The Wealth of Nations 1977: From boom to depression to prosperity to stagflation toùwhat?

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The dismal answer came all too quickly. By 1933 the U.S. economy had spiraled down to a point so close to complete collapse that even those old enough to remember find it difficult to believe. One-fourth of the working force was unemployed, banks closed down, hungry men hunted for scraps of food in trash heaps. The Inauguration of Franklin D. Roosevelt marked a turning point perhaps most important for its assertion that economic recovery and revival could be achieved only with a substantial assist from the Government. While the Depression continued, it was softened by the New Deal's relief and reform measures. And with F.D.R.'s cry for "action, and action now," the Government assumed a commitment to alleviate suffering and restore economic health. That commitment has proved irreversible for all succeeding Administrations, conservative and liberal alike.

Real prosperity did not return until the end of World War II. But with the silencing of the guns and the conversion of wartime technology to peaceful uses, there began a generation of rising affluence throughout much of the world, of rapid growth in output and incomes that continued through the '50s and '60s. One of the early milestones of that era was the Marshall Plan of 1947, an act of imaginative statesmanship that started the rebuilding of the war-shattered economy of Western Europe into the mighty industrial engine of today. It also constituted formal recognition—fulfilling the promise of the monetary conference at Bretton Woods in 1944—that the U.S. and other economies share an interdependence, which has grown with almost every succeeding year.

Alas, the new economic Golden Age that seemed within reach in the Soaring Sixties failed to materialize. More than any other event, the Arab oil embargo and stunning price boosts of late 1973 signaled to the world that the long party was over. Those hammer blows did more than awaken the , West from its unconscious assumption that cheap energy and other natural resources would always be amply available; the price increases acted as a kind of gigantic consumer tax that gave a mighty push to the overlapping forces of inflation and unemployment that have plagued the industrial nations ever since. It is too early to know precisely what story will one day symbolize the transition from that period to whatever comes next. It is safe to predict, though, that the story will rate front-page headlines in newspapers and cover billing in magazines.

—By George J. Church