From Fourth International, Vol. 10 No. 8, September 1949, pp. 227–229.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
“The Marshall Plan is entering a critical phase.” So runs the refrain in the international press hardly a year after the plan was put into effect. It is noted with astonishment that Western Europe has never been “further removed” from economic unification and that never (at least since the end of the war) have London and Washington been less agreed “on the manner of resolving the economic problems of the times.” (Le Monde, Paris, June 24)
The London Economist, June 11, declares:
“Unless some change of method is adopted, western Europe will continue to hammer itself into its own autarchic strait-jacket and by 1950 it may find that it has deprived itself of all power of movement, even the power to breathe.”
The alarm is sounded from all sides on this first anniversary of the Marshall Plan. Under the meaningful title, Cassandra Speaking, Walter Lippman says in his column in the New York Herald Tribune, June 10:
“The problem of European recovery is manifestly deeper and more stubborn than most of the operators of the Marshall Plan realised, than any were willing to admit publicly. The economic exhaustion of Western Europe has been greater than the official estimates allowed, and the disruption of the channels of trade and of the media, of exchange has been such that only by extremely artificial, and therefore quite temporary devices, has a moderate volume of trade been restored.
“The fragile recovery which has been achieved is now threatened by a worldwide deflation in which, unlike 1947, the United States is involved. The deflation has set in before, but just before, Germany and Japan are being encouraged to enter the worldwide competition for contracting markets.”
Nevertheless, the first objective of the Marshall Plan, the restoration of Western European economy to its prewar level, has been attained. According to the report issued by the Economic Commission for Europe, production for the Marshall Plan countries (with the exception of Germany which still lags behind) has surpassed the 1938 level by 13 percent; in one year productivity rose 9 percent and the volume of exports 30 percent. This increase of production must be directly attributed to the aid given by the Marshall Plan which has furnished beneficiary countries not only with a large part of raw materials and machines necessary for industrial production, but also with financial investments. Thus, out of 148 billion francs invested in the coal, electrical and gas industries in France in 1948, 90 billion were provided by the Marshall Plan.
But once production was re-established on the 1938 level, the problem of markets and foreign trade made its appearance, and could not be solved with the same relative ease as had the first objective of the Marshall Plan. On the contrary. The revival of production is coupled with the reappearance of competition among the European countries and between them and the United States.
Let us begin with an examination of the second aspect of this problem. It is common knowledge that one of the aims of the Marshall Plan was to make Western Europe independent of “the dollar deficit” by permitting it to attain an equilibrium of its balance of payments with the dollar zone by 1952. Opinion is now unanimous that this aim will not be attained and that a serious deficit in dollars will continue to unbalance Western European trade long after this date. They now even go as far as to point out that this deficit is not accidental and does not result from transitory causes originating in the last war, but is rather to be attributed to the new organic structure of the world capitalist market. The United States will preserve and strengthen a favorable balance of payments in relation to Europe. Under pressure of the crisis, which is now beginning, the economy of the United States will be oriented more and more toward an increase of its exports to Europe and a reduction of its imports from that area. In other words, this means that the United States will tighten its hold on the European and world markets to the obvious detriment of its European competitors.
In 1948, the nations of Western Europe succeeded in reducing their trade deficit with the dollar zone by approximately a billion dollars by reducing their imports from the United States and from Canada. But in the same period, their exports to America only increased by less than 150 million dollars, that is, by an amount much lower than the corresponding pre-war figure. The year 1949 began with a considerable fall of all European exports to America. Thus, in 1948 Western Europe had a deficit of around $2,300 million to America. This deficit may vary from year to year but the essential trend will remain.
While Europe will not be able to forego American imports the United States, under pressure of the crisis, will be obliged to more and more reduce its imports from Europe. On the other hand, it should not be forgotten that Marshall aid is accorded to European countries on condition of obligatory purchases in America.
