crying demand for unskilled labor. Once again, for the third time in a hundred years, the German economy was the powerhouse of Europe’s economic growth.²³¹

Statistically, then, the story seemed one of unbroken success. Even between 1948 and 1952, German industrial production rose by 110 percent and real GNP by 67 percent.²³² With the country having the highest gross investment levels in Europe, German firms benefited immensely from their ready access to capital. Steel output, virtually nonexistent in 1946, was soon the largest in Europe (over 34 million tons by 1960), and the same was true of most other industries. Year after year, the country had the largest growth in gross domestic product. Its GNP, a mere $32 billion in 1952, was the biggest in Europe (at $89 billion) by a decade later, and was over $600 billion by the late 1970s. Its per capita disposable income, a modest $1,186 in 1960 (when the United States’ was $2,491), was an imposing $10,837 in 1979— ahead of the American average of $9,595.²³³Year after year, export surpluses were built up, with the deutsche mark needing frequent upward adjustment, and indeed becoming a sort of reserve currency. Although naturally worried at the competition posed by the even more efficient Japanese, the West Germans were undoubtedly the second most successful among the larger “trading states.” This was the more impressive since the country had been separated from 40 percent of its territory and over 35 percent of its population; ironically, the German Democratic Republic was soon to show that it was the most productive and industrialized per capita of all of the eastern European states (including the USSR) despite the loss of millions of its talented labor force to the West. Had it been possible to return to the 1937 boundaries, a united Germany would once again have been far ahead of any economic rival in Europe and, indeed, perhaps not significantly behind the much larger USSR itself.

Precisely because Germany had been defeated and divided, and because its international status (and that of Berlin) continued to be regulated by the “treaty powers,” this economic weight did not translate into political might. Feeling a natural responsibility toward Germans in the east, the Federal Republic was peculiarly sensitive to any warming or cooling in the NATO-Warsaw Pact relationship. It had the largest trade with eastern Europe and the USSR, yet it was obviously in the front line should another war occur. Soviet and (only slightly less) French alarm at any revival of “German militarism” meant that it could never become a nuclear Power. It felt guilty toward neighbors like the Poles and the Czechs, vulnerable toward Russia, heavily dependent upon the United States; it welcomed with gratitude the special Franco-German relationship offered by de Gaulle, but rarely felt able to use its economic muscle to control the more assertive policies of the French. Engaged in a profound intellectual confrontation with their own past, the West Germans were very happy to be seen as good team players, but not as decisive leaders in international affairs.²³⁴

This contrasted very markedly, then, with France’s role in the postwar world or, more accurately, in the post-1958 world, when de Gaulle took over the helm of the state. As mentioned above (pp. 401–2), the economic progress which the planners around Monnet hoped to achieve after 1945 had been affected by colonial wars, party-political instability, and the weakness of the franc. Yet even at the time of the Indochinese and Algerian campaigns the French economy was growing fast. For the first time in many decades, its population was increasing, and thus fueling domestic demand. France was a rich, varied, but half-developed land, its economy stagnant since the early 1930s. Merely with the coming of peace, the infusion of American aid, the nationalization of utilities, and the stimulus of a larger market, growth was likely. Furthermore, France (like Italy) had a relatively low per capita level of industrialization, because of its small-town, agriculture-heavy economy, which meant that the increases in that regard were quite spectacular: from 95 in 1953, to 167 in 1963, to 259 in 1973 (relative to U.K. in 1900 = 100).²³⁵ The annual rate of growth reached an average of 4.6 percent in the 1950s, and spurted to 5.8 percent in the 1960s, under the impetus of Common Market membership. The particular arrangements of the latter not only protected French agriculture from world-market prices, but gave it a large market within Europe. The general boom in the West aided the export of France’s traditional high-added-value wares (clothes, shoes, wines, jewelry), which were now joined by aircraft and automobiles. Between 1949 and 1969, automobile production rose tenfold, aluminum sixfold, tractors and cement fourfold, iron and steel two and a half times.²³⁶ The country had always been relatively rich, if underindustrialized; by the 1970s, it was a lot richer, and looked altogether more modern.

