Notes: The Marshall Plan by Benn Steil

This entry is part 5 of 6 in the series Book Notes

I read this next book, The Marshall Plan: Dawn of the Cold War, by Benn Steil, in an attempt to take the idea of a “Marshall Plan for post-Covid recovery” seriously.

I’m glad I did because I apparently had an entirely misguided understanding of what the plan was, the context in which it was undertaken, how it worked, and how well it worked.

In the decades since the OG plan arguably saved postwar Europe from collapse, the idea of a “Marshall Plan for X” has become something of a cliche in policy circles, and an event like the Covid19 pandemic is perhaps the most tempting sort of binding for X. I myself tweeted on March 28 that maybe we should shoot for a “bottom-up OODA Marshall Plan” sometime in March.

Now, having read the book, I have to say, the Marshall Plan is perhaps not the best precedent to look at for today’s needs, even though there are elements worth learning from, mostly in the what not to do department. If there are lessons here for post-Covid, they are not the obvious ones.Here is the original thread. On to the notes.

Next pandemic live read. The Marshall Plan: Dawn of the Cold War by Benn Steil

Story starts with FDR’s vision for One World post WW2 dying with him, and Stalin playing along with new orgs like the IMF and UN to ensure they’d be set up not to interfere with USSR. He hopes to dominate a weak postwar Western Europe. But Truman has other plans.

George Marshall as Secretary of State leads the plan. Stalin hates it because he can’t veto it and it aims to create a strong Western Europe. Stage is set.

“…given the enduring passion for creating “new Marshall Plsns” to solve the worlds problems, the story of the old, original one is,I believe, well worth telling.”

Amen. Let’s go.

This book feels contemporary in a way pre-WW2 books don’t. Discussion of how Stalin reneged on promises at Yalta, pissing off FDR and then Truman.

Wow. For every dead American in WW2, 13 Germans died and 70 Russians.

Apparently Marshall Plan was the alt to the plan Stalin wanted and FDR was willing to accept, the Morganthau Plan, to leave Germany de-industrialized and pastoralized. The decision to rebuild a strong Germany messed up Stalin’s plans and started Cold War

Off on bunny trail to refresh memory about Bretton Woods, which created the Marshall Plan OS of IMF, IDRB, dollar-and-gold standard, etc. Somehow I’d forgotten that this happened while WW2 was still on.

Soviets say no to Bretton Woods, leading to 3 inaugural markers of Cold War: Stalin address at Bolshoi theater on Feb 9, 1946, George Kennan long telegram 2 weeks later, Churchill Iron Curtain speech s2 weeks after that.

The OS is not enough since it is predicated on political stability, so Truman admin kinda sidelines it to do a much more proactive Western Europe rebuilding predicated on a Cold War with Soviet Union. So Marshall Plan is the big initial strategic piece of the Truman doctrine.

Funny how this does not feel like history but living reality. Partly because I was alive and old enough to pay attention for the end of the Cold War, and partly because consequences are still unfolding.

Didn’t realize the extent of postwar civil conflict in Europe after 1945. 100s of thousands killed in reprisal for collaboration, lots of political purging. Big population movements especially German minorities. Coming on the heels of 35m civilian dead it must have seemed small.

There’s a blind spot in my sense of this history between the end of the war and true Cold War events like the Berlin airlift. The 3 years 1945-48 must have been crazy.

“All told, Stalin and Hitler forcibly displaced some 30m people between 1941-43” … and vast numbers “sent home” to horrible fates after the war. 40% of German housing destroyed. This was one huge messy cleanup job. We rarely hear about the postwar era.

People had learned during the war that patriotic duty meant lying, cheating, and black marketeering during the war so couldn’t get back to lawful behavior after easily. Not that they could, since the economy was a shambles. By inflation etc.

Dean Acheson and George Kennan both saw it all coming as the war would down. Without a serious rebuilding by America, Europe would have turned into a long-term disaster area. World War 3 would have started from the nascent continental civil war.

Gotta admire the American idealism that drove a rebuilding in the face of Stalin’s desire to keep the region weak, basically accepting the war effects as a strategic gift.

Gotta remember: “don’t rebuild” is always a major viewpoint after every tragic disaster. Including Covid.

Interesting. Apparently Truman loved maps and frequented the map room at the White House (paper and pins era… I imagine it was large screen monitors by Obama time and is now sold to Kodak for $3.50).

He apparently had autodidact mastery of the maps and history.

1947. Britain retreating from Empire and abandoning obligations to Turkey and Greece provokes Stalin ambitions for expansion. The US scrambled into a response. Truman is a map hawk. Kennan is a grand strategy guy. Dean Acheson seems like an operator. What will they do?

Already a big learning just 3% into book. The Marshall plan was about containing Stalin first, filling vacuum of retreating Britain second.

Altruistic-idealist reconstruction of Europe was a distant third reason. I thought it was the first.

Acheson thought Stalin would take over Greece and Turkey to cut off East from West, then advance into Asia to take over India and then China. Surreal how much colonial spheres were still seen as NPCs rather than agents. Not wrong. It took another 30 years for them to agentify.

FDR treasury apparently put a lot of pressure on Britain to unravel its empire financially (through Bretton Woods I guess) while supporting it in WW2. I guess he was indirectly a factor in decolonization 🤔

Kennan was a Russophile but hated soviet leadership. Melancholic intellectual who preferred Russian culture. His boss Ambassador Harriman thought he understood Russia but not the US.

Heh Kennan effectively memed the US into the Cold War with the Long Telegram, the first viral documented blog post in history.

Interesting. The US awakened into awareness of itself as a political superpower relatively late but quickly over just about 15 weeks in early 1947 when both the Truman Doctrine and Marshall Plan came together, precipitated by the Greece/Turkey crisis caused by British withdrawal.

Britain went bankrupt as an empire really quickly in 1947 via financial crisis, and the US got sucked into the power vacuum. I’d like to read the view of this period from the Kremlin perspective. Wtf were they thinking. Did Kennan read them right?

“FDR had been too forthright in highlighting the evils of empire for his accidental successor to appear to be creating one.”

