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Dollar Diplomacy

Niall Ferguson praises the Marshall Plan, and cites yours truly:

Dollar Diplomacy: Books: The New Yorker: This positive reassessment echoes the argument advanced in the early nineties by Brad DeLong and Barry Eichengreen (in an article that is absent from Behrman’s bibliography). Marshall Aid was indeed vital, but more in terms of political economy than macroeconomics. It helped get the European economies through a balance-of-payments crisis, to be sure. More important, though, it helped European governments balance budgets and reduce inflation. It forced them to shift from wartime controls to free-market mechanisms. And it played an important part in moving Europe from a dysfunctional system of labor relations based on strike action and class conflict to one based on wage restraint and productivity growth. In all of this, the Marshall Plan resembled the “structural adjustment programs” the International Monetary Fund imposed on borrowers in the developing world during the nineties, but on a larger scale and with much better public relations. As Marshall had foreseen, tackling the food bottleneck was beneficial both materially and psychologically. One Dutch baker displayed a sign that read, “More than half of your daily bread is baked with Marshall wheat.” Wherever the red-white-and-blue Marshall shield could be seen, its motto resonated: “For European Recovery: Supplied by the United States of America.” The most important strings attached to such supplies were the ones tying Europe to the new American model of managerial capitalism.

Behrman goes still further, however. He also sees the Marshall Plan as having been instrumental to the process of European economic integration, presaging today’s European Union in the Organization for European Economic Cooperation. And he accepts the claim that the Marshall Plan defused potentially revolutionary situations in Western Europe and helped prevent a Communist tide from engulfing West Berlin, Italy, and perhaps even France. He has no interest in the once fashionable arguments of Cold War revisionists that the Plan was—in the memorable phrase of Stalin’s economic adviser Yevgeny Varga-—“a dagger pointed at Moscow.” If the Soviets chose to decline Marshall Aid for themselves and their clients, more fools they. The notion that Marshall and his colleagues aimed at “economic and political subjugation of European countries to American capital,” to quote another Soviet source, is presented as unworthy of serious consideration.

His is a timely book, reminding us of the good things that the United States has achieved within living memory. Not for nothing do economists call aid payments “unrequited transfers.” It is also useful to recall just how poisonously partisan Washington was after 1947, as Joseph McCarthy’s witch hunt gathered momentum. This was no golden age of cross-party consensus. Yet there is a need for caution. Historians have a duty to immerse themselves in contemporary testimony, as Behrman has clearly done. But they must also beware of uncritically accepting contemporary judgments....

Ultimately, the North Atlantic Treaty mattered more than the Marshall Plan in checking the Soviet advance. In all likelihood, then, Western Europe could have pulled through without the Marshall Plan. But it certainly could not have pulled through without the United States. At the time that Marshall made his speech in Harvard Yard, no one could be sure that all would turn out for the best in postwar Western Europe. No one could even be sure that the United States would deliver on Marshall’s pledge. All people could remember was the sad sequence of events that had followed the previous World War, when Western Europe was swept by general strikes and galloping inflation, while the United States Senate reneged on Woodrow Wilson’s “plan” for a new order based on collective security. The Marshall Plan was not the only difference between the two postwar eras, but, to West Europeans struggling to make ends meet, it was the most visible manifestation of American good will—and a mirror image of the Soviet policy of mulcting Eastern Europe. This, more than its macroeconomic impact, explains its endurance in the popular imagination. At a time when, according to the Pew Research Center, only thirty-nine per cent of Frenchmen and thirty per cent of Germans have a positive view of the United States, that is something worth remembering, and pondering.