Importance of the Marshall Plan to Economic Recovery in Europe in the Postwar Era - Coursework Example

Introduction After the second world, war, Western Europe recorded one of the most astonishing economic recoveries in history. This was because the region moved from a period of turmoil and crisis during the war to booming economies afterwards. There were a number of occurrences that could have explained this rapid economic transition. Some people assert that it was as a result of the macroeconomic policies adopted by those respective countries. Others believe that the miracle was due to growing industries such as steel and coal. On the other hand others believe that international efforts played a significant role. The purpose of this essay is to examine how relevant the Marshall plan was to Western Europe’s economic recovery. History of the Marshall Plan The European continent had been devastated by the War. Most of them were battling with a series of issues. The continent was plagued with so many problems because the Second World War had been more expansive than the First World War. Industrial production was one of the key areas that had been affected by this war. This was largely as a result of the attack that nations had to face from aerial attacks. Some of the most developed cities in the continent urgently needed assistance. Berlin and London were such examples; also, there was an urgent need to look for mechanism of rebuilding other cities like Rotterdam that had been completely destroyed. (Bonds, 2000) Agricultural matters were also exerting a lot of pressure on members of the European continent. After the war, many people could not access food because agriculture had been destroyed. Infrastructure was also another problem owing to the fact that bridges, roads and rails had been air struck thus leading to their overall damage. Also, the war had used up much of the treasures that these European countries had placed in store. Consequently, there was a need to look for a system in which they could deal with some of these problems. It should also be noted that the Second World War had come after the First World War. This latter war led to a serious recession within the European continent. Also the US had played a large role in streamlining some of these problems prior to the Marshall Plan. For instance, it is on record that the US assisted Germany in paying its war reparation through a debt given to them. In the US States Department, Harry Truman became interested in luring very active foreign policy. However, the US Congress was not as enthusiastic as this leader was. In fact, at that time, the US Congress thought that Europe would look for their own solutions out of their economic crisis through the utilisation of their colonies. However, this was not to be. In fact, there were prolonged winters in the year 1947 such that the food situation become worse than it already was. The following concerns were prevalent on the continent at that time Low exports Low industrial production Poor agricultural policies These issues were so real in the lives of the Eastern Europeans. For instance, in the United Kingdom, the domestic demand for food was much higher than it could be sustained. In Germany, matters were even worse; homes lacked heating mechanisms and it became increasingly difficult for the population to feed itself. It had been reported that people in Germany were slowly dying. In Germany, trade was not going as it was supposed to because there were certain underlying problems. (Gimbel, 1976) These problems propelled the Truman administration to re-examine its foreign policy towards Germany and also towards the rest of the European continent. This was instrumental for both the economic well being of the United States and also out of humanitarian attachments. The Marshall Plan In the period between 1949 to 1951, a substantial amount of financial aid was poured into the European economy as a direct result of the Marshall Plan which had been drafted in the United States. These finances reached a tune of thirteen billion dollars at that time. The latter sum was labelled as the European Recovery program. The Marshall plan had been drafted and then approved by the United States Congress during the year 1948 under an Act known as the Economic Cooperation Act. It took the US a period of three months to implement this program after it had been approved. Thereafter, the Economic Recovery Program took a period of three years to be executed in the European continent. This means that payments were made to the latter region until 1951. (Burke, 2001) It should be noted that in the Economic recovery Program, the United States provided its assistance in the form of grants so as to avoid transference problems. Also, the Marshall plan came at a time when Europe was battling a number of economic problems that included; Food rationing Power shortage Coal problems Extreme weather conditions Given all the latter problems, the Truman administration opted to look for another initiative that would be more effective in curbing some of these problems. It should be noted that most of the other economic aids offered to Europe usually did not have any form of political connotations to them. However, the Marshall Plan was unique in that it did. In fact, some analysts assert that the reason behind the effectiveness of the Marshall Plan in dealing with Europe’s economic problems was that there were certain political connotations that were linked to these issues. (Wasser & Dolfman, 2005) There were a series of economic repercussions that were created by the Marshall Plan. First of all, it should be noted that the Marshall Plan did not bring about immediate entry of Europe into the International markets. In fact at the time of the implementation of the Marshall plan, Europe was in a lot of external debt. Consequently, they were facing difficulties in trying to cope with some of the problems being faced at that time. It should be noted that the Marshall Plan came in when Europe was faced with the dilemma of sealing this gap. Additionally, there were concerns about the process of trade liberalisation within the European continent. The Marshall Plan considered this as a very important part of their plan. Many experts have interpreted the effects of the Marshall Plan in a different light. However, there is no doubt that this was one of the most successful cases of US Intervention in international economies. Individuals agree that the Marshall Plan was a way in which Europe got a boost or a kick for sustaining their plans for economic recovery. In fact, a large percentage of historians and economists believe that were it not for this system, then the European continent would still be battling with a series of economic challenges. In this regard, the analysts claim that the Marshall Plan was instrumental in restoration of food supplies. Also, they assert that it was the push that was needed in getting rid of bottlenecks that were eminent in most European industries. According to them, this plan was helpful in the process of restoring what was inherently wrong with the European economy. However, the latter view is largely held by sympathisers of the Marshall Plan. (Vickers, 2000) Sceptics on the other hand have asserted that the Marshall Plan was not that important. Its major goal according to these opponents was that the United States wanted to exert some form of control in Europe. This group claims that the Marshall Plan was a pathway that the US used in order to overcome fears about their economic stagnation after the war. It should be noted that this perspective is largely held by Anti American Lobbyists. Most of them assert that