Reconstruction, Reconstruction, decolonization and re-decolonization and re-

stabilizationstabilization

Europe in the late 1940sEurope in the late 1940s

The Department of Political Science The Department of Political Science PresentsPresents

Figuring out what's broke: Assessing the Figuring out what's broke: Assessing the effects of ownership on political news effects of ownership on political news

contentcontent

Dr. Kelly BlidookDr. Kelly BlidookDepartment of Political ScienceDepartment of Political Science

Memorial University of NewfoundlandMemorial University of Newfoundland

Friday March 13, 2009Friday March 13, 2009SN2033SN20332:30pm2:30pm

Reminders:Reminders:

Net assignment #2 due, Monday, March 16Net assignment #2 due, Monday, March 16 thth at at 5:00 p.m.5:00 p.m.

Book or film reviews due in class on Thursday, Book or film reviews due in class on Thursday, March 19March 19thth • Be sure to consult the hints and suggestions & the Be sure to consult the hints and suggestions & the

directions on format and style in the topic sheetdirections on format and style in the topic sheet

Today’s classToday’s class

Further exploration of a paradox: how Europe Further exploration of a paradox: how Europe moved from a half century of turmoil to one of moved from a half century of turmoil to one of peace, political unity, prosperity, and affluencepeace, political unity, prosperity, and affluence

Possible explanations:Possible explanations:• New elNew elán, determination not to return to dirty án, determination not to return to dirty

thirties?thirties?• Dreams and hopes?Dreams and hopes?• Willingness to learn from the past?Willingness to learn from the past?• Deliberate planning? Deliberate planning? • Fortuitous choices, facilitated & encouraged by the Fortuitous choices, facilitated & encouraged by the

cold war?cold war?

Look atLook at

Domestic politics, uses made of the Domestic politics, uses made of the statestate

Marshall PlanMarshall Plan Attempts to construct a federal Attempts to construct a federal

EuropeEurope International sideInternational sidehttp://news.bbc.co.uk/2/shared/spl/hi/europe/02/euro_borders/html/7.stmhttp://news.bbc.co.uk/2/shared/spl/hi/europe/02/euro_borders/html/7.stm

Domestic sideDomestic side Parties of the left emerge from the war Parties of the left emerge from the war

stronger than beforestronger than before• Surges of support for CommunistsSurges of support for Communists• Socialists stronger in many countriesSocialists stronger in many countries• Christian Democrats willing to work with the Christian Democrats willing to work with the

leftleft• Labour wins majority in 1945 electionsLabour wins majority in 1945 elections

Widespread sense that:Widespread sense that:• Neither politically possible nor desirable to Neither politically possible nor desirable to

return to the 1930sreturn to the 1930s• The state could be used – albeit in different The state could be used – albeit in different

ways -- to produce desired outcomesways -- to produce desired outcomes

UKUK Labour gov’t nationalizes basic industries:Labour gov’t nationalizes basic industries:

• Coal, gas, transport, eventually iron & steelCoal, gas, transport, eventually iron & steel Implements Beveridge report: Implements Beveridge report:

• Citizens pay flat rate insurance premiumCitizens pay flat rate insurance premium• Receive universal benefits, without means test (thus flat rate)Receive universal benefits, without means test (thus flat rate)

Old age pensions & widows’ benefitOld age pensions & widows’ benefit Unemployment insuranceUnemployment insurance Sick leave/insurance against industrial accidentsSick leave/insurance against industrial accidents

• Presumption:Presumption: affordable if economy is managed so affordable if economy is managed so that relatively few are forced to draw on themthat relatively few are forced to draw on them

Requires Keynsian demand management – counter-cyclical Requires Keynsian demand management – counter-cyclical policiespolicies

Establishes National Health Service (NHS): system of Establishes National Health Service (NHS): system of socialized medicine, doctors on salarysocialized medicine, doctors on salary

Moves toward physical resource planningMoves toward physical resource planning

ProblemsProblems

IndebtednessIndebtedness ExhaustionExhaustion Insufficient resources to sustain empire, Insufficient resources to sustain empire,

overseas role or pound as a reserve overseas role or pound as a reserve currencycurrency

