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   
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THE MARSHALL PLAN TODAY
Model and Metaphor

Editors

JOHN AGNEW
J. NICHOLAS ENTRIKIN
University of California, Los Angeles
 First published in 2004 in Great Britain by
Routledge
11 New Fetter Lane
London EC4P 4EE

and in the USA and Canada by

Routledge
29 West 35th Street
New York, NY 1001

Copyright in collection © 2004 Routledge

Copyright in chapters © 2004 individual contributors

Routledge is an imprint of the Taylor & Francis Group

This edition published in the Taylor & Francis e-Library, 2004.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from
The British Library

ISBN 0-203-50307-4 Master e-book ISBN

ISBN 0-203-58233-0 (Adobe eReader Format)

ISBN 0 7146-5514-7 (cloth)
ISSN 1466-7940

Library of Congress Cataloging-in-Publication Data

A catalog record for this book is available
from the Library of Congress

All rights reserved. No part of this publication may be reproduced, stored in or

introduced into a retrieval system or transmitted in any form or by any means,
electronic, mechanical, photocopying, recording or otherwise, without the prior
written permission of the publisher of this book.
 Contents

List of illustrations vii

Contributors ix
Foreword: The Marshall Plan Speech xiii
Preface xvii
List of Abbreviations xix

Introduction: The Marshall Plan as Model and Metaphor 1

John Agnew and J. Nicholas Entrikin

Part I: European Recovery

1 Post-World War II western European Exceptionalism: The

Economic Dimension 25
J. Bradford DeLong
2 Europe and the Marshall Plan: 50 Years On 58
Alan S. Milward
3 The Economic Effects of the Marshall Plan Revisited 82
Dafne C. Reymen
4 The Marshall Plan and European Integration: Limits of an
Ambition 127
Gérard Bossuat

Part II: Markets and National Policy

5 As the Twig is Bent: The Marshall Plan in Europe’s

Industrial Structure 155
Raymond Vernon
6 Confronting the Marshall Plan: US Business and European
Recovery 171
Jacqueline McGlade
7 The Marshall Plan: Searching for ‘Creative Peace’ Then
and Now 191
Paul Bernd Spahn
vi    
Part III: International Cooperation and Globalization

8 The Marshall Plan and European Unification: Impulses and

Restraints 217
Wilfried Loth
9 The Marshall Plan: a Model for What? 234
Thomas C. Schelling
10 From Marshall Plan to Washington Consensus? Globalization,
Democratization, and ‘National’ Economic Planning 241
Stuart Corbridge

Index 270
 Illustrations

The following plates appear between pp. 140 and 141.

Plates
1 ‘All Our Colours to the Mast’
2 ‘Western Europe’s Recovery’
3 President Harry Truman signs the Foreign Assistance Act of 1948,
setting into motion the ‘Marshall Plan’ for European Recovery
4 The central figures of the Marshall Plan were (left to right)
President Harry Truman, Secretary of State George
Marshall, Will Clayton and Paul Hoffman
5 ‘Without the Marshall Plan Your Bread Would Be Bare . . .’
6 ‘England: Something for Everybody’
7 Miner’s Homes in Holland
8 ‘The American Bludgeon’ was Russia’s interpretation of America
intruding on the sovereignty of west European economies
9 ‘Can He Block It?’

Figures
1.1 Germany: GDP per capita, 1870–1994 27
1.2 France: GDP per capita, 1870–1994 28
1.3 Italy: GDP per capita, 1870–1994 29
1.4 Britain: GDP per capita, 1870–1994 30
1.5 GDP per capita since 1900 35
1.6 Exports plus imports divided by national product 40
1.7 Real investment as a share of GDP 44
1.8 US transfers abroad as a share of GDP 46
1.9 German unemployment, 1949–70 47
1.10 Western European inflation, 1950–96 47
1.11 Days lost to strikes 49
3.1 Allotments and aid received per country 113
3.2 Contribution by Marshal Plan in GNP growth 115
7.1 European Recovery Program recipients 197
10.1 Diagram of the world system during (A) and after (B) the
Cold War 261
viii    
Tables
1.1 Effect of international trade on Western European
post-WWII development 41
2.1 Net ERP aid received, after trading settlements made with
‘conditional’ aid 61
2.2 Net total ERP aid received, after trading settlements made
with ‘conditional’ aid and drawing rights 61
2.3 Additional output growth attributable to the Marshall Plan,
allowing for interaction effects 63
3.1 Comparison between aid requiring counterpart deposits
and allotments 116
3.2 Aid requiring counterpart deposits and loans compared to
allotments 117
3.3 Deposits in counterpart funds and loans compared to
allotments 118
3.4 Regression equations used for the simulations 119
3.5a Contribution to growth by the Marshall Plan through the
three traditional channels 119
3.5b Contribution to growth by the Marshall Plan allowing all
channels to operate 120
3.6 Impact of aid on investment, current account and
government spending 120
3.7 Growth equations (1948–1955) 121
5.1 Foreign manufacturing subsidiaries established by
multinational enterprises in selected areas 161
5.2 Number of mergers, acquisitions, and joint ventures in
manufacturing industries, 1982/83 to 1992/93 165
7.1 Funds made available to ECA for European economic
recovery 193
7.2 European recovery program recipients 196
 Contributors

John Agnew is Professor of Geography at UCLA. He served as the

Associate Director of the UCLA Center for European and Russian
Studies. He is author of numerous books and articles on geopolitics
including Political Geography (Arnold), The United States and the World
Economy (Cambridge), and Mastering Space (Routledge) with Stuart
Corbridge.

Gérard Bossuat holds the Jean Monnet Chair of Contemporary History

at the University of Cergy-Pontoise (France). He also chairs the
Department of History and directs a Master ‘Manager of Europe’
project. Professor Bossuat is a member of the Liaison Group of the
Historians within the European Community and of the administrative
staff of the Jean Monnet Foundation in Lausanne, and of the Institut
Pierre Mendes in Paris. He is on the editorial boards of Matériaux pour
l’Histoire de notre temps, Recherche socialiste, and Journal of European
Intégration History. Professor Bossuat’s recent books are Les aides
américaines économiques et militaires à la France, 1938–1960 (Paris),
Comité pour l’histoire économique et financière de la France (2001); Les
fondateurs de l’Europe unie (Paris, 2001); and (with Georges Saunier)
Inventer l’Europe, histoire nouvelle des groupes d’influence et des acteurs
de l’unité européenne, actes du colloque de Cergy-Pontoise des 8–10
November 2001, PIE Peter Lang, 2003.

Stuart Corbridge is Professor of Geography at the London School of

Economics and at the University of Miami. He works mainly on India and
is the author of Reinventing India: Liberalization, Hindu Nationalism and
Popular Democracy (Polity, 2000, with John Harriss). His next book, with
Glyn Williams, Manoj Srivastava and Rene Veron, will be published by
Cambridge University Press in 2004 under the title Seeing the State: How
the Rural Poor Experience Governance and Democracy in India. Besides
India, his main interests are in development studies and international
political economy.

J. Bradford DeLong is Professor of Economics at the University of

California, Berkeley, Co-Editor of the Journal of Economic Perspectives,
and a Research Associate of the National Bureau of Economic
x    
Research. He served in the Clinton Administration as Deputy Assistant
Secretary of the Treasury for Economic Policy. He has written on the
evolution and functioning of markets, the course and determinants of
long-term economic growth, and the making of economic policy. Recent
publications include, ‘The Marshall Plan: History’s Most Successful
Structural Adjustment Programme’, with B. Eichengreen (in R.
Dornbusch et al. (eds), Postwar Economic Reconstruction and Lessons
from the East), ‘Keynesianism Pennsylvania-Avenue Style’, Journal of
Economic Perspectives.

J. Nicholas Entrikin is Professor of Geography at UCLA and former

Associate Director of the UCLA Center for European and Russian
Studies. His writings include works on place and political community in
western Europe and North America as represented in The Betweenness
of Place: Towards and Geography of Modernity (Johns Hopkins), ‘Lieu,
Culture et Démocratie’, Cahier de Géographie du Québec, ‘Political
Community, Identity, and Cosmopolitan Place’, International Sociology,
and ‘Democratic Place-Making and Multiculturalism’, Geografiska
Annaler.

Wilfried Loth is Professor of Modern European History at the

Universität in Essen, Germany. A specialist on the history of the Cold
War, Professor Loth has had several of his books translated and pub-
lished in English, including The Division of the World: 1941–1955
(Routledge), Stalin’s Unwanted Child: The Soviet Union, the German
Question and the Founding of the GDR (Macmillan) and Overcoming the
Cold War: A History of Détente, 1950–1991 (Routledge).

