The success of the American economy was achieved largely due to a number of favorable factors that contributed to the rapid socio-economic development of the country. Let’s highlight the main ones.
The United States got a huge, almost uninhabited continent with the richest natural resources, primarily a variety of minerals, conveniently located in relation to the rapidly developing centers of industry. The climate of the main agricultural areas of the country with their fertile soils favors the conduct of highly productive agriculture.
In the United States, there was no pre-capitalist relationship (with the exception of slavery in the south of the country), the remnants of which would interfere with the formation of capitalism, as it was in European countries. Under these conditions, free land, an abundance of cheap energy resources and raw materials contributed to the creation of a powerful economic potential in the United States. A rapidly developing economy that required more and more workers, and a relatively high level of wages attracted millions of immigrants from other countries to the United States. For example, if in the period from 1800 to 1900 the population of Europe doubled, then the population of the United States – 14 times, mainly due to immigration from Europe. In the United States, people moved who were dissatisfied with their position in their homeland, mostly active, ready for hard work and a desperate struggle for a place in the sun.
The rapidly growing population of the country and the relatively high level of income contributed to the orientation of the American economy to the consumer, to the production of consumer goods and the development of the service sector. Meeting the personal needs of a growing population became a major source of profit. The expanding consumer market stimulated the development of mass production, which, in turn, was a factor in the further expansion of the mass market. Mass production in the United States was created many decades ago. So, even during the First World War, the United States crossed the million mark in the production of cars (in 1915, 985.5 thousand of them were produced, in 1916 – 1.526 thousand). This level required an appropriate level of production of related industries that supplied their products for the production of cars. Therefore, the country developed rapidly: the oil refining industry; petrochemicals; metallurgy; instrumentation; textile industry, etc.
The development of the US economy was not hampered by wars, military destruction and human losses. The last invasion of American territory by foreign troops was in 1812, and hostilities on American territory proper were last conducted in 1861-1865 during the civil war between the North and the South, against slavery in the southern states. Since then, the United States itself has fought colonial wars, participated in two world wars. But all this happened far from the shores of America and did not entail any significant human and material losses for the United States. On the contrary, the world wars, which hindered the development of other participating countries and damaged their farms, contributed to noticeable leaps forward in the economic development of the United States. For example, U.S. GNP increased from $716.6 billion . (in 1982 prices) in 1939 to 1380.6 billion dollars. in 1944, when the peak of military production was reached, that is, by 92.6%, and production in the manufacturing industry increased by 2.4 times over the same period. The average annual growth rate of GNP was 14%, and production in the manufacturing industry – 18.7%. The U.S. economy has never achieved such a rate of economic growth in peacetime.
The accelerated economic development of the United States was facilitated by competition and freedom of economic activity. It is characteristic that, firstly, the creation of new enterprises in the country was extremely easy, with minimal bureaucratic formalities, and secondly, gave impetus to the development of competition. In turn, competition, fierce struggle for the consumer’s dollar forced to constantly improve production, reduce its costs, improve quality, update and increase the range of products. Competition did not allow production to stagnate, constantly pushing technological progress. However, it would be completely wrong to think that the United States is dominated by an unlimited market element and state intervention in the economy is reduced only to preventing monopolization. Anti-monopoly measures are only one of many methods of state influence on the economy.
The state has played and continues to play an important role in the economic life of the United States. Its functions are constantly expanding. A large set of methods and tools for regulating the American economy is used. These are budgetary, monetary, legislative, administrative measures, they allow us to influence the pace of economic development, the level of employment and unemployment, the growth rate of prices. The state carries out legislative regulation, legislatively establishes various standards and regulations, in particular, the length of the working day, the minimum wage, safety requirements. Much attention is paid to the implementation of tax and credit incentives for scientific and technological progress.
The state regulates the activities of certain branches, for example, the military, nuclear industries, etc.
The economic models used at different stages of the development of the US economy helped to successfully cope with economic problems, to overcome socio-economic crises. So, after the Great Depression of 1929-1933, the United States managed to improve its economy. This happened as a result of President Franklin Roosevelt’s choice of the famous “New Deal”, which includes the following components: the structural restructuring of the economy, the adoption of new financial and social laws, the implementation of a new regional policy.
The structural restructuring of the economy implied the priority development of national industry. During this period, there were bans on the purchase of foreign goods under the state order. The quotas introduced in the country and high customs duties on imported goods were designed to protect its own producers.
Major changes also occurred in agricultural policy, where the main problem was overproduction. Therefore, measures were taken to limit the production of products by this industry. The Farm Credit Act and the Mortgage Act were drafted and enacted, and as a result, farmers and urban dwellers had access to loans guaranteed by the federal government. The total number of short-term loans amounted to about 300 thousand for a total amount of $ 1.5 billion .