Fascinating. Marshall plan and NATO in part grew out of a sense that the UNRRA which existed 1943-47 was being used by hostile countries to take advantage of the US which provided the bulk of the funding. Ironic given similar charges by Trump against NATO.

So Truman speech to Congress kinda finessed an empire into existence.

‘In dealing with Congress, in Acheson’s view it was sometimes necessary to make arguments “clearer than the truth”’ 😂

OG alt facts?

“Cartohypnosis” apparently shaped mid-century geopolitics. Guy named Halford Mackinder was apparently considered father of geopolitics and suffered from cartohypnosis as did apparently everybody back then. The falling dominoes type metaphor started then.

Hmm. Both the pro-Soviet left and isolationist right favored acting through the UN over Truman’s direct intervention approach to Greece and Turkey.

The US made the mistake of “conflating an ally’s failings (Britain’s) with an opponent’s strategy.”

Stalin did not care about Greece and Turkey and was focused on Germany. He in fact stuck to 1944 spheres of influence agreements with Churchill.

New character enters story: William Lockhart Clayton. UN skeptic and firmly anti-Soviet.

Clayton was Southern businessman/free trader “King Cotton” turned political appointee running war stuff under FDR and Truman who wrote influential memo arguing that UN and IBRD wouldn’t work, and aid had to be linked to political reforms favoring US.

I’m impressed with bipartisanship that seemed to be the norm, and relatively individualist political stances. These people also wrote a lot of memos and things and actively worked with each other despite differences, much more than today.

Then again, all white males, so easier.

I didn’t realize the Marshall Plan was so much more about Cold War geopolitics than about humanitarianism. March 1947. Geopolitical stage set. Rationale crafted. Marshall’s headed to Moscow in a C-54. It’s not even a jet wtf. I suspect this B&W movie won’t end well.

Aside: Unlike premodern history with no AV material, 20th century history creates incongruous juxtapositions of textual and audiovisual memories. The people in this book are a lot smarter and more modern than their campy avatars in 16-18fps b&w footage and tinny radio broadcasts.

And damn, they had nukes and did more moving and shaking than Davos set, but they used paper communications, wore silly hats, and rode around in primitive vehicles barely a generation removed from horse-drawn carriages. And flew in antique death-trap propeller airplanes.

Yet in text they come across as people you might deal with comfortably as contemporaries today. Basically modern despite funny accents and no WiFi.

Which societal memory is more accurate? Textual or AV?

Marshall had a BATNA in negotiations with Molotov: unilateral disengagement from the fragile Potsdam talks which proved impossible to implement. The impasse was Soviets wanted capped and weakened Germany being milked for reparations and the US wanted Germany self-sufficient first.

Reparations-first logic would have made Germany a pass-through entity for American aid as reparations to allies, which would have repeated WW1 mistakes. But Potsdam called for a unified economic plan. So breakdown into East and West was inevitable. 

But pass-through grift aside, intentions were different. The West wanted an economically strong unified Germany though France had doubts. The Soviets wanted a weak unified Germany. Subsistence level with all surpluses going towards reparations. 

There’s a lesson here on reparations in general. The economic math doesn’t work even if the moral math does. The Soviets wanted essentially a kind of indefinite reparations-debt slavery Germany would never have exited. Moral debts of the past cannot be repaid with future bondage. 

Unclear what the answer to the blood money question is, but it isn’t reparations. That’s just vendetta math with a moral UX overlaid. It can never end. 

This setup to the partition of Germany in 1946 is giving me 4d chess headache. Trying to balance reparations, trade deficits, imports, rebuilding, economic integration but with political weakness, with US aid balancing the equation. That’s even before getting to doctrinal diffs. 

This problem goes back to Napoleonic wars. Keeping Germany economically strong enough to pay reparations but politically weak enough to not be a threat and under the control of competing adversaries. The US was a new boundary condition of aid that kinda eventually solved it. 

It’s a bit painful to read this intricate play-by-play since with 20/20 hindsight, partition of Germany, the wall etc seem inevitable. But it was not a death march. All parties were vying for other outcomes. Stalin was playing for all of Germany. Nobody wanted a 43-year impasse. 

Interesting, 40% of German housing stock was destroyed in the war but 80% of the industrial capacity survived and there were more machine tools after the war than before, most new. Dumb bombing, but lucky for after. That’s why it was a prize worth playing for.

This whole thing seems bizarre now. They were trying to do hopelessly ill-posed Potsdam math and kinda finesse the cost of the war so nobody had to foot the bill. Still our own era has its own funny math. 

6 futile weeks in Moscow with irreconcilable differences that only became really clear towards the end. Strong or weak Germany?

Stalin proposed a plebiscite. Anyone who ever proposes a plebiscite has a plan to manipulate it. Stalin had done it in Poland already. FDR let him. 

Marshall concludes that Stalin was negotiating in bad faith and intended to let the German situation fester unresolved and recovery stall. Returns to US intending to announce the unilateral plan. Receives the v0.1 Frankenplan, this SWNCC committee report

Many Covid reboot plans look like this 😬

Sidebar: a lot of the logic of the Marshall plan was selfish, focus on boosting aggregate European demand for American exports which faced a sharp slump if Europe didn’t recover. The plan was basically a Keynesian fiscal stimulus. Goals for the Marshall plan were, in order:

1. Prevent communism spread
2. Prevent humanitarian crisis
3. Stop threat to American economy

These elements were there in frankenplan. Just missing the blueprint for how. Marshall appoints Kennan to head up the new Policy Planning Staff. He has to come up with a plan in 2 weeks.

Moral of the story: if you rewrite a Long Telegram heralding a Cold War, you’ll get stuck with the thankless job of planning it. 

Intermission with some history on US economic interventionism around the world starting around turn of the century. Free traders ruled and protectionists were on the retreat through the 20s and 30s. Motives for Marshall plan weren’t that different from banana republic policies. 

It’s easy to forget just how international American businesses became after the civil war. The US might have been politically meek and reluctant until WW2 but not economically. Isolationism in geopolitics and connectionism in economics. Germany policy design was a microcosm. 

‘[Morganthau and White] had, [Acheson] lamented, “envisage[d] a victory [in war] where both enemies and allies were prostrate — enemies by military action, allies by bankruptcy”

A dark view of the US participation in WW2: That the US did bail out Europe but at a price. 