Nevertheless, France’s growth was never as broadly based industrially as that of its neighbor across the Rhine, and President Pompidou’s hopes that his country would soon overtake West Germany had little prospect of realization. With certain notable exceptions in the electrical, automobile, and aerospace industries, most French firms were still small and undercapitalized, and the prices of their products were too high compared with Germany’s. Despite the “rationalization” of agriculture, many smallholdings remained—and were, in fact, sustained by the Common Market subvention policies; yet the pressures upon rural France, together with the social strain of industrial modernization (closing old steelworks, etc.) provoked outbursts of working-class discontent, of which the most famous were the 1968 riots. Poor in indigenous fuel supplies, France became heavily dependent upon imported oil, and (despite its ambitious nuclear-energy program) its balance of payments heavily fluctuated according to the world price of oil. Its trade deficit with West Germany steadily increased, and necessitated regular (if embarrassed) devaluations against the deutsche mark—which was probably a more reliable measure of France’s economic standing than the wild fluctuations in the dollar-franc exchange rate. Even in periods of sustained economic growth, then, there was a certain precariousness to the French economy—which, in the event of shock, sent many prudent bourgeois across the Swiss frontier, bearing the family savings.

Yet France always had an impact upon affairs far larger than might be expected from a country with a mere 4 percent of the world GNP—and this was true not merely of the period of de Gaulle’s presidency. It may have been due to sheer national-cultural assertiveness,²³⁷ and that coinciding with a time when Anglo-American influences were waning, Russia was appearing more and more unattractive, and Germany was deferential. If western Europe was to have a leader and spokesman, France was a more obvious candidate than the isolationist British or the subdued Germans. Furthermore, successive French administrations quickly recognized that their country’s modest real power could be buttressed by persuading the Common Market to adopt a particular line—on agricultural tariffs, high technology, overseas aid, cooperation at the United Nations, policy toward the Arab-Israeli conflict, and so on—which effectively harnessed what had become the world’s largest trading bloc to positions favored by Paris. None of this restrained France from quite unilateral actions when the occasion seemed to merit it.

The fact that all four of these larger European states grew in wealth and output during these decades, together with their smaller neighbors, was not a guarantee of everlasting happiness. The early hopes toward ever-closer political and constitutional integration foundered upon the still-strong nationalism of its members, shown first of all by de Gaulle’s France, and then by those states (Britain, Denmark, Greece) which had only later, and more warily, joined the EEC. Economic disputes, especially over the high cost of the farm-support policy, often paralyzed affairs in Brussels and Strasbourg. With neutral Eire a member, it was not possible to effect a common defense policy, which had to be left to NATO (from whose command structure the French had now absented themselves). The shock of the oil price rises in the 1970s seemed to hit Europe especially badly, and to take the steam out of the earlier optimism; despite widespread alarm, and considerable planning in Brussels, it seemed difficult to evolve high-technology policies to counter the Japanese and American challenges. Yet, notwithstanding these many difficulties, the sheer economic size of the EEC meant that the international landscape was now significantly different from that of 1945 or 1948. The EEC was by far the largest importer and exporter of the world’s goods (although much of that was intra-European trade), and it contained, by 1983, by far the largest international currency and gold reserves; it manufactured more automobiles (34 percent) than either Japan (24 percent) or the United States (23 percent) and more cement than anyone else, and its crude-steel production was second only to that of the USSR.²³⁸ With a total population in 1983 significantly larger than the United States’ and almost exactly the same as Russia’s—each having 272 million—the ten-member EEC had a substantially bigger GNP and share of world manufacturing production than the Soviet state, or the entire Comecon bloc. If politically and militarily the European Community was still immature, it was now a much more powerful presence in the global economic balances than in 1956.

