efficient and self-regulating market increasingly hard to sustain.
Lacking a clear understanding of the problem, governments inter-
vened to shelter their producers from a market that no longer brought
prosperity. Between 1931 and 1936, European and North American
states regulated domestic markets, abandoned the gold standard,
and raised tariff barriers. International trade and investments, which
had grown steadily until then, fell drastically, and the idea of an open
world market governed bylaissez-fairesimply collapsed.^8
Beyond the adoption of defensive measures, three broad courses of
action seemed plausible. First, communism along Soviet lines, an option
that appeared to be reinforced by the capacity of the USSR to keep
growing in a receding world economy. Second, fascism, an orientation
that claimed to move beyond the old opposition between capitalism
and socialism, and also seemed able to bring economic recovery, at
least in Germany. Third, a reformed liberal economy that promised to
better balance market rules and state intervention into a combination
that would become known as the “mixed economy.”
The war sealed the fate of fascism, and the Cold War contained the
expansion of communism, leaving the idea of a mixed economy dom-
inant in most countries. This idea, however, raised many questions. In
the 1930s and 1940s, governments had experimented with economic
regulation, planning, collective bargaining, and social security, but these
reforms had been more improvised than designed. Both experts and
the general public feared in fact that the end of the world conflict would
bring back a severe recession.^9 Among the issues left unresolved by the
war, the most fundamental concerned the rules that would govern
international exchanges, the extent to which social equality should be
achieved, the specific role of the state in the economy, and the place of
the working class in society.^10 At the international level, a liberal trade
regime rapidly prevailed, and domestically, as will be seen below, new
welfare programs allowed states to combine the pursuit of economic
growth with the quest for social justice. With respect to the state and
the working class, two ideas also emerged that structured the debates
between the left and the right: planning and collective bargaining.
(^8) Eric J. Hobsbawm,The Age of Extremes: The Short Twentieth Century,
1914–1991, London, Abacus, 1994, pp. 88–95.
(^9) Ibid., p. 230.
(^10) Charles S. Maier, “Nineteen Forty-Five: Continuity or Rupture?,”Europa: A
Journal of Interdisciplinary Studies, vol. 5, no. 2, 1982, 109–21, pp. 120–21.
110 Left and Right in Global Politics