We now come to the inter-European difficulties which “threaten” the Marshall Plan but which in reality are a consequence of the crushing weight which American economy, driven by the exigencies of the coming crisis, brings to bear on the capitalist structure of Western European economy and on the entire world market. The Marshall Plan aims at “the economic cooperation” of Western Europe which is deemed necessary for its “recovery.” In reality, for Yankee imperialism this “cooperation” means the possibility of freely circulating its merchandise and its capital over the European market, which to this date is divided and walled-off by a thousand barriers. This was the reason why the US, from the beginning, has been opposed to tariff walls, to bilateral trade, to non-convertibility of currency. Wall Street desires a free market in which there can be free play of competition for which it is better armed than any other capitalist power. But nobody in Europe can get enthusiastic over this type of liberalism.
As a result of the competitive and non-complementary structure of European production, and important differences which exist from country to country in relation to productivity, production costs and wage scales, the countries of Western Europe – far from orienting towar4 economic fusion – are engaged in “plans of internal investment,” “national plans,” which are reflex actions and self-defense against other European competitors and against the United States itself.
The publication of the long-term plans of the Marshall Plan countries has revealed, as is noted bitterly by The Economist (June 11), that,
“western European planning is based – unconsciously, perhaps, but decisively on the ideal of national autarchy. In each plan, emphasis is placed on the same phases of heavy industrial development. Each plan does away with some aspect of European industrial specialisation. For instance, Benelux and Switzerland are expanding textile production, Sweden is introducing watch-making, and dye-stuffs, steel, machine tools and cotton goods, the countries which manufactured the least of these products before the war are now planning the biggest increases ... Under its present plans, Europe will emerge from the Marshall era less economically unified than it went in.”
In the absence of genuine planning for European economy, which is conceivable only in a Socialist United States of Europe, this tendency can only be reversed by re-establishing a state of competition between the industries of Europe to enable “each country to find the best place for itself and therefore that economic field where a country can most profitably develop its investments.”
In capitalist parlance, it is necessary to facilitate competition by removing the obstacles which now paralyze competition: the question of payments, tariff and trade barriers (quotas, etc.). But the Western powers are far from agreement on all these questions and particularly on the question of payments. The chief obstacle is proving to be the antagonism England is showing to its principal competitors in Europe and in the world – Belgium, Western Germany and the United States.
The English do not want multilateral trade (that is, unrestricted trade) nor convertibility of currency (that is, the right of a country to exchange one currency against another, without limits or controls). They fear that such freedom will benefit the creditor countries or those which have a favorable trade balance toward it, as is the case with Belgium, Western Germany and the United States. By permitting the convertibility of sterling, London would once again risk the mass flight of the gold and dollars which remain in its possession as happened during a brief period in the summer of 1947. It would also risk losing some of its customers to its creditors. But, on the other hand, its refusal to consent to this measure is blocking all inter-European trade and is accentuating the autarchic tendencies of the Marshall Plan countries.
But how far can the resistance of England go? The United States has at its disposal powerful means of pressure over England and it will not hesitate to use them as the crisis grows worse and is forced to tighten its hold on the world market. The day that England consents to convertibility, and to the devaluation of the pound sterling which will follow – on that day one can say that Uncle Sam will have, for the first time, driven a fatal breach into the economic system on which the international power of Great Britain still rests. The death knell will sound for the British Empire, and England itself will enter a crisis from which there is no escape so long as it remains a capitalist country. The definitive balance sheet of the last war is in reality only now being drawn up for England in the battle sit is waging to defend itself against the disagreeable proposals being made by its Western partners led by the United States for the purpose of rending the Empire.
The Marshall Plan was conceived by Washington as an economic and political instrument designed in part to assure the United States a high level of necessary exports so as to ward off the danger of crisis and, in part, to draw the economically dependent countries into the struggle the US is waging against the USSR and its satellites. The Atlantic Pact rests on the Marshall Plan and rounds it out. But the success of the Marshall Plan, from a purely economic point of view, was based on a number of considerations which ignored the realities of the capitalist system and the inevitable consequences of the end of the second war on this system. Capitalism has proved itself incapable of “economic planning” even when all that was involved was “cooperation” on the scale of Benelux. Belgium and Holland have postponed to next year the realization of their “customs union.”