Almost exactly the opposite could be said about the USSR, as it evolved from the 1950s to the 1980s. As has been described above (pp. 385–91), these were decades when the Soviet Union not only maintained a strong army, but also achieved nuclear-strategic parity with the United States, developed an oceangoing navy, and extended its influence in various parts of the world. Yet this persistent drive to achieve equality with the Americans on the global scene was not matched by parallel achievements at the economic level. Ironically (given Marx’s stress upon the importance of the productive substructure in determining events), the country which claimed to be the world’s original Communist state appeared to be suffering from increasing economic difficulties as time went on.

This is not to gainsay the quite impressive economic progress which was made in the USSR—and throughout the Soviet-dominated bloc—since Stalin’s final years. In many respects, the region was even more transformed than western Europe during those few decades, although that may have been chiefly due to the fact that it was so much poorer and “underdeveloped” to begin with. At any event, measured in crude statistical terms, the gains were imposing. Russia’s steel output, a mere 12.3 million tons in 1945, soared to 65.3 million tons in 1960, and to 148 million tons in 1980 (making the USSR the world’s largest producer); electricity output rose from 43.2 million kilowatt-hours, to 292 million, to 1.294 billion, during the same periods; automobile production jumped from 74,000 units, to 524,000, to 2.2 million units; and this list of increases in products could be added to almost indefinitely.²³⁹ Overall industrial output, averaging over 10 percent growth a year during the 1950s, increased from a notional 100 in 1953 to 421 in 1964,²⁴⁰ which was a remarkable achievement—as were such obvious manifestations of Russian prowess as the Sputnik, space exploration, and military hardware. By the time of Khrushchev’s political demise, the country had a far more prosperous, broader-based economy than under Stalin, and that absolute gain has steadily increased.

There were, however, two serious defects which began to overshadow these achievements. The first was the steady, long-term decline in the rate of growth, with industrial output each year since 1959 dropping from double-digit increases to a lower and lower figure, so that by the late 1970s it was down to 3–4 percent a year and still falling. In retrospect, this was a fairly natural development, since it has now become clear that the early, impressive annual increases were chiefly due to vast infusions of labor and capital. As the existing labor supply began to be fully utilized (and to compete with the requirements of the armed forces, and agriculture), the pace of growth could not help but fall back. As for capital investment, it was heavily directed into large-scale industry and defense-related production, which again emphasized quantitative rather than qualitative growth, and left many other sectors of the economy undercapitalized. Although the standard of living of the average Russian was improved by Khrushchev and his successors, nonetheless consumer demand could not (as in the West) stimulate growth in an economy in which personal consumption was being deliberately kept low in order to preserve national resources for heavy industry and the military. Above all, perhaps, there remained the chronic structural and climatic weaknesses affecting Soviet agriculture, the net output of which grew 4.8 percent a year in the 1950s but only 3 percent in the 1960s and 1.8 percent in the 1970s—despite all the attention and capital lavished upon it by anguished Soviet planners and their ministers.²⁴¹ Bearing in mind the size of the agricultural sector in the USSR, and the fact that its population rose by 84 million in the three decades after 1950, the overall increases in national product per capita were significantly less than the rates of industrial output, which were in themselves a somewhat “forced” achievement.

The second serious defect was, predictably enough, in terms of the Soviet Union’s relative economic standing. During the 1950s and early 1960s, with its share both of world manufacturing output and of world trade increasing, Khrushchev’s claim that the Marxist mode of production was superior and would one day “bury capitalism” seemed to have some plausibility to it. Since that time, however, the trend has become more worrying to the Kremlin. The European Community, led by its industrial half-giant West Germany, has become much wealthier and more productive than the USSR. The small island state of Japan grew so fast that its overtaking of Russia’s total GNP became merely a matter of time. The United States, despite its own relative industrial decline, kept ahead in total output and wealth. The standard of living of the average Russian, and of his eastern-European confreres, did not close the gap with that in western Europe, toward which the peoples of the Marxist economies looked with some envy. The newer technology, of computers, robotics, telecommunications, revealed the USSR and its satellites as poorly positioned to compete. And agriculture remained as weak as ever, in productive terms: in 1980, the American farm worker was producing enough food to supply sixty-five people, whereas his Russian equivalent turned out enough to feed only eight.²⁴² This, in turn, led to the embarrassing Soviet need to import increasing amounts of foodstuffs.

