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  Family watching television, c. 1958 (by Evert F. Baumgardner via  Wikimedia Commons ) The era between 1945 and 1975 is often described as the 'Golden Age' of capitalism. During this period the economy of the United States, Western Europe and Japan grew at an unprecedented pace. The post-war economic miracle was made possible by the parallel growth of productivity, capital stock per worker and real wages, which ensured a balanced development of production and consumption. Despite the rapid increase in the volume of international trade, in the post-war period developed countries mostly relied on their domestic market to boost growth (see  The Golden Age of Capitalism: Reinterpreting the Postwar Experience , eds Stephen A. Marglin, Juliet B. Schor). But were the nearly three decades that followed the Second World War really a 'golden age'? Were people better off than we are now? Let us look at some facts. In 1960-61 the average  household income  in the United St

Volkswagen plant in Wolfsburg, Germany (photo by VW_Werk_Altes_Heizkraftwerk.jpg: Richard Bartz derivative work: Diliff via Wikimedia Commons) A white paper released by the British government in 2017 described the United Kingdom as an " open, liberal market economy ", whose foundation lies in "the power of the competitive market - competition, open financial markets, and the profit motive". Despite recognizing the government's "strategic power and leadership role" in developing and disseminating technologies and industries, the white paper rejected protectionism and equated industrial policy mostly with Research and Development (R&D), education and infrastructure. Nowadays there is a widespread belief that countries develop because of "free market" . Therefore, economically poorer regions, such as Greece, southern Italy or Portugal, are responsible for their own poverty, either because of their cultural shortcomings,

(Image by kees torn (CSCL GLOBE) [CC BY-SA 2.0], via Wikimedia Commons On the latest episode of Last Week Tonight, comedian John Oliver made fun of Donald Trump's tariffs and mocked him for not understanding how free trade works.   Oliver noted that tariffs are paid by importers and typically passed along to US consumers, leading to higher prices. Tariffs could cost the US hundreds of thousands of jobs, Oliver argued.  Trade deficits "aren't actually always bad, and many economists believe, for very complex reasons involving savings rates and the dollar's special status as the world's reserve currency, that America's trade balance might be more or less where it should be," he said. Oliver argued that "the overwhelming consensus among economists is that trade between countries generally speaking can create jobs, lower costs, and be a net benefit to both nations."  But is John Oliver right? We shall argue that although Tr

"The Wealth of the Nation" by Seymour Fogel via Wikimedia Commons In his bestseller Free to Choose economist Milton Friedman offered a vision of American economic history that revolved around the idea of freedom. He wrote: "Ever since the first settlements of Europeans in the New World America has been a magnet for people seeking adventure, fleeing from tyranny, or simply trying to make a better life for themselves and their children ... When they arrived, they did not find streets paved with gold; they did not find an easy life. They did find freedom and an opportunity to make the most of their talents. Through hard work, ingenuity, thrift, and luck, most of them succeeded ... "The story of the United States is the story of an economic miracle and a political miracle that was made possible by the translation into practice of two sets of ideas .... One [of them] was embodied in the Wealth of Nations, the masterpiece [by] Adam Smith [w