Shades of Chinese belt-and-road initiative. If a rising superpower is both materially supporting you and underwriting your financial capacity to pay for that support, it looks like a free lunch but you’re signing away freedom. Europe wrt US in 1940 = Africa in 2020 wrt China.

Peeking ahead, post-war European reconstruction and return to prosperity *could* be viewed as a deal with the US devil, with the cost being becoming a US protectorate. Truman doctrine was an imperial boundary as much as a containment boundary. 

Luckily the Marshall Plan was enlightened enough to at least aim at win-win unlike the Morganthau plan which was cartoon villainish. FDR was accused in 1934 of finding “the only Jew in the world who doesn’t know a thing about money”

Henry Morganthau (wikmedia commons)

Wonder if being Jewish made Morgenthau an extremist in wanting to impose a “hard peace” on Germany. Hitler and the Nazis are curiously missing in this whole discussion. I guess the economists wanted to forget that and move on. 

It’s clear that after Yalta it was already US vs USSR. The last phase of WW2 was about laying out the cold war positions, and cleaning up the Nazis was just a minor loose end. I knew this already but book makes it clear the extreme degree to which that was true. 

The last 3 months after Yalta must have been surreal. Feb- 11 – May 8 1945, the world was still focused on Nazis but powers-that-be were already continuing the infinite game. The mop-up really was a minor detail. 

Something similar might happen with Covid. Post-Covid world configuration will be worked out somewhere when the end is in sight but the war is not yet won.

Big lesson right now is: Trumpism is more Morganthau than Marshall 😬

Bidenism might be too. And Xi = Stalin role?


By the time Kennan turned his long telegram into an article, he’d shifted from a perimeter containment to a strong-point defense model that demanded much lower economic burden. Congress was suspicious Soviets would drain the US economy through entanglements all along perimeter. 

Military shrank from 83B in 1945 to 42.7 in 1947 to 12.8B in 1947. Armed forced went from 12m to 1.6m personnel. Army secretary wanted 20% more budget if economic aid was voted down.

The plan had to be an economic one. Literal butter over guns choice.

Truman and his Republican senate ally Vandenberg were both born in 1884. Freaks me out how such modern events were shaped by people born just before industrial modernity. Electricity was new in 1884. Airplanes didn’t exist. Humans hunted mammoths.

Arthur Vandenberg (wikimedia commons)

Kennan begins drafting PPS/1: Policy Planning Staff paper 1. Stark contrast to messy committee output of SWNCC. Lays out clear framework instead of wishful thinking muddle.

Key doctrinal points:

  • No requirement to trade with Eastern Europe
  • Grants, not loans (contra Morganthau, lend-lease, IMF)
  • Anti-Soviet strings attached
  • (W) Germany to be made strong; France would have to deal
  • (W) Europe to be integrated; UK would have to deal

Western Europe was clearly an American creation. Stalin may have created the Iron Curtain but the US created the difference across it very deliberately.

Will Clayton returns from Europe with a sense of urgency over Europe on the brink of economic collapse. He’s aligned with Kennan mostly but wants a more assertive US role, not merely financial and advisory.

As befits a free trader capitalist, he wants proper reconstruction of corporatized, nationalized economies along more laissez-faire lines. Free market via command actions to dismantle command economies. 

‘In Acheson’s words, Clayton wanted the plan merely to “appear to come” from Europe…The United States, he said, “must run this show.”

Kennan/Clayton = good cop/bad cop.

Acheson = ADA

Marshall = DA There was basically bipartisan drive towards a “United States of Europe.”

Besides Clayton, others like Dulles, Truman, Vandenburg (formerly an isolationist) all got behind it.

The EU was the result of the US intentionally reshaping Europe in its own image.

Kennan final PPS/1 navigates a subtle shift away from communism as cause of problems and focus of plan to core economic/cultural issues, with communism as an opportunistic infection of weakened state.

And thus did Truman doctrine finesse Marshall plan into existence.

Okay, Kennan has laid out doctrine and strategic logic. Clayton has defined required posture of command.

But who’s going to work out the execution model? 🤔 

Enter new actor who will apparently work out the execution logic of the plan: Lucius Dubignon Clay, guy who has already made an appearance on the Berlin tactical chessboard and will soon mastermind the Berlin airlift.

Now shit’s getting real.

Lucius Dubignon Clay (wikimedia commons)

Clay was son of a 3-time senator, but chose to go into the military. Star student but with conduct problems. Liked authoritah. Cartman, but straight-As type. Rose through logistics and engineering hierarchy without seeing combat until he was running Berlin by… my age right now. 

Clay’s orders were to run Berlin by the punitive/vindictive Morganthau Plan, which was both impossible in a devastated economy and something he didn’t want to do. So he used “disease and unrest” appropriations to run the show in more humane ways, thwarting the plan’s intent. 

“There is no choice between becoming a communist at 1500 calories and a believer in democracy at 1000” — Clay in a 1946 cable to Washington. 

JCS 1067, the original occupation directive. Replaced by JCS 1779 which I can’t find online.

Clay blamed the French more than the Russians for the recovery quagmire, and thought Kennan was a dangerously dogmatic theory guy. Interesting tension there since he himself was on the theory side of the military in a way (didn’t get to see combat despite trying).

Marshall unveils plan in a carefully drafted commencement speech at Harvard, centering humanitarian aid and inviting Europe to make an opt-in cooperative request for US aid. Language designed to nominally allow the Soviets to join but really intended to smoke out true intentions.

Truman didn’t see even the draft of the speech. He stayed arms length away and called it the Marshall Plan rather than the Truman Plan so Republicans could comfortably vote for it.

Stalin surprised by the move. He still thought cooperation his terms was possible and that his stalling and delaying tactics via Molotov were working. The Marshall-Stalin negotiations almost look like management-labor negotiations. He didn’t think the US had a BATNA. He was wrong.

Kremlin correctly guesses the intent to keep the Soviets out and blame them for the schism. Decides to try to join the Plan to scuttle it from the inside, which appears to have been a Stalin gambit. Molotov joins talks and signals rest of nascent eastern bloc to do so too.