Many of Russia’s own economic difficulties have been mirrored by those of its satellites, which also achieved high growth rates in the 1950s and early 1960s—though again from levels which were low compared with those of the West, and by following priorities which similarly emphasized centralized planning, heavy industry, and collectivization of agriculture.²⁴³ While significant differences in prosperity and growth occurred among the eastern European states (and still do occur), the overall tendency was one of early expansion and then slowdown—leaving Marxist planners with a choice of difficult options. In Russia’s case, additional farmland could be brought under cultivation, though the limits imposed by the winter ecology in the north and the deserts in the south restricted possibilities in that direction (and easily reminded many of how Khrushchev’s confident exploitation of the “virgin lands” soon turned them into dustbowls);²⁴⁴ similarly, more intensive exploitation of raw materials ran the danger of increasing inefficiencies in dealing with, say, oil stocks,²⁴⁵ while extractive costs rose swiftly as soon as mining was extended into the permafrost region. More capital might be poured into industry and technology, but only at the cost of diverting resources either from defense—which has remained the number-one priority of the USSR, despite all the changes of leadership—or from consumer goods—slighting of which was seen to be highly unpopular (especially in eastern Europe) at a time when improved communications were making the West’s relative prosperity even more obvious. Finally, Russia and its fellow Communist regimes could contemplate a series of reforms, not merely of the regular rooting-out-corruption and shaking-up-the-bureaucracy sort, but of the systemitself, providing personal incentives, introducing a more realistic price mechanism, allowing increases in private farming, encouraging open discussion and entrepreneurship in dealing with the newer technologies, etc.; in other words, going for “creeping capitalism,” such as the Hungarians were adroitly practicing in the 1970s. The difficulty of that strategy, as the Czech experiences of 1968 showed, was that “liberalization” measures threw into question the dirigiste Communist regime itself—and were therefore frowned upon by party ideologues and the military throughout the cautious Brezhnev era.²⁴⁶ Reversing relative economic decline therefore had to be done carefully, which in turn made a striking success unlikely.

Perhaps the only consolation to decision-makers in the Kremlin was that their archrival, the United States, also appeared to be encountering economic difficulties from the 1960s onward and that it was swiftly losing the relative share of the world’s wealth, production, and trade which it had possessed in 1945. Yet mention of that year is, of course, the most important fact in understanding the American relative decline. As argued above, the United States’ favorable economic position at that point in history was both unprecedented and artificial. It was on top of the world partly because of its own productive spurt, but also because of the temporary weakness of other nations. That situation would alter, against the United States, with Europe’s and Japan’s recovery of prewar level of output; and it would alter still further with the general expansion of world manufacturing production (which rose more than threefold between 1953 and 1973), since it was inconceivable that the United States could maintain its one-half share of 1945 when new factories and industrial plant were being created all over the globe. By 1953, Bairoch calculates, the American percentage had fallen to 44.7 percent; by 1980 to 31.5 percent; and it was still falling.²⁴⁷ For much the same reason, the CIA’s economic indicators showed the United States’ share of world GNP dropping from 25.9 percent in 1960 to 21.5 percent in 1980 (although the dollar’s short-lived rise in the currency markets would see that share increase over the next few years).²⁴⁸ The point was not that Americans were producing significantly less (except in industries generally declining in the western world), but that others were producing much more. Automobile production is perhaps the easiest way of illustrating the two trends which make up this story: in 1960, the United States manufactured 6.65 million automobiles, which was a massive 52 percent of the world output of 12.8 million such vehicles; by 1980, it was producing a mere 23 percent of the world output, but since the latter totaled 30 million units, the absolute American production had increased to 6.9 million units.

Yet despite that half-consoling thought—similar to the argument which the British used to half-console themselves seventy years earlier when their shares of world output began to be eroded—there was a worrying aspect to this development. The real question was not “Did the United States have to decline relatively?” but “Did it have to decline so fast?” For the fact was that even in the heyday of the Pax Americana, its competitive position was already being eroded by a disturbingly low average annual rate of growth of output per capita, especially as compared with previous decades (see Table 42).