Jacqueline McGlade is Associate Dean for Graduate and Academic

Affairs and Associate Professor of History, University of Northern
Iowa. She has published several articles on American aid and post-1945
western Europe including ‘From Business Programme to Production
Drive: The Transformation of US Technical Assistance to Western
Europe’, in Marshall Aid and European Industry (Routledge), NATO
Procurement and the Revival of European Defense, 1950–60 (Palgrave)
and ‘The Big Push: The Export of American Business Education to
Western Europe after World War II’, in Missionaries and Managers:
United States Technical Assistance and European Management
Education, 1945–60 (Manchester).

Alan S. Milward is Senior Research Fellow at St John’s College, Oxford

and Official Historian to the United Kingdom Government. He is
 xi
affiliated with The European University Institute and the University of
North London. Professor Milward is the author of numerous books and
journal articles on modern European economic history, including The
Reconstruction of Western Europe: 1945–51 (Methuen) and The Frontier
of National Sovereignty: History and Theory, 1945–92 (Methuen).

Dafne C. Reymen has a Ph.D. in Economics from Stanford Univer-

sity. She is currently working for the ECORYS group, conducting policy
preparatory research, and is Visiting Professor at EHSAL (Brussels,
Belgium).

Thomas C. Schelling is the Lucius Littauer Professor of Political

Economy (Emeritus) at Harvard University and the Distinguished
University Professor of Economics and Public Affairs at the University
of Maryland. He has served in the United States Bureau of the Budget,
the Economic Cooperation Administration in Europe and in the White
House Office of the Director of Mutual Security. Professor Schelling is
a member of both the National Academy of Sciences and the American
Academy of Arts and Sciences. His books include Choice and Conse-
quence (Harvard University Press), Arms and Influence (Yale), and The
Strategy of Conflict (Harvard University Press).

Paul Bernd Spahn is Professor of Public Finance at the Johann Wolfgang

Goethe University in Frankfurt, Germany. He has served as an eco-
nomic consultant for the International Monetary Fund, the World
Bank, the Commission of the European Union, and numerous govern-
ments all over the world. His research interests include public finance,
especially tax policy and coordination, fiscal decentralization, interna-
tional economics, and economic integration.

Raymond Vernon was the Clarence Dillon Professor of International

Affairs and the Herbert Johnson Professor of International Business
Management at Harvard University. Before joining the faculty at
Harvard he spent a long career in the Securities and Exchange
Commission and the Department of State dealing with issues of postwar
recovery in Japan and Europe. He was a member of the American
Academy of Arts and Sciences and the author of numerous books on
international finance and development, including, Big Business and
the State Changing Relations in Western Europe (Harvard), Beyond
Globalism: Remaking American Foreign Economic Policy (Free Press)
with D. Spar, In Hurricane’s Eye: The Troubled Prospects of Multinational
Enterprises (Harvard). Professor Vernon passed away in 1999.
 Foreword: The Marshall Plan Speech

The following is the speech given by Secretary of State George C. Marshall

in which he outlined a program of economic assistance to war-torn Europe.
It became known as ‘The Marshall Plan Speech’.

June 5, 1947, Harvard University, Cambridge, Massachusetts

Mr President, Dr Conant, members of the Board of Overseers, Ladies

and Gentlemen:

I’m profoundly grateful and touched by the great distinction and honor
and great compliment accorded me by the authorities of Harvard this
morning. I’m overwhelmed, as a matter of fact, and I’m rather fearful of
my inability to maintain such a high rating as you’ve been generous
enough to accord to me. In these historic and lovely surroundings, this
perfect day, and this very wonderful assembly, it is a tremendously
impressive thing to an individual in my position.
But to speak more seriously, I need not tell you that the world situa-
tion is very serious. That must be apparent to all intelligent people. I
think one difficulty is that the problem is one of such enormous com-
plexity that the very mass of facts presented to the public by press and
radio make it exceedingly difficult for the man in the street to reach a
clear appraisement of the situation. Furthermore, the people of this
country are distant from the troubled areas of the earth and it is hard for
them to comprehend the plight and consequent reactions of the long-
suffering peoples, and the effect of those reactions on their governments
in connection with our efforts to promote peace in the world.
In considering the requirements for the rehabilitation of Europe, the
physical loss of life, the visible destruction of cities, factories, mines, and
railroads was correctly estimated, but it has become obvious during
recent months that this visible destruction was probably less serious than
the dislocation of the entire fabric of the European economy.
For the past ten years conditions have been abnormal. The feverish
preparation for war and the more feverish maintenance of the war effort
engulfed all aspects of national economies. Machinery has fallen into
disrepair or is entirely obsolete. Under the arbitrary and destructive Nazi
rule, virtually every possible enterprise was geared into the German war
xiv    
machine. Long-standing commercial ties, private institutions, banks,
insurance companies, and shipping companies disappeared through loss
of capital, absorption through nationalization, or by simple destruction.
In many countries, confidence in the local currency has been severely
shaken. The breakdown of the business structure of Europe during the
war was complete. Recovery has been seriously retarded by the fact that
two years after the close of hostilities a peace settlement with Germany
and Austria has not been agreed upon. But even given a more prompt
solution of these difficult problems, the rehabilitation of the economic
structure of Europe quite evidently will require a much longer time and
greater effort than has been foreseen.
There is a phase of this matter which is both interesting and serious.
The farmer has always produced the foodstuffs to exchange with the city
dweller for the other necessities of life. This division of labor is the basis
of modern civilization. At the present time it is threatened with break-
down. The town and city industries are not producing adequate goods
to exchange with the food-producing farmer. Raw materials and fuel are
in short supply. Machinery is lacking or worn out. The farmer or the
peasant cannot find the goods for sale which he desires to purchase. So
the sale of his farm produce for money which he cannot use seems to him
an unprofitable transaction. He, therefore, has withdrawn many fields
from crop cultivation and is using them for grazing. He feeds more grain
to stock and finds for himself and his family an ample supply of food,
however short he may be on clothing and the other ordinary gadgets of
civilization. Meanwhile, people in the cities are short of food and fuel,
and in some places approaching the starvation levels. So the govern-
ments are forced to use their foreign money and credits to procure these
necessities abroad. This process exhausts funds which are urgently
needed for reconstruction. Thus a very serious situation is rapidly devel-
oping which bodes no good for the world. The modern system of the
division of labor upon which the exchange of products is based is in
danger of breaking down.
The truth of the matter is that Europe’s requirements for the next
three or four years of foreign food and other essential products – princi-
pally from America – are so much greater than her present ability to pay
that she must have substantial additional help or face economic, social,
and political deterioration of a very grave character.
The remedy lies in breaking the vicious circle and restoring the
confidence of the European people in the economic future of their own
countries and of Europe as a whole. The manufacturer and the farmer
throughout wide areas must be able and willing to exchange their product
for currencies, the continuing value of which is not open to question.
 xv
Aside from the demoralizing effect on the world at large and the pos-
sibilities of disturbances arising as a result of the desperation of the people
concerned, the consequences to the economy of the United States should
be apparent to all. It is logical that the United States should do whatever
it is able to do to assist in the return of normal economic health in the
world, without which there can be no political stability and no assured
peace. Our policy is directed not against any country or doctrine but
against hunger, poverty, desperation, and chaos. Its purpose should be the
revival of a working economy in the world so as to permit the emergence
of political and social conditions in which free institutions can exist. Such
assistance, I am convinced, must not be on a piecemeal basis as various
crises develop. Any assistance that this Government may render in the
future should provide a cure rather than a mere palliative. Any government
that is willing to assist in the task of recovery will find full cooperation, I
am sure, on the part of the United States Government. Any government
which maneuvers to block the recovery of other countries cannot expect
help from us. Furthermore, governments, political parties, or groups
which seek to perpetuate human misery in order to profit therefrom polit-
ically or otherwise will encounter the opposition of the United States.
It is already evident that, before the United States Government can
proceed much further in its efforts to alleviate the situation and help start
the European world on its way to recovery, there must be some agree-
ment among the countries of Europe as to the requirements of the situ-
ation and the part those countries themselves will take in order to
give proper effect to whatever action might be undertaken by this
Government. It would be neither fitting nor efficacious for this
Government to undertake to draw up unilaterally a program designed to
place Europe on its feet economically. This is the business of the
Europeans. The initiative, I think, must come from Europe. The role of
this country should consist of friendly aid in the drafting of a European
program and of later support of such a program so far as it may be prac-
tical for us to do so. The program should be a joint one, agreed to by a
number, if not all, European nations.
An essential part of any successful action on the part of the United
States is an understanding on the part of the people of America of the
character of the problem and the remedies to be applied. Political
passion and prejudice should have no part. With foresight, and a will-
ingness on the part of our people to face up to the vast responsibility
which history has clearly placed upon our country the difficulties I have
outlined can and will be overcome.
I am sorry that on each occasion I have said something publicly in
regard to our international situation, I’ve been forced by the necessities
xvi    
of the case to enter into rather technical discussions. But to my mind, it
is of vast importance that our people reach some general understanding
of what the complications really are, rather than react from a passion or
a prejudice or an emotion of the moment. As I said more formally a
moment ago, we are remote from the scene of these troubles. It is virtu-
ally impossible at this distance merely by reading, or listening, or even
seeing photographs or motion pictures, to grasp at all the real signifi-
cance of the situation. And yet the whole world of the future hangs on
a proper judgment. It hangs, I think, to a large extent on the realization
of the American people, of just what are the various dominant factors.
What are the reactions of the people? What are the justifications of those
reactions? What are the sufferings? What is needed? What can best be
done? What must be done?
Thank you very much.
 Preface