Interesting that just as the US had a tradition of Kremlinology starting with Kennan, the Soviets had a tradition of Beltwayology trying to analyze US thinking. The two sides of the Cold War did understand each other.

The Soviet view of the US as imposing economic imperialism to control Europe is not wrong. Marshall’s crew sought to do exactly that. The plan was nominally European in origin but the content was dictated by the US.

“You set the valuation I’ll make the term sheet” basically. 

The Soviets fundamentally underestimated American economic strength. They thought the US would be forced to deal to save itself from an economic crisis caused by loss of trade. They didn’t realize the US had already written Eastern Europe out of the economic calculations. 

The US needed an economically strong Germany to rebuild Europe and restart the world economy to serve American business interests, but not so badly that they’d compromise with the Soviets over it.

The Soviets really did drink their own kool-aid. Their negotiating stance was based on the assumption that America was on the verge of economic collapse due to loss of export markets. Because of course capitalism was destined to collapse any day now as foretold by doctrine.

Stalin was supposedly the greatest strategic negotiator of his time. Molotov was a master of stalling and other tactics. Yet doctrine compromised them.

If the US used dollar diplomacy to force a unified economic zone in the west, and suppress bilateralism, the Soviets used bilateralism in the East to sort of divide and conquer their zone. The description reads like a tyrannical pater familias ruling brood by 1:1 intimidation.

It’s interesting that labor leaders in UK and France reluctantly went along with the US despite communist sympathies. Stalin lost much of the ideological goodwill that Russia had earned from the global communist movement in previous decades.

The Soviets wanted a unified Germany to milk for reparations (maximizing their share) to build their own empire, and a fragmented Europe. The US wanted a unified Western Europe and a fractured Germany, to force an economic schism, because it had kinda ceded the East already.

Soviets bluffed thinking the US could be dragged into a long negotiation slide into a compromise that they could dominate. The US called the bluff and triggered the schism the Soviets were using as a threat. This feels familiar. Putin’s geopolitics are also “drag from weakness” 

The US does not come off looking too good here, but there was a core of generosity and goodwill behind the dollar authoritarianism. The Soviets though were fundamentally acting out of self-interest and bad faith and assumed the US was too.

There’s a sense of “it’s okay to lie and cheat in dealings with evil capitalists” to their whole posture.

We’re now at the breakdown point. Stalin has received spy intel that confirms US motives and he orders Molotov to back out of Marshall Plan talks.

Molotov walks out of talks, accusing the U.K. and France of letting the US but it’s way into interfering in Europe, for its own economic self-interest. Not wrong but a half-truth that revealed the central failure of communist imagination to understand nonzero sum capitalist logic.

“Bevin did a superb job of getting Molotov out of Paris. He had the — by careful maneuvering… [He] had the courage to invite him and the bluntness to get rid of him.” — Truman commerce secretary W. A. Harriman on Ernest Bevin, British foreign minister

Ernest Bevin (wikimedia commons)

Looks like Bevin’s tactics relied on Kennan’s insight into how to goad Stalin into causing the schism when they could have stayed and done more damage.

Acheson exits government to return to law practice. Robert Lovett takes over as driver of Marshall Plan

Robert Lovett (wikimedia commons)

Soviets try a last gambit on July 5, 6th, cabling satellites to attend plan launch but vote against it and walk out, to undermine launch. But then reverse course on July 7, not trusting the satellites, especially Czechoslovakia, to run the play. So July 7th is real Cold War start.

Marshall has already committed to the schism mentally on April 15, so Stalin took nearly 3 months to catch on. Crucial slip that led to Soviets being successfully cast as the cause of the schism and interested in chaos over reconstruction. Which was not wrong.

It’s amazing to think that in 1947 Soviets genuinely believed Western capitalism would collapse under its internal contradictions and prepared Soviet Inion would step into vacuum via the communist parties they were sponsoring ideologically throughout the west.

The McCarthy era paranoia makes more sense now even if no more justifiable. The Soviets really were a grim specter of an alternative history/future looming over the imagination of the West. “The idea of European integration as a Trojan horse for German hegemony would become a staple of communist diplomatic doctrine.”

“German rehabilitation wrongly given priority over assistance to its victims”

Again not wrong… it’s what did happen…but failure of imagination.

Understood in the light of their best ideals rather than their worst hypocrisies, this was a contest of nonzerosum imagination+wealth motives vs zero-sum geopolitical justice motives.

Soviets lost because they backed the worse idea, not by being geopolitically outmaneuvered.

Czechoslovakia makes a weak bid to join Marshall Plan, but is firmly reined in by Stalin.

“I went to Moscow as the foreign minister of an independent sovereign state. I returned as a lackey of the Soviet government” — Jan Masaryk.

Jan Masaryk (wikimedia commons)

Soviet bloc out. 16 nations meet to hash out the coordinated aid request to the US. Now France is the main bottleneck, wanting to keep Germany weak. The West had the same suspicions of US intentions as the Soviets. They were just even more suspicious of Soviets.

Bunch of committees to pull the proposal together in 6 weeks. This description reads like a major NSF or DARPA grant proposal coming together across a bunch of universities. The trick is to pitch what the US government wants you to pitch. Figure it out via backchannels.

This bit is a headache-inducing account of the intricate maneuvering to get France face-saving concessions while protecting German recovery. Ruhr kinda internationalized to give France some control over European steel, in return for stopping obstruction elsewhere.

The sausage making is ugly and I can’t keep all the names and positions straight. Basically some economic efficiency in recovery was sacrificed to assuage French demands. Some reasonable, others not. There are no saints here but degrees of original sin in rebirth of Europe.

Interesting tricky problem was rationalizing trade payments. All the countries lacked gold and dollars. Wild inflation everywhere. Belgium had a big trade surplus due to being liberated first, and getting production back on, and wanted to keep that. Others said screw you. 

Basically the precondition of American aid was continent-wide recovery coordination. Which required stable currencies and convertibility. Which required a completed recovery. Chicken-egg. Solved via payments union and trade quotas. Command economy it till you get to free market.

European currencies remained inconvertible till 1958 🤯

So it took 13 years for WW2 destabilization effects to be surgically stabilized with a command economy before free-float trade was possible again.

How long for Covid destabilizations?