Once again, it may be possible to argue that this was a historically “natural” development. As Michael Balfour remarks, for decades before 1950 the United States had increased its output faster than anyone else because it had been a major innovator in methods of standardization and mass production. As a result, it had “gone further than any other country to satisfy human needs and [was] already operating at a high level of efficiency (measured in terms of output per man per hour) so that the known possibilities for increasing output by better methods or better machinery were, in comparison with the rest of the world, smaller.”²⁵⁰ Yet while that was surely true, the United States was not helped by certain other secular trends which were occurring in its economy: fiscal and taxation policies encouraged high consumption, but a low personal savings rate; investment in R&D, except for military purposes, was slowly sinking compared with other countries; and defense expenditures themselves, as a proportion of national product, were larger than anywhere else in the western bloc of nations. In addition, an increasing proportion of the American population was moving from industry to services, that is, into low-productivity fields.²⁵¹

Table 42. Average Annual Rate of Growth of Output per Capita, 1948-1962²⁴⁹

Much of this was hidden during the 1950s and 1960s by the glamour developments of American high technology (especially in the air), by the high prosperity which triggered off consumer demand for flashy cars and color televisions, and by the evident flow of dollars from the United States to poorer parts of the world, as foreign aid, or as military spending, or as investment by banks and companies. It is instructive in this regard to recall the widespread alarm in the mid-1960s at what Servan-Schreiber called le défi Américain—the vast outward surge of U.S. investments into Europe (and, by extension, elsewhere), allegedly turning those countries into economic satellites; the awe, or hatred, with which giant multinationals like Exxon and General Motors were regarded; and, associated with these trends, the respect accorded to the sophisticated management techniques imbued by American business schools.²⁵² From a certain economic perspective, indeed, this transfer of U.S. investment and production was an indicator of economic strength and modernity; it took advantage of lower labor costs and ensured greater access in overseas markets. Over time, however, these capital flows eventually became so strong that they began to outweigh the surpluses which Americans earned on exports of manufactures, foodstuffs, and “invisible” services. Although this increasing payments deficit did see some gold draining out of the United States by the late 1950s, most foreign governments were content to hold more dollars (that being the leading reserve currency) rather than demand payment in gold.

As the 1960s unfolded, however, this cozy situation evaporated. Both Kennedy and (even more) Johnson were willing to increase American military expenditures overseas, and not just in Vietnam, although that conflict turned the flow of dollars exported into a flood. Both Kennedy and (even more) Johnson were committed to increases in domestic expenditures, a trend already detectable prior to 1960. Neither administration liked the political costs of raising taxes to pay for the inevitable inflation. The result was year after year of federal government deficits, soaring price rises, and increasing American industrial uncompetitiveness—in turn leading to larger balance-of-payments deficits, the choking back (by the Johnson administration) of foreign investments by U.S. firms, and then the latter’s turn toward the new instrument of Eurodollars. In the same period, the U.S. share of world (non-Comecon) gold reserves shrank remorselessly, from 68 percent (1950) to a mere 27 percent (1973). With the entire international payments and money-flow system buckling under these interacting problems, and being further weakened by de Gaulle’s angry counterattacks against what he regarded as America’s “export of inflation,” the Nixon administration found it had little choice but to end the dollar’s link to gold in private markets, and then to float the dollar against other currencies. The Bretton Woods system, very much a creation of the days when the United States was financially supreme, collapsed when its leading pillar could bear the strains no more.²⁵³