Economy out of joint: rationing through Economy out of joint: rationing through 19521952

Actual planning is minimal: Actual planning is minimal: nationalizations achieve ownership without nationalizations achieve ownership without necessarily providing control or directionnecessarily providing control or direction

FranceFrance

Despite political uncertainty, move toward Despite political uncertainty, move toward indicative planning (voluntary targeting)indicative planning (voluntary targeting)

Commissariat du Plan established under Commissariat du Plan established under directorship of Jean Monnetdirectorship of Jean Monnet

Planners set targets for economic growthPlanners set targets for economic growth• Isolate bottlenecks or obstaclesIsolate bottlenecks or obstacles• Use information & resources of the state to Use information & resources of the state to

encourage corporations to overcome them:encourage corporations to overcome them: Financial facilities (e.g. loan guarantees)Financial facilities (e.g. loan guarantees) Nationalized industries (e.g. Renault)Nationalized industries (e.g. Renault)

• Facilitate postwar industrializationFacilitate postwar industrialization

ItalyItaly

Postwar state inherits IRI – a holding company Postwar state inherits IRI – a holding company with a portfolio of industries publically owned, with a portfolio of industries publically owned, because Fascists had rescued thembecause Fascists had rescued them

Use to modernize Use to modernize partsparts of the Italian economy of the Italian economy Regional development funds established – Regional development funds established –

transfer huge amounts of money to the transfer huge amounts of money to the underdeveloped southunderdeveloped south

Even so,Even so,• Widespread destitution, poverty….Widespread destitution, poverty….

NetherlandsNetherlands Breakthrough, championed by resistance forces, Breakthrough, championed by resistance forces,

Social Democrats, fails to materializeSocial Democrats, fails to materialize Nevertheless, Social Democrats & Catholics ally Nevertheless, Social Democrats & Catholics ally

to build postwar welfare stateto build postwar welfare state Trade unions & employers association come Trade unions & employers association come

together to administer incomes policies and together to administer incomes policies and manage reconstruction manage reconstruction

Government uses licensing powers, access to Government uses licensing powers, access to foreign exchange to promote industrialization & foreign exchange to promote industrialization & job creation, ‘active industrial policy’job creation, ‘active industrial policy’

Jump-starting European economiesJump-starting European economies

Despite planning, severe economic Despite planning, severe economic dislocationsdislocations

Recovery stalled by liquidity crisis Recovery stalled by liquidity crisis • Individuals, countries lack money to buy each Individuals, countries lack money to buy each

others’ goodsothers’ goods Growing realization that economic stability Growing realization that economic stability

linkedlinked Outbreak of Cold War galvanizes US into Outbreak of Cold War galvanizes US into

actionaction

Marshall Plan (1947)Marshall Plan (1947) U.S. Secretary of State, George MarshallU.S. Secretary of State, George Marshall

• proposes recovery planproposes recovery plan• receives bi-partisan supportreceives bi-partisan support

US supplies multi-year creditsUS supplies multi-year credits• Part for purchase of American goodsPart for purchase of American goods• Part for investment in industryPart for investment in industry• Technical assistanceTechnical assistance

Plans to be developed through new intnat’l Plans to be developed through new intnat’l org, OEEC (Organization for European org, OEEC (Organization for European Economic Cooperation, later OECD)Economic Cooperation, later OECD)

Offered to both western and eastern European Offered to both western and eastern European countriescountries

ImpactImpact

Older view:Older view:• Marshall Plan jump-starts European economies, Marshall Plan jump-starts European economies,

providing needed liquidityproviding needed liquidity• Foundation for postwar affluenceFoundation for postwar affluence• An instance in which the US got it rightAn instance in which the US got it right

More recently, some argue thatMore recently, some argue that• Growth was already underwayGrowth was already underway• Marshall Plan largely self-interested -- designed to Marshall Plan largely self-interested -- designed to

promote US interestspromote US interests Bottom lineBottom line

• Even if impact largely psychological, Marshall Plan made Even if impact largely psychological, Marshall Plan made a differencea difference

Organizing Western EuropeOrganizing Western Europe

Multiple efforts to build transnational and Multiple efforts to build transnational and international structures:international structures:

Bretton Woods Conference (1943) Bretton Woods Conference (1943) establishes basis for currency exchange: establishes basis for currency exchange: multilateral system of accounts replaces multilateral system of accounts replaces bilateral exchangebilateral exchange

GATT (General Agreement on Tariffs and GATT (General Agreement on Tariffs and Trade, fore-runner of WTO) as device for Trade, fore-runner of WTO) as device for facilitating changefacilitating change

World Bank and International Monetary World Bank and International Monetary Fund as stabilizersFund as stabilizers

Uniting EuropeUniting Europe

Initially, stuff of dreamers & visionariesInitially, stuff of dreamers & visionaries Altiero Spinelli & European Federalist Altiero Spinelli & European Federalist

MovementMovement Churchill urges (but not for Britain)Churchill urges (but not for Britain) United States promotesUnited States promotes

Multiple effortsMultiple efforts

BeneluxBenelux Hague Conference > Council of EuropeHague Conference > Council of Europe Organization for Economic Cooperation Organization for Economic Cooperation

and Development (OECD) as vehicle for and Development (OECD) as vehicle for Marshall Plan aid (initially OEEC)Marshall Plan aid (initially OEEC)

European Coal and Steel Community European Coal and Steel Community (ECSC) (ECSC)

NATONATO• Engages all but a few neutrals (Switzerland, Engages all but a few neutrals (Switzerland,

Sweden, Ireland, AustriaSweden, Ireland, Austria

European Coal & Steel European Coal & Steel CommunityCommunity

Schumann Plan – conceived by Jean MonnetSchumann Plan – conceived by Jean Monnet Problem:Problem:

• How to allow Germany to reindustrialize in ways How to allow Germany to reindustrialize in ways acceptable to Franceacceptable to France

ECSC (1951) brings France, Germany, Italy & Benelux ECSC (1951) brings France, Germany, Italy & Benelux together in a community to manage key resources: coal together in a community to manage key resources: coal and steeland steel• Governed by a high authority, with a representative Governed by a high authority, with a representative

assemblyassembly• wedge, intended to promote spillover to other sectors & wedge, intended to promote spillover to other sectors &

eventual European unityeventual European unity• forerunner of European Economic Community (EEC) & forerunner of European Economic Community (EEC) &

eventually, the EUeventually, the EUhttp://news.bbc.co.uk/2/shared/spl/hi/europe/02/euro_borders/html/9.stmhttp://news.bbc.co.uk/2/shared/spl/hi/europe/02/euro_borders/html/9.stm

The new Europe The new Europe US actively engagedUS actively engaged Governments actively involved in the Governments actively involved in the

management of their economiesmanagement of their economies With Marshall Plan Aid, currency reforms With Marshall Plan Aid, currency reforms

most European economies recovermost European economies recover• Steady economic growth through 1950sSteady economic growth through 1950s• By late 1950s, 1960s many countries By late 1950s, 1960s many countries

approaching full employmentapproaching full employment• Older conflicts ease – cf. class tensions, Older conflicts ease – cf. class tensions,

religious divisionsreligious divisions Cold war imposes political stability in both Cold war imposes political stability in both

east and westeast and west

Interplay between domestic and Interplay between domestic and international politicsinternational politics

Western Europe enmeshed in overlapping Western Europe enmeshed in overlapping international organizations:international organizations:

OEEC (later OECD)OEEC (later OECD) ECSC (later EEC, then EC, EU)ECSC (later EEC, then EC, EU)

• European Free Trade Association (EFTA)European Free Trade Association (EFTA) NATONATO

• Western European UnionWestern European Union Council of EuropeCouncil of Europe

http://geology.com/world/europe-physical-map.shtmlhttp://geology.com/world/europe-physical-map.shtml

International sideInternational side

Britain & France, Netherlands shed Britain & France, Netherlands shed colonies – not always willinglycolonies – not always willingly

Britain & France try to carve out Britain & France try to carve out international rolesinternational roles• UK via special relationship with the United UK via special relationship with the United

States States Has its own bombHas its own bomb

• France, via independent France, via independent force du frappeforce du frappe (after (after 1958)1958)

European countries European countries policy-takerspolicy-takers rather rather than than policy-makerspolicy-makers