Scheme required each country to fill out very detailed questionnaires on economic production. They mostly just made it up. The US thought they’d police each other’s accuracy. Instead they colluded in don’t-ask-don’t-tell mutual obfuscation. Including Americans running Germany. 

Weird how we think of Cold War as capitalist west vs command economy East. But there was no real capitalism for much of the period. Soviets had 5-year plans, Western Europe had Marshall Plan. The US had military-industrial complex. Real capitalism was in eclipse 1929-1989.

Still the plan was clearly to get off planning models. Will Clayton played Europe-whisperer nudging the discussions and proposal into the right shape via backchannel pressure and slight strong-arming of expressions of autonomy. Not Stalin-grade though. 

Clayton’s 3 requirements for a successful funding proposal:

  1. Explain why funding to date hadn’t fueled recovery
  2. A 3-4 year plan to fix this by production program
  3. A blueprint for a European economic federation

Plus yay/nay to features. Bilateral deals/tariffs under ITO logic bad. Customs union/free trade zones a la Benelux good.

This was an early version of the IMF/WB economic liberalization playbook of the 80s/90s clearly. Much less sophisticated and tied to Bretton-Woods spookiness.

The Europeans resisted mightily. Wanted to retain bilateralism, tariffs and quotas over multilateralism, free trade.

In a way Trump’s Europe actions have been about trying to dismantle all this. His is the anti-Marshall non-plan. 

It’s clear that the preference is almost entirely due to the greater opportunities for corporatist grift and cronyism in a 1:1 opaque bilateral world as opposed to an n:n transparent multilateral world. The US wanted to legibilize Europe. 

So things are moving. Marshall has a team in Europe cajoling statist Europeans to think modern industrial, and a team in DC crafting a “shovel-ready” plan.

Great phrase, I’m gonna steal it. My mansion plan is not yet shovel-ready. My telescope building plan otoh, is.

Lol, the Europeans consider angling for the $$ without strings attached by hiring an American PR firm to make a style-over-substance pitch. State department scuttles that. Can’t bullshit the greatest bullshitter nation. The US means to exercise real control.

This provokes a key question perhaps the book will answer: who was the principal, who was the agent in the end? Who suckered whom? Did the US buy cheap control of Europe? Or did Europe get cheap US aid with cosmetic concessions?

I think the answer will be “yes.”

Extremely complicated tactical mid-game going on. Amounts to Uncle Sam yelling “get jobs!” at 16-year-old kids while grudgingly allowing UBI. Kids trying to stay in their room demanding a higher allowance and avoiding getting a job. Sovereign laziness vs collective industriousness.

This book is fundamentally changing my view of what the Marshall Plan was. It was a UBI experiment for unemployed countries that didn’t like sharing, and hated their rich uncle who’d just bailed them out militarily.

Deal finally done, after eleventh hour accommodations of European constraints and lots of pretty words to create good optics for all. It was a face-saving packaging of a mess that was just good enough to get funding going.

The US relaxes its demands recognizing that a war-exhausted Europe did not have the political capacity to act with the kind of decisive boldness needed. So plan gets pointed roughly right and unleashed. A punt basically.

Elsewhere in parallel GATT happens. 23 nations. Unclear what the relationship to Marshall Plan was but same principals drove both. Clayton in particular.

And of course GATT became WTO which Trump regime is now trying to destroy.

Liberal international order that began with Marshall Plan and GATT is now under wrecking ball attack by the country that built it. Trump’s Real Trade War Is Being Waged on the WTO

For context: Trump wants to rewind global trade to pre-WWI pre-industrial state. Not in a historic sense but by reaching for a vague aesthetic of bilateral kiss-ass global loyaltynomics. Others like Navarro are compiling his garish tastes into actual reactionary wrecking plan.

Europe would not achieve the kind of free trade and economic integration envisioned by the plan till 1968.

But the Paris conference did expand minds to the possibility, and create a core group of political leaders interested in Europe as a whole and trust to pursue it.

Chapter concludes with a view from the Soviet side: a hostile Kremlin analysis of the plan as American imperialism. Now it has to get through Congress.

The truth of the plan was somewhere between view from American and Soviet optics, plus strong Hanlon’s razor. Chapter 7.

“On Sept 17, 1947, Andrei Vyshinsky delivered an angry ninety-two minute indictment of the Marshall Plan before the United Nations General Assembly”

He was the “star prosecutor of the late 1930s Moscow show trials”

Andrei Vyshinsky (wikimedia commons)

‘But what truly bothered the State Department, James Reston observed, was not…Russian charges…but the feeling that the United States was intervening “just enough to be blamed for it and not enough to be effective at it.”’

Stalin blindsided by unilateralism of Marshall plan. He expected to continue talks on Germany. Calls his own conference of communist parties under Zhdanov. Whips French and Italian communist parties into line but that costs them political cred at home

Andrei Zhdanov (wikimedia commons)

Zhdanov was apparently sort of the Soviet Kennan.

Must have been tough selling what was basically a recovery sabotage plan and revolutionary loyalty test as a meaningful response to the Marshall Plan. Communism was already a bankrupt idea by 1947.

Funny how the Soviets analyzed and critiques the US actions pretty much correctly, yet were unable to do anything with their narrative.

Moral: It’s not sufficient to hate-read between the lines of your opponents’ story correctly. You also have to tell a better story yourself.

The 22-23 September meeting was meant to launch Cominform, Moscow’s anti-Marshall-plan organization. I had no idea they did this thing.

Cominform (wikimedia commons)

The Soviets read the US so clearly partly because of spies, but also because they’d tried the same thing earlier with something called Comintern which led to Moscow being accused of interfering in other countries. Imperialist recognize imperialism

Comintern (wikimedia commons)

Stalin gives up on non-revolutionary methods and instructs communist parties in the West to destabilize the plan by any means, returning to ore-war revolutionary models. Tries to bring all in line. In the East, no more tolerance for non-communist coalition partners. Purity time.

Yugoslavia under Tito resists Stalin but he doesn’t invade because Soviets aren’t strong enough to directly provoke the US.

Kinda interesting that the ideologically pure, global superpower that became familiar later did not take shape till 1949, 30y after 1919.