the Marshall Plan was a method that the US would use to create better environments for their large businesses and that the European continent itself did not hugely benefit from it. The latter category of sceptics also believed that the Marshall Plan was responsible for fostering the political interests of the United States rather than solving the economic problems of the European continent. Also, this critics claim that most of the aid from the Marshall Plan did not reach the areas that needed it the most; i.e. the battle grounds. This group claims the US would only send aid to minimise communist threats in certain parts of the continent and also to get support from other countries such as France and England. While some of the assertions may hold some truth, one cannot ignore the overall benefits that came out of this plan. For instance, many experts believe that were it not for the Marshall Plan, then Europe’s industries would have been struggling adversely. For instance in West Germany, a large share of the economic recovery in that area was brought about by the economic aid from the Marshall Pan. At that time, there were no adequate levels of raw materials entering the country. Consequently, this external force was the push required to improve trading conditions in the country. It should also be noted that the largest percent of countries in Western Europe were operating under very tight economic laws. Consequently, an external party was just the right ingredient needed to get rid of the rigidities that many European countries had become accustomed to in their economies. It should be noted that economic assistance through the Marshall plan did not come without conditions. One of them was streamlining macro economic conditions in the recipient countries. As a result, the Marshall Plan was very instrumental in shaking up the overall system that had caused some of the problems that the European continent was dealing with at that time. (Kipping, 1998) Europe was undergoing a lot of problems in its economic realm owing to the fact that there were huge cartels in their systems. Before the Marshall Plan, Europe was characterised by an economic system in which many people were not encouraged to invest. Additionally, labour conditions at that time were highly strenuous for businesses. Consequently, thanks to the Marshall plan, it was now possible for the European Wage sector to be controlled especially in terms of the issue of collective bargaining. Also, this could have led to heightened investment in the economies and this propelled the economic recovery that was witnessed at that time. The Marshall plan was also instrumental in the process of reconstruction of Germany. At that time, Germany was faced with a series of issues that would have remained as they were if it was not for the economic intervention that came out of the Marshall Plan. At that time, Germany was still trying to deal with problems that had been brought about by the First World War. To add insult to injury, the second war also came with its own set of problems. Also, some other countries in the European continent did not wish Germany well. They felt that if Germany’s economy was to be rejuvenated beyond measure, then they would become a threat again to their neighbours. However, these fears did not undermine the problems that this country was being faced with at that moment. (Gimbel, 1976) It should also be noted that there were concerns about shifting certain industries from Germany to France. This was the issue that had been laid out in the Monnet Plan in France. Consequently, Germany was facing the danger of being kept on the periphery. Initially, the US had intended on going with these sentiments. The wanted to cut back on industrial activities within Germany and they also wanted to focus on agriculture and other lighter industries in Germany. However, with time, analysts came to believe that were it not for US intervention in the European economy, then Germany’s reconstruction would not have occurred. The Marshall Plan played a huge role in ensuring that German exports now began substituting those ones from the United States in the European continent. The United States had continued military presence in the European continent thus assuring all member states of their commitment. In fact, other analysts assert that the United States took part in some arm twisting in order to protect some of their ideals and policies. For instance, France depicted signs of lack of cooperation. However, thanks to the Marshall Plan, France had to stick to their end of the bargain. In other words, this Plan acted as a reminder of the commitment that European nations had made with the United States. These latter two parties were looking for ways in which they could come up with the most feasible method of tackling their economic institutions. They needed to look for an equilibrium state between themselves so as to ascertain that both interests were met. The following interests were being sought by the United States in the Marshall plan Implementation of free trade in Europe Economic reconstruction of Germany Standstill on reparations of Germany was divided The Marshall Plan was a method in which the United States would access better policies. On the other hand, it also created a scenario in the European continent that would facilitate a better economy through fair trade. Additionally, the Marshall Plan was particularly important in ensuring that West Germany was growing at the rate that it picked up during economic recovery. If the European nations had been left on their own to deal with these issues, then chances are that Germany would have been ignored. Additionally, the Marshall Plan was also important in ensuring that the reparations and war debts were not troubling the European continent by placing a freeze on them. (Vickers, 2000) All in all, it can be argued that the Marshall plan was a sort of coating or shell. It may be seen as a set of conditions but these conditions only form the outer shell. The largest chunk of the Marshall plan revolved around its political agenda. This agenda was centred on the fact that the US wanted to foster greater economic cooperation on this continent. Consequently, it can be said that through the intervention, commitment and transformations that the Marshall Plan brought to the European continent, this area’s economy received a huge boost. Thereafter, the Marshall plan played a very important role in creating one of the most dramatic economic changes in this Continent and in the world over. It should be noted here that there was already a recovery plan in the European continent for their economy. However, the Marshall plan was instrumental in propelling this plan into action. Conclusion The Marshall plan changed the economic situation in the European continent as result of freeing up trade policies within the continent. This created a situation in which trade could be conducted freely and this ended up boosting their economy. While the Marshall Plan may not have initiated the economic recovery it was important in propelling it and sustaining it through those long term macroeconomic changes. References Burke, W. (2001): US Foreign Policy and reconstruction of West Germany, Greenwood Publishers Wasser, S. & Dolfman, M. (2005): BLS and the Marshall Plan; Monthly labour review, 128, 5, 90 Vickers, R. (2000): State, power Labour and the Marshall Plan, Palgrave Publishers Kipping, M (1998): The Americanisation of European Business, Routledge Publishers Gimbel, J. (1976): The origins of the Marshall Plan; Stanford University Press Bonds, J. (2000): Selling the Marshall Plan, Bipartisan Strategy, Free Press Read More