Most of the chapters presented in this book derive from papers presented
at a conference held at UCLA in November of 1997 entitled ‘The
Marshall Plan: Lessons after 50 Years (1947–97) – Through the Cold
War and Toward Unification’. The conference was organized under the
auspices of the UCLA Center for European and Russian Studies
(renamed in 2002 as the UCLA Center for European and Eurasian
Studies). The editors were the then former and current associate direc-
tors of the Center and the primary conference organizers. The papers
were revised to form the core of this book, and several additional con-
tributions were invited. The one paper that is presented in its original
conference format is that of late Professor Raymond Vernon.
We would like to thank Professor Ivan Berend, the Director of the
Center, for his leadership and generosity in supporting the conference
and this publication. In addition to Center support, financial assis-
tance for the conference was provided by the Goethe-Institut
German Cultural Center, the University of California Berkeley
Center for German and European Studies, the Kreditanstalt für
Wiederaufbau, and Mr George Gregory. Vera Wheeler, Center
Program Director, and her staff provided greatly appreciated assis-
tance in the planning and organization of the conference. We would
also like to acknowledge the conference participants whose work is
not presented here but whose contributions were essential to the
success of the meeting. They include: Professor Michael Intriligator,
Dr Malinka Koparanova, and the former Czech Foreign Minister Jirí
Dienstbier.
Several people were especially instrumental in the preparation of
this book and are deserving of notice. First and foremost, we would
like to express our gratitude to Carol Medlicott for her invaluable
assistance in preparing the manuscript for publication. Her organiza-
tional efficiency, critical eye, and sound judgment were essential to the
successful completion of this project. The UCLA Academic Senate
Faculty Research Grant Program provided funding for her work. The
critical yet encouraging commentary and careful manuscript review
provided by Professor Günther J. Bischof were important to us in
revising both the introduction and the overall thematic organization
of the volume. Lisa Hyde of Frank Cass Publishers and Heidi Bagtazo
xviii    
of Routledge have been patient and effective editors in facilitating the
transition from manuscript to published volume.

John Agnew
J. Nicholas Entrikin
UCLA
 Abbreviations

AMF Jean Monnet Archives

AMP Additional Military Production
CED Committee for Economic Development
CEEC Committee on European Economic Cooperation
COCOM Coordinating Committee
DOTs Developing and de-colonized countries
EBRD European Bank for Reconstruction and Development
ECA Economic Cooperation Administration
ECSC European Coal and Steel Community
EDC European Defense Community
EIP European Industrial Projects
EPU European Payments Union
ERP European Recovery Program
EURATOM European Atomic Energy Community
FFMA French Foreign Minister Archives
FNA French National Archives
FOA Foreign Operations Administration
GAB General Agreement to Borrow
GARIOA Government Aid and Relief in Occupied Areas
GATT General Agreement on Tariffs and Trade
IMF International Monetary Fund
ISB International Settlements Bank
ITO International Trade Organization
MDAA Military Defense Assistance Act
MSA Mutual Security Agency
NAM National Association of Manufacturers
NATO North Atlantic Treaty Organization
NFTC National Foreign Trade Council
NICs Newly Industrialized Countries
NSC National Security Council
OECD Organization for Economic Cooperation and
Development
OEEC Organization for European Economic Cooperation
OIG Overseas Investment Guarantees
UNRRA United Nations Reconstruction and Rehabilitation
Administration
xx    
USDS US Department of State
USTA&P US Technical Assistance and Productivity
Program
 Introduction: The Marshall Plan as Model
and Metaphor

