For this reason among others, the first postwar decades saw steeply declining ratios of national debt to GDP across advanced economies. To sink too far into debt – in terms either of the national budget or the balance of accounts with trading partners – was to risk being sapped of gold. Whether or not this modified gold standard sponsored or merely accompanied the unprecedented expansion after 1945, it discouraged extravagance among international debtors. Until then, foreign central banks had been entitled – under the terms of the Bretton Woods system established after the Second World War – to redeem dollar holdings at a rate of $35 an ounce. In August 1971, Nixon suspended the convertibility of the US dollar into gold. So it is in Paper Promises, a brisk digest of changes in Western monetary policy over the last few centuries by the Economist writer Philip Coggan, and in Debt: The First 5000 Years by the anthropologist and activist David Graeber, which situates the same stretch of modern history within the vast tidal shifts, across five millennia of Eurasian history, between monetary regimes founded on precious metals and those based on ‘virtual credit money’. Writers who stress the role of debt in the story tend to see 1971 as the cusp. At any rate, a new kind of socioeconomic arrangement – the Marxian economists Gérard Duménil and Dominique Lévy propose the name ‘neoliberalism under US hegemony’ – emerged from the turmoil of the 1970s, and is now faltering. Politically, the neoliberal turn began later, perhaps with Thatcher’s election in 1979. Intellectually, Milton Friedman’s Nobel Prize of 1976 signalled the shift from Keynesianism to monetarism thereafter orthodox economics was more concerned with low inflation than full employment. In terms of overall growth rates, it was with the recession of 1973-74 that the surge after the Second World War gave way to deceleration across the wealthy world.

The precise boundary between the postwar eras gets drawn differently depending on which feature of the terrain is emphasised. The end of the second appears to have been announced by the crisis – at first a ‘financial’ crisis, now often a ‘debt’ crisis – that broke out in 2008. The first extends from the late 1940s into the 1970s.

Most analysts divide postwar capitalism into two periods.

Debt by david graeber