Italy and France erupt into communist-backed unrest against Marshall Plan.

Damn I had no idea the Soviets instigated such direct resistance to the plan. I was under the impression it was an uncontested, peaceful aid drop.

The tactics set back recovery in both countries and turn sentiments against communists. Both countries swing right electorally in response.

…and this is why I’m a huge skeptic of the Bernie crowd. Strong rhymes here.

Communists and socialists have learned nothing in 70 years. 

1950 vs 2020

  • No Soviets but Putin trying same Stalinist tricks for same reasons
  • China belt-road-initiative looks more Marshall Plan than anything the US is doing
  • The US is larping 1830s Jacksonian version of itself
  • As usual under inequality stress West swings fascist Plot shifts to DC.

Truman now has to use Red Scare and threat of all Europe going communist if US aid doesn’t materialize before winter privations to persuade Congress.

Both parties are reluctant. Republicans more so. Narrative trotted out of Europeans just not working hard.

To recap: Truman doctrine and early aid to UK was explicitly anti-communist. Marshall Plan pulled punches and pretended to be about humanitarian aid. Stalin called bullshitbon that. Now it’s back to explicit anti-communism optics. This is how we get to NATO I guess.

1946 US loan to the UK appears to have been a big deal in this story. It forced £ convertibility to $ for UK war loans from colonies incl. India. Destroyed empire and led Marshall Plan to be more generous grants rather than loans. Finally paid off in 2006!

“Truman’s challenge was to convince many more Republicans [besides Vanderburg] that the Marshall Plan was the answer to communism, rather than being communism itself”

The plan smelled of FDR’s WPA to many Congress. Truman had to red-scarify it to sell it.

Birth of McCarthyism?

Holy crap. Between August – November 1947, >200 Congressmen went to tour Europe to get the facts first-hand. They went without wives or luxuries. Can’t imagine such diligence today. The Republicans came back convinced and converted. Herter committee.

‘This was a pleasant shock to the White House, which had been “afraid the traveling Congressmen would merely gather information to support their own prejudices.”’

Much impress. Working politics. So Amaze. 

“the great difficulty here is not so much the physical destruction of the war, but the fact that the communists have chosen this country as the scene of one of their most clever and well-financed operations against the forces of democracy.” — Nixon touring Italy as freshman 🤯 

This thing is like the Silmarrilon to today’s LOTR. The contours of everything are being laid down. Will Richard Gollum Nixon find the One Ring in a Capitol Hill bathroom while the Marshall Plan is being voted on?

Herter committee 883-page report basically lays out Red Scare case for the plan. On Vandenberg’s advice Truman appoints 3 bipartisan committees. Harriman being the big one. The reports fuel top secret Kremlin report on the plan.

William Harriman (wikimedia commons)

Richard Bissell, executive secretary to Harriman, pulled all-nighters to get the Harriman Report together in time. Later had CIA career running U2 program, Bay of Pigs, etc. Month after it was released 2/3 of Americans had heard of the plan and 56% approved of it. Damn!

Hard to remember a time when the US was willing to endure domestic hardship to help out the world. And this was before post-war boom. 1946 US economy was down 11%.

Though, it was explicitly fellow feeling for Europe at the time, not Peace Corps style global altruism

“…the nations by whose citizens our land was settled and in whose tradition our civilization is rooted.” — Henry Stimson Marshall Plan PR piece in foreign affairs.

There was a huge PR effort to sell the plan, including private and lobbying efforts. Brookings and CFR did their thing. Stimson’s article in FP became rallying flag. He became chair of the Marshall Plan committee.

AFL-CIO supported it, as did all business/trade associations. Christian leaders loved it. Everybody loved the plan.

There was grassroots efforts to encourage Americans to accept austerities. Women were encouraged to cook with leftovers (ugh 1950s jello dishes explained?) 

The South wants a Marshall Plan for the South. ASPCA wants one for animals. Who doesn’t like free money plans 😂 

Alright. To bed. We continue tomorrow.

Homework: design your own Covid Marshall plan. Use arduinos and 3d printers if possible. Link it to a China scare so we can sell it better.

Getting started early today since there’s a heat wave on in LA and don’t feel like doing much else.

Now at four-power meeting on Germany, in London, November 1947. Writing on the wall, the talks are dead on arrival. Everyone knows the West has already forked away from Potsdam. 

Talks fail as expected. Stage set for partition of Germany and unique problem of Berlin 120 miles east of border. As expected Soviets make moves to nullify the four-party control of the city following failure of the talks. This would be exciting if I didn’t already know ending.

Dizzying cast of characters moving across the stage and I’m not bothering to keep track.

Every big historical story has a unique set-piece short story within that’s strategic and critical but doesn’t rhyme with anything in other stories. Berlin is that for this story. 

Lots of speechifying. Everybody realizing that the Marshall Plan is not an alternative to re-armament or vice-versa, any more than Lend-Lease was an alternative to US militarization before WW2.

Will the Cold War be economic or military?

Why not both dot gif. 

WaPo, Nov 9, 1947: “If, as Bismarck says, history occurs when things happen, the last five months have teemed with history.”

August 1947 looms so large in the Indian imagination (Aug 15 was independence from Britain) that it’s a blindspot for me for world history elsewhere. 

‘The House of Reps, Reston observed, was now not just divided into parties, “but into whose who went [to Europe for visits] and those who stayed home.”‘

Cf: 2020, Congress reps who made earnest attempts to determine ground reality re: Covid, vs those who stayed Trumpie.

Lol, Henry Wallace, FDR’s last veep, leads charge from the Left, arguing against the plan and suggesting a 3x bigger $50B European New Deal to be administered by the UN. So the farcicalization of the New Deal happened within a decade of the original. GND is just the latest.

From the Right, Robert Taft trots out the same tired creating-dependency arguments and advocates cutting the plan budget. Free marketer Henry Hazlitt wants to halve the amount.

The derps of today go back to 1947 😬 

‘Today, a foreign “dollar shortage” and domestic inflation would be considered matters for monetary policy…They would not be subjects of presidential speeches…Inappropriate monetary policies in both the US and Europe were… making the problems worse.’

Hmm… really? 