JOHN AGNEW AND J. NICHOLAS ENTRIKIN

In a 1947 address at the Harvard University Commencement, Secretary

of State George C. Marshall outlined the idea, later enshrined in the
Truman Administration’s European Recovery Program, of reconstruct-
ing a devastated Europe only just emerging from World War II through
the infusion of US aid on a massive scale. The Marshall Plan would
eventually cost between 12 and 13 billion dollars before being subsumed
by US defense spending on NATO and support for a variety of bilateral
aid programs in the early 1950s. The Marshall Plan was indeed by many
measures a successful international aid program, which like most such
programs had more than purely philanthropic aims. Among other
things, a devastated Europe was an invitation to Soviet political med-
dling, an opportunity for rebuilding export markets for US businesses,
and a chance to experiment with creating an open world economy that
would not experience repetition of the economic and political disasters
of the previous twenty years.
Evocative speeches at timely moments played a major role in defining
and reorienting ‘Europe’ after World War II. One was Winston
Churchill’s ‘iron curtain’ speech at Westminster College in Missouri in
1946. Another was George Marshall’s speech at Harvard in 1947 offer-
ing American aid and advice in rebuilding a shattered continent. A third
was Robert Schuman’s speech in Paris in 1950 proposing common
European control over coal and steel resources. These speeches, perhaps
because they were relatively short and eloquent, captured the popular
imagination of the time. They shifted thinking by creating a new conven-
tional wisdom. With hindsight they seem like founding moments of what
has happened since. The fact that two were given in the United States
points to both American centrality to Europe’s future and the interweav-
ing of destinies that was already under way.
Scholars have long debated the extent to which the Marshall Plan
of 1947 actually contributed to the postwar growth and prosperity of
western Europe and the degree to which it was an unprecedented act of
2    
state altruism or an example of American imperialism. Indeed, scholar-
ship on the consequences of the Marshall Plan has gone through several
identifiable stages. Accounts of the Marshall Plan as the major cause of
postwar European recovery were challenged by the revisionist counter-
factual analysis of Alan Milward (1984), and Milward’s conclusions
have in turn been questioned by Barry Eichengreen and Marc Uzan’s
(1992) econometric analysis reasserting the positive impact of the plan
through its critical and timely support of basic market systems in fragile
European national economies. These and other interpretive disagree-
ments highlight the troublesome data issues associated with Marshall
Plan scholarship, in which seemingly straightforward claims, such as the
amounts of aid received by participating countries, are matters of con-
tinual reassessment and argument.
What appears beyond dispute, however, is that the plan had two
major impacts, irrespective of either its quantitative effect or its motiva-
tion. One was the political–psychological boost its massive economic
assistance gave to a recovering Europe. The other was its undoubted con-
tribution to the divergence in political–economic paths of western and
eastern Europe. After Stalin’s rejection of the plan as an example of
unmitigated American imperialism, the funds and the American ideas
for how they should be spent poured into western Europe where they
influenced the course of both ideology and institutions over the next 50
years. Indeed, it is not too far-fetched to suggest that the opening up of
national boundaries to trade and investment implicit in the plan’s
approach and the conjoining of private and public initiatives within the
plan helped lay the groundwork for later European unification and the
decisive choice of the US side by western Europe in the emerging Cold
War between the United States and the Soviet Union.
Since 1989, the reinvigoration of European unification and the col-
lapse of the Soviet Union have created a sense of a new European age,
of a unifying Europe looking to the future rather than a divided Europe
mired in the past. Recent events, such as the dreadful and continuing vio-
lence in the former Yugoslavia, the cataclysmic economic implosion of
Russia, and the emergence of significant cleavages among members of
the European Union with respect to acceptance of key policies on pop-
ulation mobility and currency unification, and foreign policy cleavages
over the war in Iraq, remind us of the fragility of what has been achieved.
At the same time they suggest the need for greater international coordi-
nation to combat a renewal of political and economic fragmentation. Yet
the seemingly compulsive progress of integration within the European
Union and the convulsive collapse of the Cold War world also recall the
European past, particularly the years immediately after World War II,
 3
when Europe was divided between east and west, and what these years
signify both in terms of the trajectory of western Europe thereafter and
the relevance of that experience for the assimilation of the east into the
project of European unification.
In particular, the spirit of integration represented by the European
Union can be traced to the immediate postwar years when a group of
western European political leaders, such as Monnet, Schuman, De
Gasperi, and Adenauer, combined a vision of an integrating Europe
with support for an American plan of economic recovery and institu-
tional reform. This initiative was directed as much at preventing a recur-
rence of the Depression of the 1930s as at minimizing the likelihood of
a return of the national animosities that had produced the two world
wars. As such it closely matched contemporary American imperatives.
Along with the military commitments of the United States to western
Europe in the form of NATO, designed to frustrate Soviet ambitions
beyond the sphere of influence agreed to by the Allies (the United States,
Britain and the Soviet Union) at the Yalta conference in 1945, the most
important material and symbolic economic commitment of the US
government took the form of the Marshall Plan, designed to limit the
political success of indigenous Communist parties by pointing to
American financial support and the absence of any Soviet equivalent,
stimulating European economic growth to help American exports, and
creating (in conjunction with the Bretton Woods Agreement on curren-
cies of 1944) a world economy in which the competitive protectionism of
the 1930s would be a thing of the past.
The Marshall Plan has become the centerpiece of claims about what
distinguished the aftermath of World War II in Europe from that of
World War I, particularly the limited emphasis on reparations from a
‘guilty’ Germany and the necessary role in this played by the United
States government, and the specific American contribution to western
European economic growth and prosperity in the 1950s and 1960s. It has
also become a model or rhetorical device for exhorting planned external
intervention elsewhere, more recently for eastern Europe and the former
Soviet Union, and most recently for Afghanistan and Iraq, to do what
the Marshall Plan is alleged to have done so successfully for western
Europe after World War II. More than fifty years after the introduction
of the Marshall Plan, therefore, the plan still lives on but now as a model
for organizing the transition from state socialism to open market econo-
mies. As Barry Eichengreen (2001, 141) has noted, the Marshall Plan
was a unique response to a particular historical circumstance, but
‘Marshall’s key insight, that a market economy needs institutional and
policy support to function effectively, is as timely today as 50 years ago.’
4    
Two related themes, the Marshall Plan as a force for western
European economic recovery and political integration and as a model for
the later world economy and the recent transition economies, form the
conceptual axis for the organization of this volume. The Marshall Plan
looms large in general debates about the origins of the Cold War and the
globalization of the world economy under American auspices. It has
recently assumed an intellectual and political importance out of all pro-
portion to what its initiators seem to have had in mind. Since the end of
the Cold War the Marshall Plan has taken on a mythic role in political
rhetoric and in debates among scholars that is deserving of close atten-
tion. The purpose of this book is to begin such a reevaluation by incor-
porating examination of the impact of the plan, its legacy for European
integration, its emergence as a model for the transition from state social-
ism, and its founding as a vital underpinning of the globalizing world
economy which accompanied the mutual development of the Cold War
western world’s American and European halves.
The book consists of 10 chapters by authors from a range of disci-
plines – from economics and history to political science and human geog-
raphy – and a diversity of national backgrounds – from French and
British, to German and American. They combine to tell a collective nar-
rative that extends well beyond a specifically ‘American story’ of the
Marshall Plan and its consequences. The book also offers a mix of views
from leading authorities on the Marshall Plan, including Alan Milward,
Raymond Vernon, Wilfried Loth, Gerard Bossuat, and Thomas Schelling,
and a group of younger, noteworthy scholars, such as J. Bradford De
Long, Stuart Corbridge, Dafne C. Reymen, and Jacqueline McGlade.
The continuity of the Marshall Plan as a metaphor and model for
beneficent external intervention to aid in economic transformation
under conditions of socio-economic collapse is one feature that distin-
guishes this book from others on the Marshall Plan or aspects of it that
have appeared since 1980. The other feature is its focus on the longer-
term impacts of the Marshall Plan, including that of its effect on
European unification. Most previous studies fit under one of three
rubrics. In the first category are volumes of memoirs, recording the
origins and working of the plan from the point of view of participants.
The volumes published in celebration of the 35th and 40th anniversaries
of the plan are of this type (Hoffman and Maier, 1984; Clesse and Epps,
1990). The second category consists of studies of the politics of the plan
in relation to single countries (for example, Bischof, Pelinka and Stiefel,
2000; Maier and Bischof, 1991; Whelan, 2000) or the role of individual
political figures, such as Dean Acheson, in its formulation (for example,
Chace, 1998). The third, and final, are books that have emphasized the
 5
impact of the Marshall Plan on the postwar economic recovery of
western Europe (for example, Wexler, 1983; Milward, 1984; Eichengreen,
1995) or its role in creating a political–economic ‘bridge’ between the
United States and Europe across which American ideas of political–
economic organization might freely pass (for example, Mee, 1984;
Hogan, 1987). Though covering many of the themes raised in the other
studies, this book endeavors to provide a rather more comprehensive per-
spective on the Marshall Plan than is found elsewhere in terms of the
plan’s long-term political influence, as well as its shorter-term political
and economic impact. Not surprisingly, it is closest in format to another
50th anniversary volume, The Marshall Plan: Fifty Years After, edited by
Martin Schain (2001) under the auspices of the Center for European
Studies at New York University. Both books examine the debates con-
cerning the Marshall Plan’s legacy for European recovery and integra-
tion, but some of the following chapters extend beyond these themes to
include consideration of the salience and discursive power of the idea of
the plan in other arenas of international affairs.
The Introduction provides four services to the reader of the book.
The first is to situate the Marshall Plan in the geopolitical context of the
Cold War and the new world economy to which it contributed. A partic-
ular emphasis is placed on what the Marshall Plan signifies about the
peculiar character of the dominance exerted by the United States as an
emerging superpower in the late 1940s. The second is to provide a brief
overview of the Marshall Plan and its legacy. This is a brief narrative of
the origins and unfolding of the plan that should help in providing back-
ground for the disputes over its impact in subsequent chapters. The third
is to outline the use of the Marshall Plan as a metaphor and model for
external support, particularly in relation to eastern Europe in the early
1990s. Finally, the organization of the book, the specific chapters, and
their relationship to the overarching themes are traced.

