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Henry Judd

World Politics

Western Europe Opposes Marshall Plan
Attempt to Integrate Economy

(16 January 1950)

From Labor Action, Vol. 14 No. 3, 16 January 1950, p. 3.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

It is common knowledge that the first part of the Marshall Plan – that aspect of it under which America poured billions of dollars worth of raw materials, goods and credits into the old veins of Western Europe in an effort to renew the flow of economic life – has now passed by and preparations are under way for a new phase, the second phase, of the plan’s fulfillment.

The first part, devoted to restoring the productivity of Western Europe, has had a considerable success, thanks to the hard work and energy of the European working class together with the powerful resources which still remain. American officials, of course, would like to place credit primarily on American support – which unquestionably supplied a powerful stimulus to renewed production – but more fundamental factors were at work.

It is estimated that Western European production as a whole, basic industries and light industries included, now stands at 120 per cent of its pre-war mark. This must be understood in relation to other facts – such as increased population – but it nevertheless represents an astounding recovery; proof that Western Europe retains its historic and social vitality and its sense of being the world’s cultural and productive center.

To be sure, a careful analysis of even the productive figures would reveal many weaknesses, most significant of which would indicate a tendency toward a leveling-off of the rate of recovery, together with unfavorable contrasts between pie-war productive rates and costs; a weakness in the availability and investment of fresh capital and no decline in the proportion of worn-out machinery used. Important as such factors are – for they indicate the truth of the Marxist contention that the continuation of capitalism results in social and productive stagnation – there are more significant things to be considered, namely, the functioning and operation of capitalism in Western Europe, now that it has attained such a high level of recovery.

“Cockeyed Picture”

Anne O’Hare McCormick, in the N.Y. Times (December 19) places her finger on the new and feature issue at stake; “the plan tended to produce exactly the opposite effect. In putting the prime emphasis on national production, and distributing aid on the basis of dollar deficits, it helped fortify the historic economic boundaries and encouraged the participants to narrow their sights and concentrate pretty exclusively on their own particular projects and problems.” Production is now tapering off steadily not because the need has declined (the reconstruction of France, Italy and Western Germany even to a level of 1939 would still be a work of years of effort, demanding billions of dollars), but because of marketing difficulties and exchange controls.

The most sensational example is that of steel production, which is now listed in the category of “overproduction”! With dozens of cities requiring reconstruction from the ground up. there are now 6 million idle tons of steel in countries, such as Germany, able to produce comparatively cheaper than France or England. Protective tariffs and exchange regulations prevent the export or import of this idle steel. A N.Y. Times reporter quotes a trade expert as follows: “It is as cock-eyed a picture as could well be imagined and makes a mockery of the talk about economic cooperation in Europe.” Other examples of the blocking of trade and its flows could be cited at length.

It is here that the question of what the Marshall Plan, Phase 2, is, enters the picture. The purpose of the new phase of this plan, we are told, now that production has been restored, is to “integrate the economic life of Western Europe by counter-acting those tendencies toward the freezing of national economies in their existing shapes,” to break down trade barriers, to stimulate competition and to encourage Europe to develop a single economy as opposed to a watertight, compartmental economy of a national basis. The phrase employed by Hoffmann, the Marshal Plan administrator, is “integration of European economy.” It might appear that this is something similar’ to the proposed socialist unification of Western Europe, together with a planned production and distribution of resources. Hoffmann, of course, quickly countered such ideas or interpretations by explaining that what he had in mind might not be realized during this century – certainly not during his lifetime.

Old Rivalries Remain

Instead, a new economic scheme – the heart of phase 2 – is now being evolved by the ECA people and Hoffmann: the so-called clearing union, or central dollar fund setup. Under this scheme, which aims to finance a free-trade system and stimulate a more rapid exchange, the United States would drop its production credits and create a huge dollar fund permitting the mutual convertibility of Marshall Plan nation currencies. A new organization to manage this fund would be set up, and its total resources at first would be close to one billion dollars. It would act as a central clearing house for European currencies which would be freely convertible, contrary to the present arrangement.

Such a plan, now under discussion, runs smack up against British objections. The British, anxious to preserve their small dollar hoard, oppose such integration of their resources and reserves into such a central system which might result in a further drainage of what remains to them.

The tendency in Europe is now towards the organization of rival and regional trade blocs, the basic conflict being between England (anxious to hold together its narrow sterling bloc) and the Continent as a whole. But even within the Continental bloc France, which is its leader, struggles desperately to keep out Western Germany whose industrial recovery (the most amazing of all) threatens its leadership. Thus, all the old rivalries exist, even if in new and quite different forms, and it is highly doubtful if the type of central dollar pool described above could actually be formed.

Why does the United States propose this? Its strategic reason, of course, is a part of its plan to weld together Western Europe as one mighty, prosperous and centralized area standing as a bulwark against Russia and Stalinism. America wants free convertibility (under such a system, the dollar is absolute master since it is the most powerful and desirable currency); a lowering of tariffs (without any effort to lower its own tariffs correspondingly) and an end of the quota import system which makes governments all-powerful in determining and regulating imports. Integration of Europe’s economy can be conceived of in many ways, it goes without saying. The American conception is one of bureaucratic control from above, with financial manipulation, all of which is aimed at strengthening American intervention and influence in Europe’s social and economic life.

Yet it must be recognized that the tendencies at work contain elements of great potentiality and even revolutionary significance, provided they are executed in a proper way and under the leadership of others. The whole drive of European economy is and must be toward “integration,” toward destruction of barriers and the free interchange of production and goods. Today, this movement remains in the hands of bourgeois and reactionary leaders who attempt to stifle, rather than give full vent, to such movements. At best, they yield only to that which is absolutely essential.

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Last updated: 8 March 2023