I mean MMT, Chinese currency policies, petrodollars… Trump trying to trash talk the Fed. Have we really evolved significantly past Bretton-Woods? Terms differ, but I think very similar monetary/fiscal policies ARE subjects of presidential speeches.

522 million ($5.6B today) interim aid bill passes. Now fight over real bill amount and who will run it. Republican Congress does not want the State Dept. running it, so it’s going to be split between State and a special Council.

European conference wanted 29.2B over 4 years… 

…State talked them down to 19.3. Truman asks Congress for 17. Vandenberg wants to tranche it across the 4 years, which State hates since it means billion dollar appropriation bills every year. Finally, down to $6.8 for 15 months, and then down to 5.1B for 12 months.

In today’s money we’re talking about $311B being negotiated down to $53B, though I don’t like inflation adjusted comparisons across very different economic regimes.

But just as a comparison, the Family First coronavirus bill had a price tag of $192B.

Interesting sidebar on European public perceptions at the time. About 25% of Britain and France viewed the Marshall Plan as humanitarian (rest some mix of self-interest/communism containment… book doesn’t have details on the poll). Italy the rate was ~33% and for the Dutch, 10%.

Soviets alarmed at enthusiasm for Marshall Plan. Agitprop ramps up. DC worried about Soviet misinformation campaigns. Proposals arise for funding for VOA broadcasts, translations of American newspapers and ad space in European media. Bill passed in January for info war ops.

Communist walkover coup in Czechoslovakia, via takeover of police and threats of direct action. Jan Masaryk gets pushed to his death. Is any European history possible without somebody getting thrown out of a window in Prague? US regrets Patton stopping short of Prague in 1945.

Brits produce a secret Cominform doccalled “Protocol M” planning worker strikes in West Germany to undermine Marshall Plan. Marshall uses it in Congress as proof of threat. Soviets denounce it as a forgery. After the bill passes, Brits admit they faked it.

Well, finally at the passage of the bill chapter, after a detour through Czechoslovakia toppling. RIP unspellable country that lasted 1918-93. At least from a spelling perspective, Czech republic and Slovakia is an improvement.

Bill passes Senate finally in March. Now growing tension as Soviet posture grows more aggressive. Opinion forming that the Marshall Plan by itself would be futile without military build-up. France cajoled into joining bizonia, so now stage set for West Germany to form.

Stalin starts spiral that will turn into the Berlin siege, using various excuses of terror threats etc. Fatefully they leave air travel due to an air collision incident between a Russian fighter and a British civilian aircraft over Berlin, and perhaps not wanting more such.

House passes bill on March 31, incl. extra 900m for military aid to Greece and Turkey, and aid to China.

April 2, 1948, Economic Cooperation Act/Foreign Assistance Act passes both houses. April 3, Truman signs into law.

Part of rush was commie threat in April 18 Italy elections.

Italian communists get booed in election, support for US is high. Communists+socialists drop from 40% to 31% of seats. Pro-US coalition gets absolute majority. West gets Italy.

Wonder how world would be if Patton had detoured to Prague, but bill had been delayed, losing Italy.

Interesting. The US shared the plates for “occupation marks” with Soviets who promptly printed 8x as many as the US did, creating mini-inflation crisis. Luckily they were distinguishable by a dash in the serial number so the West could monetarily separate the two layer.

The siege of Berlin was as much about the Soviets trying to gain control of monetary system by killing free commerce as about anything else. They printed as much money as the Nazis did, but did not allow convertibility to roubles for their soldiers.

There was underground arbitrage: US soldiers would sell things like $4 watches to Russian soldiers for 10,000 marks, then redeem at official rate of 10:1 and clear a $996 profit. The mess cost US 6.75B in today’s money. Or 675m then? Much Catch-22.

West forks off the Deutschmark which Soviets ban in Berlin. Siege on by May 18. I had no idea this currency fork was such a big part of the story.

The Berlin Magistrat votes to restrict Soviet marks to East Berlin. Soviets bring in communist mobs to beat up those who voted for the West. Both sides introduce their own notes. Train turned back at border. This feels like a real version of the CHAZ/CHOP Seattle nonsense.

Aside: this kind of shit could easily happen in the US now. It would just be more sophisticated and involve muni bonds or something if feds and states/cities have breakdown.

Currency shenanigans are a big marker of systemic breakdown. See also Indian demonetization.

Russian commander Sokolovsky begins siege proper, moving divisions into position, cutting off electricity, putting up barrage balloons. On the American side, Lucius Clay begins the famous airlift. 480 flights a day landing by June, one every 3 minutes.

Vasily Sokolovsky (wikimedia commons)

Everyone ready for bedtime story? Alright so Clay Rabbit and Sokolovsky Rabbit are fighting over Berlin and have banned each other’s currency.

Deutschmarks are trading 1:4 against East marks. It’s a mess even without Softbank around to play games.

A lot of this story revolves around US-UK physical control of Ruhr. Everybody wanted a piece of that to feature in their story. France wanted it internationalized to use it to reindustrialize. Soviets wanted Germany intact so they’d have a claim on it. Reparations golden goose.

The occupation of the Ruhr by France and Belgium after WW1 for reparations defaults was part of what led to WW2. No matter how seemingly justified reparations are dumb. Eye for an eye logic. In WW2, the western allies fought a late battle to capture it.

Airlift continues as western parties fail to craft alt strategy.

Soviets continue to insist on Potsdam framework, quadripartite decision on Berlin and rejection of currency schism. City needs 1400 tons of food, 2000 tons of coal a day. West also blockades industrial exports.

A general feature of hostile geopolitics and international relations is rejecting all agreements except the most recent one that favors you. Since all treaties are made with imperfect info, if trust to perfect it breaks down you revert to last imperfect checkpoint.

Potsdam was obviously a mess of an agreement made in fog-of-war conditions. But it suited Soviets to entrench there. For US new equilibrium that allowed Marshall reconstruction over Morganthau pastoralization was better and control of Ruhr allowed them to unilaterally go there.

The treaties of international relations are like a series of really bad patches to a non-existent OS. They reflect the power balance and imperfect information of the last time the parties were temporarily not in conflict. Very Hobbesian.

