Modelling the historical record

The task of part II is to explain economic developments in the advanced capitalist economies during the twentieth century to illustrate the explanatory power of the evolutionary-Keynesian framework outlined in part I. This long-run period covers four distinct episodes: developments from the end of the nineteenth century to the 1930s, the 1930s, the golden age of capitalism beginning soon after World War II and lasting until the 1970s, and the period from the 1970s until the present. The end of each episode is defined by a radical change in performance as a new episode begins, tracing out a sequence of alternating episodes of good and poor performance.

Our explanation of capitalist development centres on the structural changes that provide linkages between consecutive historical episodes. When outlining our framework in chapter 6, we stated that changes in institutions provide the key links between episodes in the post-World War II era, whereas technology change served this function prior to World War II. However, to identify a change in one structural feature as the linkage leading to a new episode does not exclude a role for others; whether or not these also change, they can reinforce or prolong the new type of performance. For example, it will be argued in chapter 8 that the structural change linking the episode prior to the 1930s with the Great Depression was technology.