The Peculiarity of American Hegemony

In early 1947 the United States government did not yet have any kind of
grand strategy in relation to either its global role or the more specific
problems of its military and political presence in Europe. As Dean
Acheson, then Under-Secretary of State, wrote in his memoir, referring
to himself and his colleagues in the Truman Administration: ‘Only
slowly did it dawn upon us that the whole world structure and order that
we had inherited from the nineteenth century was gone and that the
struggle to replace it would be directed from two bitterly opposed and
ideologically irreconcilable power centers’ (Acheson, 1969, 726).
6    
What was clear was that the relative location of the various victori-
ous armies at the end of the war seemed to augur a world divided into
spheres of influence with the Red Army in eastern Europe, the American
army in Japan and southern Korea, the British and American forces in
Germany and Italy, and the British army in Greece. This vision, origi-
nating at the Yalta Conference in 1945, received its most vivid expression
in Winston Churchill’s famous speech on 5 March 1946 at Westminster
College, Missouri, when the former British prime minister warned that
an ‘iron curtain’ had descended across Europe and an Anglo-American
alliance had to make sure that it went no further. Stalin had earlier
endorsed his own version of a dividing world when in a speech on 9
February 1946 he spoke of the fundamental incompatibility between his
communist and the American capitalist systems. The war of words that
constituted the verbal face of the Cold War as it was to grow down the
years was under way. Its military and political–economic components
were not long in revealing themselves.
Mutual suspicions fueled by divergent political–economic systems, a
budding arms race, and mutual interpretations based on totalistic
accounts of the Other, systematically exaggerating each one’s negative
features, left little scope in 1946–47 for calm realpolitik appraisal of
either side’s intentions or capabilities. Each side began to define itself as
the complete opposite of the other with each considered as an ideal type
of political–economic system between which there could be no compro-
mise in a struggle for global primacy. The growing rigidity of this divi-
sion did not unfold linearly. The recent opening of Soviet archives
suggests some Soviet wavering in terms of response to the initial offer
to include the Soviet Union and eastern Europe in the plan (Roberts,
1994). Many forget that Marshall’s speech did not single out western
Europe but had a much more expansive understanding of Europe
(Loth, 1988). The British also contributed to the polarization, not only
by means of Churchill’s rhetoric and Foreign Secretary Bevin’s fervent
anti-communism and enthusiasm for Anglo-American joint ventures,
but also through pursuing the goal of propping up the British Empire
by encouraging an east–west division in place of possible alternatives,
such as a US–Soviet détente, that might have doomed the continuation
of British pretense to Great Power status (Ryan, 1982; Taylor, 1990).
The signs of the growing Cold War were evident, however, in the con-
flict over the Greek civil war, struggles over Berlin, revelations of Soviet
espionage to acquire nuclear secrets, George Kennan’s writings charac-
terizing the Soviet Union as an adversary that only understood the ‘logic
of force’, and an increasing consensus between the two political parties
and among powerful economic interests in the United States that the
 7
country could not safely retreat into its shell as it had done after World
War I.
Although the military aspect of the emerging global confrontation
with the Soviet Union received pride of place in both Washington DC
and Moscow, the US approach increasingly involved a focus on tying
foreign policy to the needs of domestic economy including a sense that
the future success of the latter depended on an expanding world market
to which the Soviet Union as an autarkic state-command economy posed
a direct threat. What made the United States a peculiar superpower,
therefore, was not its command over nuclear weapons or its military
might in general but its desire and ability to export its ethos of organized
capitalism so as to build and protect its base at home. This made it qual-
itatively different from the previous experience of the British and their
focus on territorial empire-building or the Soviet Union’s commitment
to ideological rather than material exports. The Americans have been the
true dialectical materialists, exporting ideas and commodities at one and
the same time.
The immediate origins of the Marshall Plan lay in the perception by
leading figures in the Truman Administration that (1) with the defeat of
Germany and Italy and the exhaustion of Britain and France, Europe
was a power-vacuum into which the Soviet Union might expand unless
countered economically as well as militarily by the United States, and (2)
the economic recovery of Europe involved not only direct financial aid
to rebuilding but also an institutional reorientation in many European
nations towards the American model of business–government relations
preferably in a framework in which the barriers between states in Europe
would become like those between States in the United States (Leffler,
1984; Hogan, 1987, 26–53). The American insistence on a multinational
approach with joint planning and resource sharing suggests how seri-
ously the US Administration took the idea of moving beyond bilateral
aid into an entirely new world of multilateral commitments and multi-
national institution building. At an early stage the Marshall planners
presciently determined that Germany, the devastated enemy of two years
previously, would serve as the locomotive of European recovery. For this
to happen, however, the legitimacy of national governments (above all,
that of West Germany) as providers for their populations had to be rees-
tablished and the other countries had to be open to the impulses trans-
mitted by German economic rejuvenation. If American federalism
inspired the political thrust, the economic principles to guide American
engagement with Europe were those that had evolved in the corporate
expansion of the 1920s and the New Deal of the 1930s in the United
States: ‘where a large internal economy integrated by free-market forces
8    
and central institutions of coordination and control seemed to have laid
the groundwork for a new era of economic growth and social stability’
(Hogan, 1987, 27).
Europe was viewed as central to world economic recovery. The
Europe that mattered was the industrial one that was currently in crisis
but when it did recover was likely to pose a threat to the US unless incor-
porated into an American-ordered world economy. US aid was to
finance the dollar deficits of Europe incurred in transatlantic trade and
thus to enable reconstruction and movement towards currency convert-
ibility (Eichengreen, 1996, 104–5). Left undefined in Marshall’s speech
so as to suggest a purely beneficent, even anti-geopolitical approach to
reconstruction, postwar ‘Europe’ was really industrial western Europe as
viewed from the US, plus other countries included largely for political
reasons. But of course Europe was also the historic region of origin of
most Americans at the time, not least their leaders. So, it was seen as
‘natural’ that Europe would have a high priority in postwar American
designs. The confrontation with the Soviet Union was also most obvious
and crucial in Europe, whether directly through military competition, or
indirectly through the threat posed by large communist parties with
Moscow affiliations in Italy, France and several other countries. Will
Clayton, one of the architects of the plan, directly linked the European
origins of most Americans with anti-communism in a speech on 18
December 1947:
Western Europe is made up of our kind of people. Many of our
forefathers came from there. Those people hate Communism but if
they must resist it under conditions of economic frustration, cold,
and hunger, they will lose the fight (Dobney, 1971, 229).
The actual impact of the plan was much more complex than the
Marshall planners foresaw. Though the Marshall Plan, along with such
American international initiatives as the International Monetary Fund,
the World Bank, and the General Agreement on Tariffs and Trade, were
to give powerful institutional support to the emergence of an ‘embedded
liberalism’ in relations between the US and Europe, individual countries
adapted differentially to the initiatives of the plan. The American archi-
tects of the plan realized that they could not achieve their goals without
active European collaboration, so they were sensitive to national differ-
ences, including different national business histories and financial
systems. Rather than ‘one size fitting all’, therefore, the Marshall Plan
allowed for significant national variation in response to the general over-
arching political–economic direction implicit in the plan for Europe as a
whole. Out of the Marshall Plan and, after 1949, with NATO, a regional
 9
architecture of power, institutions, and ideology evolved, which, while
allowing for local differences, served three security goals, somewhat flip-
pantly expressed as ‘keeping the Americans in, the Russians out, and the
Germans down’ (that is inside but controlled within a western commu-
nity of states), and the economic goals of stimulating European eco-
nomic recovery in a broad framework building towards regional
integration on an American model but allowing for national differences.
Of course, what was shared was a generally dirigiste appreciation of the
virtues of planning and state–business collaboration, associated in the
United States with the New Deal, something lost to the world economy
since the 1980s’ explosion of support for monetarist and supply-side eco-
nomic ideologies that look with disfavor on the explicit planned inter-
vention represented by the Marshall Plan and such subsequent
European institutional initiatives as the European Coal and Steel
Community, the European Common Market, and the European Union.
If in early 1947, therefore, as Dean Acheson relates, there was no
American grand strategy for the postwar world, after midsummer of that
year there was indeed. It was represented in the Marshall Plan, a propo-
sal that managed to encapsulate within one general policy initiative a set
of ambitious goals for making over Europe in a new, Americanized
image. Not only did this mark a total departure from the American atti-
tude of retreat after World War I, it also signaled the rise of a new and
distinctive superpower, oriented towards a remaking of its recent
enemies and allies alike rather than their simple conquest or incorpora-
tion into an American imperium. This is why the Marshall Plan can be
seen both as a philanthropic act and a cunning design for a new world
order. To its architects, neither one would be seen as contradicting the
other.