The detailed story of the ups and downs of the dollar in the 1970s, when it was floating freely, are not for telling here; nor is the zigzag course of successive administrations’ efforts to check inflation and to stimulate growth, always without causing too much pain politically. The higher-than-average inflation in the United States generally caused the dollar to weaken vis-à-vis the German and Japanese currencies in the 1970s; oil shocks, which hurt countries more dependent upon OPEC supplies (e.g., Japan, France), political turbulence in various parts of the world, and high American interest rates tended to push the dollar upward, as was the case by the early 1980s. Yet although these oscillations were important, and tended to add to global economic insecurities, they may be less significant for our purposes than the unrelenting longer-term trends, which were the decreasing productivity growth, which in the private sector fell from 2.4 percent (1965–1972), to 1.6 percent (1972–1977), to 0.2 percent (1977–1982);²⁵⁴ the increasing federal deficits, which could be seen as giving a Keynesian-type “boost” to the economy, but at the cost of sucking in so much cash from abroad (attracted by the higher American interest rates) that it sent the dollar’s price to artificially high levels and turned the country from a net lender to a net borrower; and the increasing difficulty American manufacturers found in competing with imported automobiles, electrical goods, kitchenware, and other manufactures. Not surprisingly, American per capita GNP, once the highest in the world, began to slip down the list.²⁵⁵

There were still consolations, to those who could see the American economy and its needs in larger terms than selected comparisons with Swiss incomes or Japanese productivity. As Calleo points out, post-1945 American policy did achieve some very basic and significant aims: domestic prosperity, as opposed to a 1930s-type slump; the containing of Soviet expansionism without war; the revival of the economies—and the democratic traditions—of western Europe, later joined by Japan to create “an increasingly integrated economic bloc,” with “an imposing battery of multilateral institutions … to manage common economic as well as military affairs”; and, finally, “the transformation of the old colonial empires into independent states still closely integrated into a world economy.”²⁵⁶ In sum, it had maintained the liberal international order, upon which it, itself, increasingly depended; and while its share of world production and wealth had shrunk, perhaps faster than need have been the case, the redistribution of global economic balances still left an environment which was not too hostile to its own open-market and capitalist traditions. Finally, if it had seen its productive lead eroded by certain faster-growing economies, it had still maintained a very considerable superiority over the Soviet Union in almost all respects of true national power and—by clinging to its own entrepreneurial creed—remained open to the stimulus of managerial initiative and technological charge which its Marxist rival would have far greater difficulty in accepting.

A more detailed discussion of the implication of these economic movements must await the final chapter. It may, however, be useful to give in statistical form (see Table 43) the essence of the trends examined above, as they concern the global economic balances, namely the partial recovery of the share of world product in the hands of the less-developed countries; the remarkable growth of Japan and, to a lesser extent, of the People’s Republic of China; the erosion of the European Economic Community’s share even as it remained the largest economic bloc in the world; the stabilization, and then slow decline, of the USSR’s share; and the much faster decline, but still far larger economic muscle, of the United States.

Indeed, by 1980, the final year in Table 43, the World Bank’s figures of population, GNP per capita, and GNP itself, were very much pointing to a multipolar distribution of the global economic balances, as shown in Table 44.

Table 43. Shares of Gross World Product, 1960-1980²⁵⁷
(percent)

Table 44. Population, GNP per Capita, and GNP in 1980²⁵⁸²⁵⁹

Finally, it might be useful to recall that these long-term shifts in the productive balances are of importance not so much for their own sake, but for their power-political implications. As Lenin himself noted in 1917–1918, it was the uneven economic growth rates of countries which led ineluctably to the rise of specific powers and the decline of others:

Half a century ago, Germany was a miserable, insignificant country, as far as its capitalist strength was concerned, compared with the strength of England at that time. Japan was similarly insignificant compared with Russia. Is it “conceivable” that in ten or twenty years’ time the relative strength of the imperialist powers will have remained un changed? Absolutely inconceivable.²⁶⁰

And for all Lenin’s own concentration upon the capitalist imperialist states, the rule seems common to all national units, whatever their favored political economy, that uneven rates of economic growth would, sooner or later, lead to shifts in the world’s political and military balances. This, certainly, has been the pattern observed in the four centuries of Great Power development prior to the present one. It therefore follows that the unusually rapid shifts in the centers of world production during the past two or three decades cannot avoid having repercussions upon the grand-strategical future of today’s leading Powers, and rightly deserve the attention of one final chapter.