(A translation of a 6/5/2004 editorial by Eric Le Boucher, published in Le Monde)
On this beautiful day commemorating the winning back of liberty, let us be generous with the American, Bush. Let’s play his game—not in order to admit that Bush is right in comparing his war against Saddam Hussein and that of Roosevelt against Adolf Hitler. The former’s goals are ambiguous, even suspect. The latter’s goals were noble. But let’s play Bush’s game in order to recognize that the after-math of the two situations resemble one another: how to reconstruct a ruined land—Europe of yesterday and the greater Middle East of today—in the face of an ally that has become a resolute enemy, whether it be the communism of 1945 or the radical Islamism of 2004.
Let’s plunge ourselves into the economic aftermath of war and the Marshall plan.
Emotion and Reality
If World War I created a terrible blood-letting in the population, World War II was much worse from a social and economic perspective. The Great War had been geographically focused. Bridges, tracks, ports—infrastructures everywhere were destroyed by allied bombardments and by the retreating Germans. Factories were laid waste or stripped of their machines. There were no more seeds or equipment in the fields. The black market, the dearth of coal and of housing, the scarcity of food, the famines in Germany—all of these only compounded the ravages produced by the glacial winter of 1946-7. Economic savings were dried up and financial networks were destroyed. In 1946, one year after the peace, the GDP was not even 70% of that of France in 1936 or 50% of that of Germany.
But one must remember that WWII followed the great crisis of the 1930’s, during which Europe had been overwhelmed by inflation, unemployment, social instability and political impotence. Memories of those times were still fresh in 1945. The people and their leaders lived in fear of a return to those dark years and experienced a feeling of hope mixed with dependence vis-à-vis the Americans.
In fact, as was evident from the retreat, the difficulties were over-estimated. The disaster was real, the recovery would take time, but it would begin before the arrival of American aid from the Marshall funds that would not arrive until 1948. Afterwards, the recovery would be rapid.
Politics and Economics
In Washington, the Republicans had just won the elections on a platform of reducing the federal government, of lowering taxes, of bringing GI’s back home, and of organizing an isolationist trend. There was a direct conflict involving those, such as General George C. Marshall—the former Chief of Staff of the U.S. Army under Roosevelt who then became Secretary of State in January 1947—who believed that America must assist in Europe’s turnaround. Harry Truman gave $250 million to Greece, which risked falling into the hands of Stalin, and Truman propounded a “doctrine:” the containment of the Soviets required economic development. “Economic weapons” would follow the canons. The magazine, The New Republic, summarized the idea in the following terms: “In order to combat communism, we must make sure that Europe has enough to eat for dinner.” Nonetheless—due to the divided opinion in the US—it would take the Americans one year to decide on a course of action. Then, after the “coup of Prague” and the installation of the Communists in that region in February 1947, the Marshall group won the day.
Europe favored economic planning because the damage from the laisser-faire policies of the 1930’s was too evident. Yet America was a strong believer in the marketplace. George Marshall developed a compromise, based on a mix of economic principles, but primarily liberal ones—a model which underlies the current European Union 50 years later. A prerequisite for financial aid was the dismantling of governmental controls and a “mélange that left a greater role for the markets and a lesser role for bureaucratic directives,” according to professors Bradford De Long and Barry Eichengreen.
The Marshall funds became “a powerful tool” in the hands of the governments to convince the population to accept their sacrifices (such as price increases in essential goods) and of maintaining balanced budgets. And, from the beginning, Marshall varied his plan according to the country; yet he addressed Europe as whole and he promoted integration by lifting quotas and trade barriers between European countries. In 1950, the European Payments Union was born, and this Union represented the beginning of the European Union.
Aid & Development
What was the real impact of the Marshall Plan? The common memory is that of a veritable savior, and the Plan has become an obligatory reference whenever a country falls into a crisis. Yet historical distance permits a more nuanced perspective. Thirteen billion American dollars disbursed over the course of four years represented less than 3% of the GDP of Europe. The American money accelerated growth, but it was not the principal motor of that growth.
Nonetheless, the indirect impact was considerable. Since 70% of the funds were disbursed during the first year in the form of food aid and of essential goods, the image of a generous America anchored itself in public opinion. The notion of a European market was given a significant boost, and a number of technical and managerial concepts were imported by the Marshall teams.
The ultimate goal was attained: to placate the strikers and salary demands, to stabilize economic, social and political life in a Europe firmly tied to the West. The European continent would enter the long and prosperous period known as the “Thirty Glorious Years.”
Safety and Mentalities
Europe first entered a period of peace—a sine qua non for economic prosperity. That is, undoubtedly, the first difference between a post-WWII Europe and the Arab-Muslim world of today. There is another difference—that of culture. In 1945, “an entire generation, entering the work force during the crisis of the 1930’s, adopted the objective of reconstructing the economy,” summarized Professor Maurice Lévy-Leboyer (Le plan Marshall, Comité pour l’histoire économique et financière de la France, from a 1991 symposium). Can one say the same of the region stretching from Casablanca to Karachi?
The ideas of 1945 are not transposable. However the notion of using an “economic weapon” to “contain” terrorism is. As is the idea of a shared Arab economic zone. It is the task of the now-unified Europe to elaborate on this concept and to find its own General Marshall.