Revisiting the Marshall Plan

Formal American planning for European recovery had begun by early
1947. From the beginning its two most significant features for later adop-
tion were a tendency to think in terms of Europe as a whole and the need
to integrate Germany into a regional trading and production system so
as to encourage recovery all round and reduce the fears of its neighbors
that a revived Germany necessarily meant a dangerous one. The
Marshall Plan grew out of a series of memoranda and speeches influ-
enced by these ideas about the form that European recovery might be
encouraged to take. But it also emerged in response to a perception that
European recovery was in crisis and needed a kick start by the only
country capable of giving it: the United States.
10    
Key among the speeches and memoranda were a speech given by
Dean Acheson in Cleveland, Mississippi on 8 May 1947, where a leading
figure in the Truman Administration State Department previously skep-
tical about the need for a Cold War plan asserted the need for a ‘coordi-
nated European economy’ to be pursued, if necessary, ‘without full Four
Power agreement’ (Acheson, 1969, 228–9) and a persuasive memoran-
dum penned by another State Department official and former Texas
cotton broker, Will Clayton, a week after his return from a European
trip, 27 May 1947, that recommended 6–7 billion dollars in new aid each
year over three years to reorganize an economy that had become ‘divided
into many small watertight compartments’ but now should become a
‘European economic federation’ (Clayton Memorandum, quoted in
Hogan, 1987, 43). The day after the submission of his memorandum,
Clayton met with Secretary of State Marshall and others, such as George
Kennan, to discuss his recommendations and those of the Policy
Planning Staff of the State Department, which Kennan then headed.
Interestingly, Truman himself was absent from this discussion. His
keeping a low profile can perhaps be put down to his image as a partisan
politician whose patriotism could be questioned by the Republicans,
then in legislative ascendancy within the federal government, and
Marshall’s contrasting image as the organizational genius who had
brought victory in the recently concluded war. At this meeting the main
points of what was to become Marshall’s historic speech were outlined
and agreed to. They included the idea of closer European union, extend-
ing an invitation to eastern European countries and the Soviet Union to
participate in a recovery plan but with the goal of integrating western
Europe alone if they refused to join, and insisting that the Europeans
themselves should develop an overall plan of multilateral action under
American auspices. This may have been one of the most brilliant politi-
cal strategy sessions of all time. Not only did it lay out a simple yet effec-
tive plan for American aid to European recovery, it also provided a vision
of a ‘new’ Europe to serve as a basis for more specific American military
and economic policies towards the region and a way of restricting
Stalin’s options by making him reject the noble offer of American aid
rather than exclude him from the outset and thus give him the ready
opportunity to portray the plan as a plot to extend American dominion
over western Europe.
In late 1945 the US government had vastly underestimated the degree
of European economic exhaustion. The best example of this was the
inadequacy of the 3.75 billion dollar British loan of 6 December 1945 to
the task of setting the British economy back on track. Only through
touting the virtues of sustaining free enterprise beyond American shores
 11
and invoking the threat of Soviet fishing in troubled waters did the
Truman administration convince a skeptical Republican Congress that
some action was due. Through 1946 and into 1947 the perceived failure
of a British or a wider European recovery encouraged an increasing
sense of crisis. Crop failures in France and Italy and a brutally cold
winter throughout Europe reinforced the sense that something had to be
done in 1947. This reached a peak with two related events: the virtual
bankruptcy of Britain in late 1946 as an American-mandated convert-
ibility of sterling into dollars led to a run on the pound and the British
government’s announcement in early 1947 of a withdrawal of its forces
from Greece where British-supported Royalists were battling a
Communist insurgency. It was in response to this situation that President
Truman went to Congress on 12 March 1947 to enunciate his ‘doctrine’
of protecting ‘free peoples’ from Communist (Soviet) aggression.
Clayton’s persuasive advocacy of doing something for European
recovery came at precisely the moment, therefore, when events combined
with policy preparation to make his logic compelling (for a brief but
useful account of Clayton’s contribution to the Marshall Plan, see
Fossedal and Mikhail, 1997). Marshall decided to make a short speech
about what Europe needed in a Commencement Address he had already
been invited to give at Harvard University on 5 June 1947. Reflecting the
melding of themes urged by Acheson, Kennan and Clayton, the speech
announced a proposed program of American aid to Europe that was not
directed against any country (in other words, the Soviet Union), was to
involve active European direction, and was to be such that ‘Any assis-
tance that this Government may render in the future should provide a
cure rather than a mere palliative’ (Marshall Commencement Address at
Harvard University, 5 June 1947, reprinted in Mee, 1984, 271–3; see
Foreword). Above all, the speech appealed directly to Americans’ sense
of generosity and fears for an American economy without strong inter-
national supports. Reference to the Soviet Union and communism was
indirect but nevertheless present sufficiently to suggest that without
American action the Soviet Union would be the beneficiary of Europe’s
present penury and misery (Leffler, 1992, 157–64).
The speech passed without much immediate publicity, the US govern-
ment had not yet adopted the mores of Hollywood, save for a press con-
ference by President Truman on the day of the speech announcing its
content. The Administration was aware of strong opposition to interna-
tional initiatives from within the Republican party that controlled the
Congress and had to contend with the charge, following President
Truman’s veto of a Republican tax cut bill on 17 June 1947, that ‘Truman
had decided to relieve the war-torn countries of Europe rather than the
12    
hard-pressed taxpayers of the United States’ (Hogan, 1998, 90). There
was as yet no great popular consensus for either a global crusade against
communism or an internationalist economic policy. Indeed, many
domestic interests had nothing much at stake in foreign investment and
were not readily persuaded of the compelling national-security argu-
ment for American financing of European recovery (Fordham, 1998). In
addition, one common interpretation of the American experience con-
tinued to see it in terms of opposition to European statecraft and Great
Power politics more than as a national experiment in political economy
that now needed to expand in order to survive. To supporters of America
as a haven from European skullduggery, the Marshall Plan went against
the tenets of the greatest previous speech given by an American General,
George Washington’s Farewell Address, as it warned against the dangers
to the fledgling republic of ‘foreign entanglements’ (see Hogan, 1998,
69–118, 419–62).
As things turned out, the plan had a crucial ally in Republican Senator
Vandenberg and its most important proponent in George Marshall, the
Secretary of State. Vandenberg helped adapt the legislation for a
European Recovery Program to meet with objections from his own side
but without gutting it of its essential ingredient, a substantial first year
commitment of funds to the tune of 5.3 billion dollars. Marshall’s role as
the mastermind of American victory in World War II and his aloof,
almost monumental demeanor, made for difficulty in countering anything
he might sponsor, as the Truman Administration knew and used to its
advantage (Pogue, 1987). The association of Marshall’s name with the
plan, therefore, became its greatest political asset even though he himself,
in typically modest fashion, insisted that the plan not bear his name but
be called the ‘European Recovery Program’. Rarely could such a genuine
act of modesty have had such limited effect! The Plan remained wedded
to his name right from the start.
Despite the support of Vandenberg and the celebrity of Marshall,
multiple claims were deployed to convince skeptical Representatives and
Senators of the plan’s necessity:
Nothing was excluded from the administration’s pitch if it looked
as though it might attract a few votes. If economic arguments
failed, references were made to charity; if charity failed to arouse
interest, the plight of Western civilization itself was worked into
the conversation (Mee, 1984, 239–40).
A major plus for the Administration was the positive response of the
new-fangled ‘public opinion’ as expressed through a Gallup poll. More
Americans had heard of the plan than had not. Of those who had, 56
 13
percent thought the plan best considered an act of charity; 8 percent
thought it would ‘curb communism’; and 35 percent regurgitated the
grab bag of claims on offer from the plan’s proponents, had no opinion,
or had never heard of it. This provided not only tangible evidence of
support from the public for the plan but also a broad sympathy for
Marshall’s primary goal of rescuing Europe from economic crisis (Mee,
1984, 241). An American popular ‘desire for universal harmony’ (Dallek,
1983, 158) could be seen as expressing itself in the Marshall Plan. Public
perception of the plan was not left, however, entirely to chance. It was
aided and influenced by the close cooperation of the State Department
and prominent business and labor ‘internationalists’ who formed organ-
izations, such as the Committee for the Marshall Plan to Aid European
Recovery, as part of a coordinated effort to influence both public opinion
and a wary Congress (Wala, 1986).
Congressional opinion was finally brought into line by a combination
of leaked documents that vilified Stalin as a former ally of Hitler (in the
German–Soviet non-aggression pact of 1939) and the Soviet overthrow
of the multi-party Czechoslovakian government that seemed to prove
that Stalin was a continuing threat to world peace. Even though the
Czech crisis could be seen, as it was by George Kennan, as a delayed
consolidation of the Soviet sphere of influence, it allowed the Admin-
istration to play the anti-communist card when all other arguments had
failed to convince. This was to prove to be only the first time in a long
line of occasions as the Cold War advanced, that US governments were
to use this card to trump their opponents, both domestic and foreign.
To administer the huge task of transferring American goods and
credits to Europe, President Truman chose a businessman, Paul G.
Hoffman, as the Economic Cooperation Administrator. Truman had
wanted to appoint his friend Dean Acheson, but Senator Vandenberg
insisted that Acheson would never be confirmed by the US Senate and
suggested a Republican businessman in his place. Hoffman staffed his
Washington office with other businessmen and made the goal of expand-
ing European productivity to American levels the overall goal of the
plan. With Averell Harriman as his Paris-based representative to the
European side of the operation – the Economic Cooperation Admini-
stration (ECA) in the US and the Organization for European Economic
Cooperation (OEEC) in Europe – Hoffman set about convincing and
badgering the Europeans into accepting his experts and their advice.
Economic and political effects were not long in coming. In particular, the
introduction of American machinery seemed to have dramatic effects on
production across a range of manufacturing industries, credits allowed
European firms and governments to import raw materials from the
14    
United States and elsewhere, public works projects, such as restoring
war-damaged harbors, received infusions of equipment and funds. Even
before the first supplies arrived, European anti-Communists were using
the promise of Marshall Plan aid as a campaign issue against their
Communist opponents.
Through its Information Division in Paris and the eighteen country
missions, the ECA flooded Europe with propaganda for the plan.
Greatest attention and money was directed at those countries seen as
most susceptible to a communist threat, but even those countries seen as
relatively secure, for example, Ireland, were targeted in order to address
‘misconceptions of the United States’ (Whelan, 2000, 362). Emanating
from these sites were numerous press releases, posters, publications,
radio programs, newsreels, and documentary films produced by the ECA
to promote the plan as a message of hope to the war-weary European
populace (Hemsing, 1994; Ellwood, 1988).
There was opposition to the plan in Europe. Apart from the
Communists who saw the plan as disguised American imperialism, there
were some who resented the arrogance of the Americans (Pisani, 1991).
Others saw the Marshall Plan as a Trojan Horse for American business,
sizing up assets in anticipation of future investment and control. But
before these currents could form anything other than disparate voices at
the margins of organized politics, the US government became involved
in a war in Korea that led to a rapid switch towards military aid to
Europe and abandonment of the Marshall Plan as it had operated from
the late Spring of 1948 until 25 June 1950. In those two years the US had
contributed a total of $13,015,000,000 (Mee, 1984) or $12.5 billion
(Milward, 1984, 94), depending upon whom you rely, to European recov-
ery. More crucially, the plan had helped restore European economic con-
fidence at a critical time when recovery was still fragile. More
controversially, the plan may have contributed to the overall growth of
Europe in the 1950s and probably helped revive thinking and action
about the benefits of European economic integration. With its security
successor, NATO, the Marshall Plan also put the United States into
Europe, defying physical geography to define a political geography in
which the United States tied its global fortunes irrevocably to a subset of
those European nations that had agreed to participate in the plan. Its
architects could have had no idea of its long-term significance.

