In 1945, Sewell Avery, the head of Montgomery Ward, envisioned a great postwar depression. Robert Wood, the head of Sears, Roebuck, foresaw an immense boom. By conventional logic, Avery should have been right. In 1945, two-fifths of Americans feared a return of the 1930s' high unemployment. Depressions had followed most wars. How could he ignore history? Avery asked visitors. The answer, as he discovered, was history was changing.
We are now awash in World War II memorials, but much of the war's significance lies in the durable prosperity and social consensus it produced. Wood of Sears sensed that postwar America would differ profoundly from prewar America. The war bequeathed a huge faith in our ability to promote economic growth for greater social good. Wood gambled on this faith and expanded; Sears flourished. Avery hesitated, and Montgomery Ward languished.
We postwar Americans -- about 70 percent of us were born after 1939 -- cannot easily appreciate how much our attitudes and discontents descend from the war. In 1939, America was deeply divided over the roles of government, business and labor. By 1945, a new social consensus was emerging. The postwar idea was (and is) to perfect capitalism. Private enterprise would remain responsible for producing our wealth, but government would promote and police economic growth to eliminate instability and protect victims of economic change.
This obsession with growth is at the core of the postwar consciousness and discontent. We see growth producing higher living standards and less poverty. Fine, growth can bestow these benefits. But our ideal of progress also includes social and economic stability. We want stable communities, stable jobs and a clear sense of the future. And economic growth often denies these rewards. It introduces new technologies, destroys old industries, moves populations and clouds the future. It is unsettling.
Much postwar history is a relentless quest to defeat this contradiction. Macroeconomics -- the notion that we can understand and influence business cycles -- is a postwar word and thought. Our welfare system is not just Social Security, unemployment insurance and food stamps; private-employer welfare, from health insurance to pensions, also is intended to minimize economic insecurity. Ultimately, we expect business to serve the public good; when we think it doesn't, we regulate.
To Americans of the 1920s, many of these ideas were alien. The fallacy, though, is to attribute the upheaval in social attitudes exclusively to the Depression. By itself, the Depression only erased the 1920s' faith in business and the stoic acceptance of the social effects of business slumps. The New Deal's regulation of business and programs of collective responsibility -- unemployment insurance, Social Security -- emerged from these shattered faiths.
But it was wartime prosperity that established the government's reputation as an economic manager; in 1939, unemployment was 17 percent, twice as high as in 1930. To the public, as Cornell historian Richard Polenberg said, "The idea that government spending could get the economy going was proved by the war." In 1944, there were 96,359 aircraft produced. Shipbuilding expanded the Navy to 32 times its size in 1939. And, despite rationing and virtually no automobile or appliance production, consumer spending in 1944 was actually one-sixth higher than in 1939.
More Americans were working, and the war spurred advances in technology. "We are the only nation in this war which has raised its standard of living," broadcaster Edward R. Murrow reported. The war had wide effects. Tax withholding began. Union membership jumped. People migrated west for war jobs; California's population increased by about one-sixth. But, mostly, attitudes changed; the war economy was a giant public-private partnership. Without the war would the New Deal have died of disappointment? Who knows? But the contrast between the wartime boom and the Depression assured a new political climate.
It is not that we spent ourselves into postwar prosperity. Early postwar government budgets ran surpluses. I agree with economist Edward Bernstein -- a key wartime Treasury official -- that ending the gold standard was critical. Until 1933, gold coin had circulated, and paper money could be exchanged for gold. Tying money to gold kept the economy in a straitjacket. The suspension of the gold standard during wars usually fed inflation, while its postwar restoration risked depression. By abandoning it, we prevented a postwar collapse. Avery of Montgomery Ward failed to grasp this.
But gold's demise itself reflected the new climate. We would not link our fate to anything as arbitrary as the supply of a metal. Government ultimately was responsibile for assuring prosperity and correcting capitalism's flaws. The ideas were not terribly precise, nor did they suddenly crystallize in 1945. They blended New Deal ideology and wartime pragmatism. The basic consensus still reigns. Our debates concern details: How much government? Who needs protecting? Which markets need regulating?
I doubt most Americans can imagine anything else. Government's role as our final social umpire seems utterly natural. Our discontent reflects doubts about economic growth. In part, we exaggerated our control; the loss of gold made the economy more inflation-prone. More important, we increasingly sense growth's mixed effects. In the 1950s, millions of Americans moved to bigger suburban homes; but the migration weakened central cities. In the 1960s, high economic growth cut unemployment but increased inflation. One effect of growth -- depleted oil reserves -- led to disruptive price increases.
The paradox of postwar prosperity is that, by the expectations of 1945, it has been hugely successful. Living standards have risen enormously; business downturns are milder and less frequent than before the war; public and private welfare have reduced economic insecurity. But our expectations change, and we are frustrated by our inability to marry rising living standards and social stability. We cannot live without economic growth, nor sometimes can we live with it. The thought is so unsatisfying and ambiguous that it is almost un-American.