The Man Who Rebuilt Europe

It's exactly sixty years ago this month since the Marshall Plan was announced. Here's my article from today's The Australian on why George Marshall was the greatest post-war U.S. Secretary of State.

"Our policy is not directed against any country, but against hunger, poverty, desperation and chaos. Any government that is willing to assist in recovery will find full co-operation on the part of the USA."
THESE are the words of US secretary of state George Marshall as he announced his European Recovery Program, commonly known as the Marshall Plan, 60 years ago this month. Over the next four years, more than $US13 billion of aid flowed into war-torn Western Europe. Has there ever been such an inspired - and efficacious - piece of US diplomacy?

The Marshall Plan undoubtedly saved the lives of hundreds of thousands of Europeans threatened with starvation and malnutrition. And by helping the recovery of the US's biggest export market, it guaranteed US economic pre-eminence for the rest of the 20th century. On top of all this, it fulfilled what, by 1947, had become the US's main global priority: containing the spread of Soviet-style communism.

The plan has been criticised by some on the Left for being an example of US "soft imperialism" - a self-centred move dressed up as altruism. But while it's true that realpolitik considerations undoubtedly played their part, it would be churlish to say that there were not genuinely good intentions behind the most generous package of foreign aid ever given by any country in history.

The people behind the Marshall Plan were not fanatical anti-communist hawks, or die-hard pro-capitalists, but progressive New Dealers, who believed in the ordinary citizen's right to a fair deal and the positive role of governments in changing peoples lives. "The primary purpose was compassionate, good willed. The notion that our former allies needed to have the help of the US" was the verdict of the great Keynesian economist J.K. Galbraith, hardly an apologist for US foreign policy. Let's not forget that aid was offered to Eastern Europe too, even though the US knew there was little chance of Stalin's acceptance.

The impact of Marshall aid was immediate. The years 1948 to 1952 saw the fastest period of growth in European history. Industrial production increased by 35 per cent, while agricultural production substantially surpassed pre-war levels. By 1951, at the end of the Marshall Plan, national incomes per capita were more than 10 per cent above pre-war levels. For the next two decades western Europe would enjoy an unprecedented rise in living standards.

The Marshall Plan was the engine that drove the move towards greater European economic co-operation and helped make possible the establishment of a new left-of-centre post-war consensus. There was to be no return to the dog-eat-dog economics of the 1930s; instead governments, wary that their populations might be tempted by communist alternatives, opted for planning, a genuine mixed economy, progressive taxation, full employment and state-subsidised welfare. For the ordinary people of Europe, now granted security from the cradle to the grave, it was truly a golden age.

Contrast the success of the Marshall Plan and the expansionary economic policies that followed in its wake, with the austerity program that was imposed by Western institutions, such as the EU and IMF on eastern Europe following the end of the Cold War. GDP in the former communist states fell between 20 per cent and 40 per cent in the decade after 1989, an economic contraction which can only be compared to the Great Depression of the 1930s. While a minority in the region have seen real wages rise, for the majority, the experience of the past 18 years has been radically different to that of western Europeans in the years following the implementation of the Marshall Plan.

In 1947 Marshall had the foresight to see that a bold, new approach was needed for post-war reconstruction. "Hitherto I had thought of Marshall as a rugged soldier and a magnificent organiser and builder of armies. But now I saw that he was a statesman with a penetrating and commanding view of the whole scene," was the view of Winston Churchill.

But Marshall was not only a great strategic thinker, he was also a great human being. The film director Orson Welles once told of a big wartime military banquet at which he was the only civilian present. The door opened by accident and a GI looked in and saw Marshall, then chief of staff of the US Army. "You're General Marshall," he said. "Yes, come in son", Marshall replied, not knowing that Welles was watching. Marshall went off with the GI to a corner and sat talking with him for 15 minutes. "It was done with the utmost simplicity and without the slightest hint of demagoguery" recalled Welles. "He was such a human being that the GI could see that he could talk to him."

What America and the world could do with a man with the vision - and humanity - of George Marshall today.