The Marshall Plan as Metaphor and Model

Of course, a large part of Europe was denied participation in the plan
because it lay inside the Soviet sphere of influence. With the disintegra-
 15
tion of the Soviet sphere of influence and the collapse of the Soviet
Union itself in the early 1990s, the Marshall Plan came back to life, only
this time as a metaphor for the external effort needed to bring eastern
Europe into the world economy and as a model for what was required
institutionally and financially to do so. More recently, President Clinton
invoked the Marshall Plan as a precedent for both the military action
and subsequent reconstruction taken against Serbia in response to the
‘ethnic cleansing’ of Albanians in Kosovo in 1999. Others continue to
call for Marshall Plans for Albania, Bosnia and other specific parts of
eastern Europe.
More recent events in the Middle East have shifted the geographic refer-
ent but not the message. In a 2002 speech at Marshall’s alma mater, Virginia
Military Institute, President George W. Bush invoked the Marshall Plan in
describing American efforts in re-building post-Taliban Afghanistan and
more broadly for securing peace in the aftermath of a more geographically
generalized war on terror. Administration critics counter that it is precisely
the lack of a Marshall Plan-like scale of investment in building infrastruc-
tures and economies that jeopardizes the military successes in the wars in
both Afghanistan and Iraq. These concerns have also appeared in
Congressional debate. For example, the Committee on International
Relations of the US House of Representatives met in the summer of 2002
to discuss ‘Economic Development and Integration as a Catalyst for Peace:
A “Marshall Plan” for the Middle East’. Its Chairman, Representative
Harry J. Hyde, proposed an American Marshall Plan for the Middle East,
where the enemy was violence and extremist religious and nationalist ideol-
ogies rather than communism, and the goal was investment in material con-
ditions that would foster hope and a renunciation of terror by the general
population (Committee on International Relations, 2002).
These invocations of the Marshall Plan are not entirely new ideas.
The Marshall Plan idea had been subject to episodic appropriation down
the years for projects as diverse as the ‘war on poverty’ in American cities
and Third World development projects and environmental clean-up. For
example, beginning in the late 1950s, a Marshall Plan for Third World
development was a re-occurring theme in the diplomatic efforts of Bruno
Kreisky, the Austrian Federal Chancellor from 1970 to 1983 (Lacina,
2000, 13). What has been particularly attractive about invoking the name
of the Marshall Plan in relation to eastern Europe and the Soviet Union,
however, was that these were the very countries to which an offer of aid
had been made under the original plan but which had been refused by
Stalin. Justice would be finally served if the offer were made again.
Using historical analogies or metaphors to justify some present design
or plan is integral to modern diplomacy and to international discourse
16    
more generally (Lakoff and Johnson, 1980). Some metaphors are recycled
to the point of becoming clichés, such as ‘Munich’, as a synonym for
appeasement of dictators, or ‘Vietnam’ as a metaphor for military inter-
vention without an ‘exit strategy’, or, more to the point, for ‘quagmire’.
Events continue to generate fresh expressions, such as ‘Tiananmen’ as a
metaphor for brutal crackdown, and ‘Gulf War’ for hollow victory,
increasing the repertoire of terms that give color and dimension to
debates over foreign policy. Metaphors tend to be given negative play and
are invoked largely for undesirable outcomes. The Marshall Plan is inter-
esting as a metaphor for directing foreign-policy discussions because it
has acquired a largely positive connotation. In both negative and positive
cases, however, ‘history’ is widely regarded as offering ‘lessons’ as
imparted by familiar metaphors without attending much at all to how
international and global contexts may have changed since the original
moment/place to which the metaphor refers.
Political leaders must communicate in familiar terms with both the
public and their counterparts. They must also justify their actions with ref-
erence to previous action or inaction that produced desired or undesired
outcomes. They have no other way in which to make the case for this or
that policy. Former Secretary of State Madeleine Albright, for example, is
reported to have drawn a direct comparison between her efforts to build a
post-Cold War order in Europe and elsewhere with the enterprise of
Acheson and others during the Truman Administration. An interviewer
refers to her reaction to reading James Chace’s (1998) new biography of
Dean Acheson by quoting her as follows: ‘I have been accused of overstat-
ing the case,’ she said, alluding to her reputation for tough-sounding rhet-
oric on the problems of eastern Europe. ‘They [Acheson, Clayton, et al.]
did it in spades, and that is how they got the Marshall Plan’ (Dobbs, 1999,
56). Yet this reaction by reference to a 1999 that is essentially unchanged
from a 1947 in the meaningfulness of both metaphor and associated
action was elicited at precisely the same time at which Britain’s Law Lords
were rejecting the once hallowed right of a Head of State (in this case
Chile’s Augusto Pinochet) to immunity from prosecution of human rights
offenses and the NATO bombing assault on Serbia represented the final
breakdown of the legitimacy of a regime’s claims to do whatever it might
like within its ‘sovereign’ territory. The world changes, therefore, even as
it is still represented in terms of supposedly timeless historical metaphors.
The use of the Marshall Plan as a historical metaphor in relation to
eastern Europe serves a number of purposes. One is as a serious rhetor-
ical strategy to point to a dire need to parallel the opening up and pri-
vatization of assets within previously state-command economies with
institution building to help create the legal conditions, government reg-
 17
ulation, and business organization without which long-term and equita-
ble economic growth cannot occur. It thus provides a rhetorical weapon
against the advocates of a neo-liberal ‘big bang’ who have had the ear
and the hearts of many western leaders in the early 1990s. Implicit in the
use of the Marshall Plan metaphor, therefore, is a political–economic
model that harkens back to the postwar years but which is no longer au
fait in the brave new world of 1990s transnational liberalism where the
magic of the marketplace rules dominant political agendas.
Another usage implies less a nostalgia for an international Keynesian-
ism than an attempt at communicating with Western publics about the
drastic state of affairs in eastern Europe and the former Soviet Union.
From this point of view, the end of the Cold War can be compared in the
severity of its human consequences to the aftermath of World War II.
Hence, something like the Marshall Plan is needed to give hope to the dis-
pirited and promise to potential investors. Very quickly, however, national
aspirations to acquire membership in NATO, as a sort of second-hand
membership in a Western ‘club’, replaced talk of a new Marshall Plan for
eastern Europe as a whole, in which a distinction was increasingly made
by those in its most western parts (for example, Czechoslovakia, Poland,
and Hungary) to distinguish themselves as a more qualified ‘Central’
Europe from a less ‘NATO-ready’ eastern Europe between themselves
and the former Soviet Union. This tendency has been exacerbated in the
divisions within NATO that have seen fault lines within its traditional
core members. The strains caused by the Iraq War have further deepened
these fault lines as well as created new ones. The diplomatic fallout
between the United States and NATO allies France and Germany led not
only to the inflammatory geography contained in US Defense Secretary
Donald Rumsfeld’s comments about an ‘old’ and ‘new’ Europe, but also
to the equally incendiary remarks by French President Jacques Chirac
chastising eastern European nations for their ‘infantile’ support of the
US position and warning that such behavior could lead to problems in
their accession into the EU.
Finally, the Marshall Plan has come to signify a kind of bold American
initiative that has been replaced by either an absence of decisive action,
say in relation to the 1994 Rwandan genocide, or the global refugee crisis,
or a muddled and indecisive multilateral action, as in Somalia, through-
out the Middle East and the Balkans. So, particularly from an American
perpective, the Marshall Plan conjures up an image of an America that
seems to have lost its political and moral compass. Its invocation, there-
fore, represents a hoped-for return to decisive initiatives, whether or not
they are precisely modeled on the plan itself. In many quarters there is an
increasing sense that the world’s troubles and problems, especially those of
18    
the Middle East, cannot be left to either the marketplace or to simple mul-
tilateral agreements among states. As the ‘sole superpower’ the United
States has global responsibilities. The Marshall Plan offers inspiration to
those who take this position for two reasons (for example, Rostow, 1997,
211). First, the plan had a popular consensus in the United States that has
been lost in divisive debates about foreign policy. There is a nostalgia here
for a pre-Vietnam War ‘non-partisan consensus’. Second, the plan was a
truly multilateral, even if strongly pushed by the United States. Even the
smallest countries could participate. It was, therefore, a demonstration of
world leadership more than imperialism. After September 11 the Bush
Administration has taken decisive action, but critics argue that such
actions have not heeded the message contained in President Bush’s own
invocation of the Marshall Plan in reference to Afghanistan. They argue
that massive investment in postwar rebuilding efforts and multilateralism
are precisely what is needed to make the war on terrorism successful.
These various uses of the Marshall Plan metaphor have had power-
ful resonance. What remains in dispute is how appropriate they are for
early 1990s and contemporary eastern Europe, or elsewhere today and
in the future. Is there an essential equivalence between the post-World
War II period and the wounded but still potentially powerful western
European economies, on the one hand, and the post-Cold War period
and a set of much weaker and, from an American perspective, less vital
set of economies in the East, on the other? Have NATO and European
Union membership overwhelmed the symbolic attractiveness of the
Marshall Plan model among east European élites? In the contempo-
rary world can a project such as the Marshall Plan be appropriately
invoked when international and global conditions are so different from
those in 1947, with no Soviet threat to discipline American politicians
and competing demands on American power that make ‘Europe’ more
responsible for its own future than was the case in the late 1940s? Does
the Marshall Plan mark the beginning of an era of transatlantic multi-
lateral cooperation that is now coming to a close? These are just some
of the questions raised by invocation of the Marshall Plan. As long as
the present is understood in terms of the ‘lessons of history’, however,
the Marshall Plan, one of the few positive metaphors in circulation in
the gloomy circuits of world affairs, will continue to be recycled as both
model and legitimation of actions planned and under way.