As a result of the contradictory nature of capitalist production between the countries and in each country, as a result of the deep-going differences which exist from country to country in conditions of production and distribution and as a result of the general crisis of the system, a relative revival of any capitalist power can only occur to the detriment of the others. Thus, “European economic cooperation” formulated by the Marshall Plan has already been proved to be a myth and we are now witnessing, on the contrary, a more intense competition among the capitalist countries of Europe than ever before and a return to the policy of autarchy and to “national planning.”
The Marshall Plan was drawn up for a situation that would develop without the pressure of economic crisis. Now, no one denies the fact any longer that we have already entered the beginning of a crisis which is designated as “depression,” “recession,” “disinflation,” or some other term to soften its effects on the ears of frightened businessmen. Once begun, the crisis will shake from top to bottom the calculations upon which the success of the Marshall Plan was based. Its first effect will be the increased pressure of the United States on the world market to the detriment of all its competitors and the still more acute competition between European capitalists themselves. In the general alarm, the universal watchword will become “every man for himself,” which is certain to be translated by an accentuation of protectionist measures and by “national planning.”
On the other hand, the market is already admittedly saturated as the development of production in 1948 in Marshall Plan countries shows and as will soon be shown everywhere in a leveling-off and even a decline, the emphasis changing from production to productivity, that is, to the cheapest possible production in order to meet competition. But a decline or even a stagnation of production must lead to perpetuating and aggravating the dependence of the Marshall Plan countries on the United States and to removing them even further from the goal set by the Marshall Plan for 1952 of making Western Europe independent of the “dollar deficit.”
In effect, France, for example, must raise its production to 40 percent over the 1938 level and enlarge its present exports by the same percentage in order to maintain its present standard of living. The same is true, in analogous proportions, for all the other countries in western Europe. It is obvious that such a strenuous effort is impossible under the conditions of the new economic conjuncture. In the months to come, it will be productivity that will absorb the principal efforts of these countries. There is great unevenness in the productivity of European countries (with France at the bottom) and between Western Europe as a whole and the US Western European productivity being less than half that of the US). An increase of productivity will signify the end of “full employment” and the return to mass unemployment.
Characteristic of the striking bankruptcy of the capitalist system of our time is the empiricism of the remedies which bourgeois thought proposes as palliatives for the shifts in the economic conjuncture. During and after the crisis of 1929–33 the bourgeois economists discovered the benefits of “full employment.” In general, they followed the school of Keynes in proposals for a more “social” policy which was in reality subsidized by state expenditures for “public works” and then armaments as the only means of reviving the economy.
Between the pincers of competition and a dwindling world market these economists have now become the champions of a return to partial unemployment for the purpose of reducing the cost of production and of using the industrial reserve army to depress the level of wages. Thus, in England the liberal periodical, The Economist (June 4 and 18, 1949), is championing a campaign to return to unemployment to the extent of 7 percent of the working-class population, that is, around 1,500,000. But the disciples of the school of Keynes and Beveridge and the “New Dealers” the world over do not consider this to be a defeat for their ideas. In the coming crisis, they will use the same arguments they have in the past to defend themselves. But let us return to the perspective of the Marshall Plan. Compromised by the revival of competition, by the antagonisms of the participants and by the developing crisis, the Plan is moving toward its inevitable collapse as an instrument capable of reestablishing a European economy which develops harmoniously and progressively and independent of American credits. While capitalist economy, as a whole, is being battered by the oncoming waves of the real economic crisis the only remaining hope for the bourgeoisie is to maintain a “precarious stability” interrupted from time to time by a “crisis” of the type which England is once again experiencing.
Updated on: 10 April 2015