Among the financial laws adopted during this period, the Emergency Banking Act should be highlighted, which gave federal control to the activities of all banks and gave government guarantees for private deposits. Banks were forbidden to act as holders of securities and engage in entrepreneurship, which significantly reduced the amount of financial speculation. The adopted law on the honesty of exchange operations and the rules for trading in securities introduced changes in the sphere of circulation of securities. The measures taken allowed the United States to protect itself for a long time from new financial shocks and crises of the banking system.
The social policy pursued in the country made it possible to provide assistance to the poorest segments of the population (about 4 million people) most affected by the crisis. For these purposes, financial assistance in the amount of $ 5 million was allocated. 400 thousand different programs were developed, according to which assistance was provided not with money, but with the provision of work.
The measures taken made it possible to significantly reduce the unemployment rate and build many roads, schools, bridges, about 500 new airports, etc.
In the United States, the State Corporation for the Management of All Monopolies in the Service Sector was created, thanks to which monopolists could no longer completely dictate their terms to society.
The regional policy pursued in the country has helped to stabilize the economic situation in depressed areas. Special development programs were developed for these areas, which had federal funding and management.
The policy of the “New Deal” was carried out by Roosevelt in the conditions of unification of the nation, it was supported by Congress, which adopted all laws, as well as the population. Roosevelt personally spoke on the radio, explaining to americans the essence of the economic policy being pursued. As a result, it was successfully implemented. In addition, advanced economic theories of the time were successfully used, for example, “The General Theory of Employment, Interest and Money” by J. S. Miller. M. Keynes, which became the main guide to the implementation of the policy of managing aggregate demand. As a result, the country was pulled out of the Great Depression and by the time of the outbreak of World War II, the US economy had acquired stability and stability of development.
After the end of the Second World War, the United States, possessing significant financial assets in the form of gold of European countries, transferred in the pre-war and wartime across the ocean to the federal vault at Forts Knox, allowed the United States in the post-war Bretton Woods system to take a dominant position. The US dollar, along with gold, began to be considered as a worldwide means of payment and reserve.
The United States provided significant financial assistance to European states to restore the war-torn economy as part of the Marshall Plan. Japan also received comprehensive economic support, which began to be considered in the United States as a strategic partner in the East in the Cold War with the socialist countries of Asia. As a result, U.S. investment in Western Europe and Japan has shaped the so-called “second economy” of the United States.
The rapid recovery of the economies of Western Europe and Japan radically changed the situation on the world market. Japanese and Western European commodity producers began to compete successfully with American ones, which led to a depreciation of the dollar against the currencies of European countries and Japan, and this meant the exchange of a smaller than before number of European currencies or Japanese yen for dollars. As a result, there was an increase in the number of dollars in the hands of foreign residents and at the same time a decrease in the accumulated US gold reserves. A situation was created when gold reserves ($ 10 billion) could not cover $ 50 billion in the hands of foreigners. For the first time since the creation of the Bretton Woods system in 1971, the gold content of the dollar was reduced, and since 1973 the exchange of the dollar for gold has been completely stopped.
In the 1970s and 1980s, the growth of labor productivity in European countries and Japan and the strengthening of their production capacities led to a decrease of one-third in the share of the United States in world capitalist production. Increased competition in the main commodity markets led to a decrease in the share of the United States in world exports of goods and capital, led to a threefold decrease in the share of American TNCs in the total volume of world foreign direct investment. A very strong rival of the United States and the EU in these years was Japan. By the mid-80s, it provided 82% of the world’s production of motorcycles, 80.7% of the production of home video systems and about 66% of photocopier equipment; by 1982, Japanese companies controlled up to 60% of the U.S. market for numerically controlled machine tools. Between 1973 and 1986, the U.S. share of world production of goods and services fell from 23.1% to 21.4%, the EU’s from 25.7% to 22.9%, and Japan’s from 7.2% to 7.7%. Accordingly, the positions of American companies have deteriorated. If in 1971 280 of the 500 largest TNCs were American, by 1991 only 157 remained; by this time, Japan had actually caught up with the U.S., owning 345 of the largest companies out of 1,000 (versus 353 for the U.S.); in the late 80s. it had 24 largest banks, in the EU there were 17, and in North America – only 5; 9 of the 10 largest service companies also represented Japan. Competitive foreign products filled the US domestic market, while American products found it increasingly difficult to find sales abroad. All these facts spoke of the deterioration of the US position in the world economy and trade. The US trade deficit in the mid-80s amounted to $ 150 billion , payments – $ 140 billion .
In these conditions, when it came to the loss of world leadership, the United States had to look for extraordinary ways of development. Allocations for R&D were significantly increased, which allowed the country to gain a foothold in the world market of high-tech products. Particular attention was paid to the development of knowledge-intensive industries, new methods of stimulating scientific and technological progress were developed. By focusing on the export of high-tech products, information, knowledge, and intellectual property products, the United States has made the right strategic choice.
In the postwar development of the United States, a Keynesian policy of managing aggregate demand was applied, which implied the provision of full employment and high rates of economic growth.