The Thematic Organization of the Book and Chapter Overview

The organization of the book reflects the range of themes outlined
above. The three sections attempt to convey, in turn, (1) whether and how
 19
the Marshall Plan led to economic recovery and political cooperation in
western Europe after World War II; (2) some of the ways in which
western European and American economies came together as a result of
the Marshall Plan yet how each side had a basic institutional similarity
that facilitated this, in contradistinction to recent western and eastern
Europe; and (3) long-term impacts of the Marshall Plan both as an influ-
ence on European unification, as a metaphor for east European eco-
nomic recovery in the early 1990s, and as a model for a globalizing world
economy that faces problems of international cooperation for develop-
ment and environmental sustainability that are not dissimilar to those
engaged by the Marshall Plan in its day.
The four chapters in section 1, by J. Bradford DeLong, Alan S.
Milward, Dafne C. Reymen, and Gerard Bossuat, offer different perspec-
tives on the general political and economic impacts of the plan in western
Europe in the aftermath of World War II. Bradford DeLong sees the
cooperative spirit among business, labor, and governments in western
Europe as owing something to the early example of the plan. The virtu-
ous circle of growth underpinned by this collaboration only faltered after
1973 when the oil-price crisis and the adoption of monetarist policies by
some governments undermined the trust and mutual confidence of the
various parties. Alan Milward extends his justly famous critical analysis
of the Marshall Plan as a stimulant of postwar European economic
growth in arguing for its inappropriateness as a model for contemporary
eastern Europe. He directly challenges those, largely American authors,
such as DeLong and Eichengreen, Maier, and Hogan, who have attrib-
uted Europe’s rapid economic recovery after World War II to the plan. He
forcefully argues that specific empirical questions about the impact of the
Marshall Plan open up larger theoretical questions about the emergence
and successful functioning of an interdependent international economic
system over a long period. Dafne C. Reymen offers a cogent analysis of
the Marshall Plan’s spending pattern, describing in detail the gap between
the funds allocated to each country and what was actually spent. She finds
that this latter figure tells a set of different national stories about the
impact of the plan rather than the single one about Europe as a whole
that usually prevails. Late 1990s aid plans to eastern Europe are assessed
in light of the template provided by this analysis. Finally, Gerard Bossuat
offers a skeptical view of both American leadership and the impact of the
plan. He utilizes a wide range of French-language sources to argue that
the American military presence in Europe has had more long-lasting
effects upon western Europe than has the Marshall Plan.
The second section focuses on the institutional consequences of the
plan. Raymond Vernon, a major historian of international business and
20    
a participant in the administration of the plan, traces a significant shift
in European business culture to the effects of the Marshall Plan. In par-
ticular, he sees the plan as challenging and undermining the cartel culture
of European big business in a way that was later carried forward under
the policies of the European Union. Jacqueline McGlade provides evi-
dence for greater ambivalence of segments of American business
towards the Marshall Plan than has conventionally been noted. She sees
a fundamental conflict that divided American business between a desire
to gain and protect markets in Europe and a concern over American
postwar rebuilding and possible support for future European business
competitors. Finally, Paul Bernd Spahn sees the institutional similarity
between the United States and western Europe as laying the groundwork
for the Marshall Plan’s success. In counterpoint, the political–economic
dissimilarity between eastern and western Europe today is much greater
than was that between the US and western Europe in 1947.
The third section brings the book full circle from consideration of the
Marshall Plan’s specific impacts in the short- and medium-term to Alan
Milward’s important point about the plan’s relationship to long-term
trends in global political–economic interdependence. Wilfried Loth’s
perspective is overtly political in investigating the role of the Marshall
Plan as a force for European integration. He sees the aid and condition-
ality of the plan as encouraging Europe’s recovery but argues that it also
facilitated and encouraged the movement for a more integrated Europe
as manifested most recently in the European Union. Thomas C.
Schelling, a former official in the Marshall Plan and a distinguished
economist/political scientist, speculates on the Marshall Plan as a model
for the early twenty-first century. He argues that now it must be directed
at global problems such as the environmental threats from greenhouse
gases. The Marshall Plan was a regional program that had global conse-
quences. Today we need global programs for many of the problems we
face. But they too must be based on cooperation. That is the lasting
legacy of the Marshall Plan: whatever is made of its specific impacts, it
is probably the best example in modern history of successful multina-
tional cooperation to achieve a common goal. Finally, Stuart Corbridge
compares the Marshall Plan as a model for economic development to the
currently favored development strategy often called the ‘Washington
Consensus’. Similar to the Marshall Plan, the Washington Consensus
has sought to encourage open economies and democratic political insti-
tutions in aid to developing countries, but, unlike the plan, it has not
offered a consistent and reliable set of aid packages to make long-term
institutional change possible. This reflects the crisis in national
approaches to planning implicit in the plan in an increasingly globalized
 21
world economy in which mobile capital is less and less constrained by
national borders. A world economy the Marshall Plan helped bring
about is no longer congenial to the national-planning goals it adum-
brated.
Indeed, it is remarkable that the Marshall Plan remains so prominent
in political discourse at a time when the world that it helped to construct
has changed so significantly. Even the Atlantic alliance that the Marshall
Plan helped to create and nourish shows signs of weakening. The United
States and many of its traditional western European allies seem to be
headed in different foreign policy directions, and these diplomatic differ-
ences have extended into cultural antagonisms and mutual incompre-
hension (Kagan, 2003; Lambert, 2003). In spite of these deteriorating
relations among nations formerly linked by the plan, the symbolic power
of the Marshall Plan as model and metaphor has not diminished. If any-
thing its significance has been enhanced by the recognition that massive
investments in material conditions that give hope for distressed peoples
and nations have lasting positive consequences for both benefactor and
recipient nations as well as for world peace.

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 Part I
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