

The time of economic miracles 
The post-war decades were a surprise not only for Marxists 
and Keynesians; in their earlier stages they were hailed 
as miracles in various countries. In dealing with the pst-war 
time I am going to extend the discussion from the subject 
of the U.S. to the wider field of industrial countries 
i.e. especially Europe. They all to a greater or lesser extent 
shared the experience of the pre-war crisis and unemployment 
and they were all enjoying a rather exceptional growth of 
output, productivity and employment now. 
I want to carry out my explanation in two steps: I shall 
first explain how the high level of employment and growth 
came about initially. Second I shall show that after these 
favorable conditions had been established they themselves 
created forces capable of perpetuating high growth. 
Taking the U.S. first, there was a basic stimulus from 
public spending which had greatly expanded as compared to 
pre-war. The effect of that was an expansion of effective 
dm^and even though there were no deficits. The spending (much 
of it military ) was in part financed by taxes on corporate 
profits ( see my paper in the Cambridge Journal 1979 ). 
The result of the combination of spending and taxes on strong 
savers is an expansion of output by^utilisation of capacity 
( 90 p.c. in the 50s ) up to the point where the profit and 
saving remaining after the higher taxes have been paid 
are as great as the y were before. While the profit situation 
of the corporations thus was not made worse by the higher

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