Marshall Plan Commemorative Section: The Marshall Plan Reconsidered: A Complex of Motives

Diane B. Kunz

From Foreign Affairs, May/ June 1997

Summary:  A look back at perhaps the most important foreign policy success of the postwar period. Edited by Peter Grose, with contributions by historians Diane B. Kunz and David Reynolds, a memoir by Charles P. Kindleberger, a profile of Marshall and Acheson by James Chace and one of Will Clayton by Gregory Fossedal and Bill Mikhail. And reflections from Roy Jenkins, Walt Rostow, and Helmut Schmidt.

Diane B. Kunz is Associate Professor of History at Yale University. Her most recent book is Butter and Guns: America's Cold War Economic Diplomacy (Free Press, 1997).

Western Europe's economic recovery ensured that the Marshall Plan would become the model for future foreign-aid programs. While the ERP was in operation, Western Europe's aggregate GNP increased 32 percent, agricultural production jumped 11 percent over prewar levels, and industrial output exceeded the 1938 figure by 40 percent. The Marshall Plan's success in keeping Western Europe out of the communist bloc convinced American planners that economic weapons could solve diplomatic problems. And this triumph blotted out the failure of American economic diplomacy to alter Soviet policy.

Fortunately, the fathers of the Marshall Plan had aimed their economic weapons at economic problems that were susceptible to an economic solution. Western Europe provided the ideal setting for the American approach. The governing structure, infrastructure, and skilled labor force were already in place. European governments lacked dollars and craved American support. The Marshall Plan filled both needs. But Averell Harriman, writing to presidential adviser Clark Clifford in 1953, warned "against undue preoccupation with economic concerns to the exclusion of others, and against the propensity of altogether too many people to think that if we solve the economic problem we automatically solve all others."

American leaders, frightened by the specter of an encroaching communism, relied on economic diplomacy to an unprecedented extent in the effort to combat that threat. Indeed, the ERP remains a model for positive economic diplomacy. Because of American financial strength, the appropriations occasioned no domestic pain and even brought significant gain to certain industrial and agricultural sectors. Economic diplomacy benefited both the United States and Western Europe, foreign and domestic interests alike. Only the communist bloc, the target of American diplomacy, suffered.

The Marshall Plan was a limited investment that paid incalculable dividends. A situation favorable to American interests was established in Europe. The aid program raised Western Europe from its knees, launched the American challenge to the Soviet Union, and bolstered the American economy. This last point runs counter to the conventional economic wisdom: how could massive government expenditures be a net plus to the domestic economy? The experience of the Marshall Plan shows the answer. Investing to protect prosperity at home generated peace and prosperity abroad, which in turn led to still greater prosperity for the donor. When the vital interests of the United States seem to be at stake, the expenditure of American dollars for foreign aid can be amply justified. That was true at the time of the Marshall Plan, and it is still true today.