Abstract
I understand that the capitalism (including mercantilist state capitalism, liberal state capitalism, and imperialist state capitalism) before First World War is a classical capitalism and that the capitalism after the end of Second World War is welfare state capitalism. I think that about 40 years from the WW I to the end of WW II is a historical transition period from classical capitalism to welfare state capitalism. Each state in capitalist countries became welfare state as welfare nationalist state during the WW I, the Great Depression of the 1930s, and WW II, but it lacked the cooperation mechanism of each other. Consequently, it did not form stable welfare state capitalism as a world-historic stage of development. The Pax Americana after WW II created a world hegemonic order in which welfare state capitalism in advanced countries of the West could develop with stability. With the conclusion of hostilities, New Deal liberal ideology had been undermined. During WW II, the government had served certain dominant interests at the expense of those less powerful. Through the functions of wartime economy, the large corporations concentrated their power. Although the labor movement had been vastly expanded in size, unions proved to be no match for business. This balance of power precluded any consistent social-democratic trend for the American political economy. This characteristic of the state of the United States after WW II had a great influence on the other countries' welfare state through various channels. These channels included the Breton Woods system, the Marshall Plan, other foreign aid, and military aid. The influence that Washington exerted through foreign aid in most of Europe could be imposed in West German and Japan. As a result, welfare state of many countries became less social democratic under Pax Americana. As a security system, American ascendancy had to have a military and strategic component. The United States became the linchpin of the North Atlantic Alliance. British, Canadians, and other allies shared the military burden. The United States coordinated an international set of military commitments. It won the principle that every ally would set aside a continuing share of national revenue for defense. Military spending and welfare spending came together to form the core of state allocations in the post-war era. The forty-year period of crisis was settled when the United States and Soviet Union finally displaced both the old imperial leader, Great Britain, and the ambitious challengers of the two world wars, Germany and Japan. At the level of domestic politics, the ideological clashes between Marxist socialist or communism on the left and an authoritarian nationalism or fascism on the right, also had to be successfully resolved with some sort of truce. The formation of the welfare state system as an international system under American hegemony was the product of a compromise. This compromise or social agreement had a historic significance. The political coalitions of welfare state in the West included working class representatives as well as spokesman for such conservative forces as industrial capital or the church. It added a new page to the history of capitalism.
