The current celebration of the Marshall Plan -- launched 40 years ago this month -- contains a special irony. The Marshall Plan's stunning success in reviving Europe after World War II made Americans determined globalists, advocating free trade and economic growth as the path to world peace, prosperity and, not coincidentally, U.S. power. Four decades later, we find ourselves increasingly disillusioned and bewildered by the wider world economy that resulted from the Marshall Plan mentality.
Our discontents lie in our trade deficit and the sense that we're losing control over our economic destiny. It is not that the huge foreign aid of the Marshall Plan and its aftermath represent a massive historic mistake for which we are now paying. That was another time, and it was the right answer to pressing problems of the day. We commemorate its success precisely because it epitomizes -- at least in retrospect -- the kind of confident response that we wish we had to our present troubles.
In 1947, Europe was in ruins. The winter was bitter. Food and coal were short; wood was stripped from fences to stoke home fires. Governments struggled to sustain a sputtering economic recovery. In France and Italy, communist takeovers seemed possible. In June, Secretary of State George Marshall proposed his plan. The next spring, U.S. wheat, fertilizer and machinery were on their way to Europe. By 195l -- after $12.5 billion of aid, equivalent to more than $100 billion in today's dollars -- Europe had revived, and the acute political crisis had passed.
In hindsight, some historians have wondered whether the Marshall Plan really "saved" Europe. Sifting through statistics, they argue that the recovery would have occurred anyway and that the threat of communist takeovers was exaggerated. This retrospective nit-picking misses the point. At the time, both Americans and Europeans thought the Marshall Plan decisive, and therein lies the enormity of its influence. Young Americans who have barely heard of it are affected by its legacy.
In Europe and Japan (where something similar happened), it promoted alliances built on gratitude and shared prosperity as well as anticommunism. In the United States, the impact was at least as great. Emerging from World War II, Americans had yet to shake their isolationist instincts. Although statesmen believed the United States had to assume world leadership, the popular mood -- self-confident from the wartime triumph, but still suspicious of foreigners -- was ambivalent. After the Marshall Plan, the issue was no longer in doubt.
The Marshall Plan created a savior mentality. We thought everyone else should be more like us, and we were prepared to wield our huge economic and political weight to make them that way. Anticommunism and military alliances were the capstones of our foreign policy, but beneath them was this broader concept. Global prosperity would promote social stability, democracy and pro-Americanism. Free trade, foreign aid and open markets became national policies. They were the ultimate antidotes to communism.
These lessons flowed from the Marshall Plan. The United States had used its power -- about 90 percent of the assistance consisted of grants, not loans -- to push the Europeans into lowering trade barriers. The idea was to create something akin to the vast U.S. market that we saw as a key to our prosperity. A bigger market would promote competition and the efficiencies of large-scale production. Europe became a testing ground for free trade theories, and success confirmed our faith in them.
More broadly, we thought we had something to give and teach The Marshall Plan's triumph endures: Our postwar policies fostered democracy in Europe and Japan and 25 years of global prosperity.
the rest of the world. Schoolchildren packed cardboard boxes full of pencils, soap and other items for Europeans. Business managers from Europe visited U.S. plants to learn production techniques. State Department historian William Sanford Jr. reports how astonished the Europeans were at the candor of U.S. businessmen, as if they had nothing to hide -- or fear -- from potential foreign competitors. In Milwaukee, the Acme Galvanizing Co. put a sign across its door ("Welcome U.K. Specialist Team No. 6") and served the visitors tea and cake.
This enthusiasm reflected Americans' traditional moralism in foreign affairs. Even our earlier isolationism derived from a sense of moral superiority; we were above others' petty quarrels. Our postwar change was abetted by what Harvard historian Charles Maier calls the "politics of productivity." To Americans, a growing economic pie means everyone's piece gets bigger; social conflict is blunted. Thus the economic boom of World War II had relieved the social tensions of the Great Depression. It was this philosophy we sought to project onto the rest of the world.
It's easy now to see where our world vision went awry. We were foolishly conceited. We barely conceived that economic recovery in Europe and Japan -- and then growth in once-poor developing countries -- would bring us such formidable trade rivals. We also overestimated the powers of economic growth to promote harmony and stability. Economic interdependence has not erased nationalism or cultural differences. Indeed, world economic problems now fan international tensions because it's easy for most countries to blame their troubles on someone else.
In some ways, we suceeded too well. Between 1950 and 1970, world manufactured exports grew roughly 500 percent. The global economy -- also linked by vast money and information flows -- became more extensive and less stable than anyone had anticipated. Americans now increasingly feel themselves manhandled by economic pressures from abroad. We still see ourselves as the noncommunist world's economic and political leader, but we don't think we get the respect and support from our allies that we deserve. They often think our policies are irresponsible.
Our frustration is that there seems to be no exit from these problems. We are flailing at them incessantly with schemes for protectionism, exchange-rate control or improved international competitiveness. More than any clear vision of where we're headed or how to get there, these efforts reflect the urge to do something. The Marshall Plan's triumph endures: Our postwar policies fostered democracy in Europe and Japan and 25 years of global prosperity. But they didn't lead to the kind of world we hoped for or imagined. Our error was overoptimism.