Clay is hawkish. Soviets can’t afford to lose Berlin because Tito’s Yugoslavia has just defected from eastern bloc. West positions B-29s in UK as a nuclear bluff but don’t know Stalin knows it’s a bluff because they are not nuclear capable and his spy MacLean has told him.

Sidebar: I wanted to read this book since I thought it would be salient to post-Covid reconstruction. It is and isn’t. Marshall Plan was less reconstruction, more a retcon of WW2 endgame into Cold War opening and a NATO bootstrap.

But maybe Covid too is an inter-war thing too. 

If so, what was the World War leading up to Covid and what is the Cold War we’re segueing into?

“Europe reconstruction” = “climate”

The rest of the mapping is murky af.

Anyway back to the story. 

Failed attempt to resolve impasse as western ambassadors meet Stalin. Both sides misread other. West Germany is starting to recovery and heading towards forming a government in Bonn. Stalin is desperate to stop it. West is desperate because ground situation in Berlin is explosive.

The extent to which this is directly an economic regime mismatch coming to a head in a literal currency war leading to physical conflict 🤯

I hadn’t realized the extent to which the blockade and airlift were sideshows to a currency/economic conflict triggered by Marshall Plan.

This is Stalin’s last ditch attempt to stop West Germany from forming. He doesn’t have strong hopes of succeeding and is actually playing for full control of Berlin as consolation prize. But most Berliners hate the idea and desperate to stay with the West. Riots, etc.

Again parallels to post-Covid. Different plans will have different success rates, creating tectonic pressures at interface points. Where are Berlins of today, vulnerable to post-Covid economic schisms? We’ve already seen Blue governors/mayors vs Trump+Mitch fiscal battles.

Stalin is hoping airlift will collapse before winter and will demoralize Berliners so they cave to eastern control.

But West has a secret weapon: new airlift ops commander William Tunner who, wait for it, is going to Taylorize the shit out of this!

William H. Tunner (wikimedia commons)

Plane porn break. C-54 Skymaster Star of the airlift. When Tunner was done cleaning up the operation, they were flying 24×7 and bringing in more food and coal than trains before the blockade.

Back in US, Truman facing an election year, and facing criticism of warmongering from his progressive party opponent Henry Wallace, who is in Stalin’s pocket (shades of Jill Stein? 🤔) goes behind Marshall’s back to try sending his own unprepared emissary Fred Vinson to Stalin.

Sideshow at UN. Allies get a resolution out, Soviets veto it. Some tedious messiness around Argentina chairing the council under pressure from both sides. Moving on.

Truman wins re-election against Republican Dewey, in what’s seen as an upset.

Winter has arrived in Berlin.

Democrats now control both houses. Truman wants Vandenburg as Marshall’s replacement but he wants to stay a Republican senator. Acheson gets the job.

Berlin city council under its own competing elections in West and East. Communist goons trying to derail it. Planes still flying.

Despite eastern communists (SED) attempts to interfere and intimidate, Berlin elections are won by western SPD Social Democrats who form coalition council with minority CDU to be stronger vs Soviets.

End of 1948, 2B in Marshall Plan funding (20B today) has already flowed and production surpasses pre-war levels for the first time. 

Over in Europe, Marshall Plan boss Paul Hoffman bullies Europe into lowering trade barriers. Begrudgingly they play along and are dragged into modernity despite themselves. The UK is the most pissed off about it.

Another lesson for post-Covid. Berlin city election, not Truman re-election, is the one to learn from.

The bad guys are the ones a) trying to build a wall b) using armed forces to interfere in elections and intimidate voters.

Good thing Berlin didn’t have electoral college.

“Make no small plans, for they have no magic to stir the imagination of men.” — Paul Hoffman

Today’s OECD came out of Marshall a Plan era OEEC, the org Hoffman bullied into accepting the beginnings of a common market by 1950. Barriers down. Payments union up. Brits unhappy. Seeds of Brexit planted. Also seeds of shows like Yes, Prine Minister.

Stalin makes his own competing Eastern Bloc economic assistance plan, COMECON. With blackjack. And hookers. In fact, forget the economic assistance. It’ll just be Kremlin-directed Nazi-style bilateral barter. Hitler-Stalin economic horseshoe here.

COMECON evolved to extract for the Soviets not assist. They also carried away 2x in German war booty industrial equipment etc than was lost to bombing in the war.

Russia suffered mightily in the war, but it’s really hard to see anything even close to good in Stalinism.

Meanwhile, back on early 1949, Gresham’s Law is in effect in Berlin. and bad East marks are driving out good Deutschmarks. Everybody is trying to spend away East marks which is officially at par, and hoarding DMs. UN gives up hopeless currency mediation.

With much US arm-twisting, UK and France agree to simultaneously declare East marks no longer legal tender in their Berlin zones, on March 20, 5 days after UN effort is quietly buried by a pro-US Cuban chair.

Currency schism is done. And allied airlift has survived winter.

Shadowy negotiations begin to end Berlin standoff. Acheson emissary Jessup meets Stalin emissary Malik. Molotov out, Vyshinsky in. Marshall Plan triggers spy/propaganda game. Kennan shepherds early covert stuff. In UK, James Bond receives his 00 rating. George Smiley joins MI6.

Marshall Plan is up and running. Now Vandenberg clears the way for NATO by initiating legislation to allow for defense treaties and non-neutral peacetime posture for the US. He believes it was 1930s US neutrality laws that allowed Hitler to emerge.

May 12, 1949. Blockade over. Stalin fails to mess with Acheson via Jessup-Malik talks to stall the creation of the FRG. Kinda a whimper rather than a bang.

We’re now in the post-climax. May 23 final foreign ministers council ends in a farce and the allies basically prevail. Berlin under an economic detente. FRG and GDR formed. Aging Konrad Adenauer takes office in the west. The end of the beginning.

Kennan retreats from the stage, cut out of the last act. Gloomy and moody, ultimately resisting the natural outcomes of his own doctrines. In a way both he and Stalin saw the beginning of the Cold War as a chess game and both lost. Acheson won by treating it like tic-tac-toe.

What led to allies prevailing was simple economic success in the West. The Soviets could not bear economic cost of holding Berlin hostage. As in 2 world wars and the Civil War, what won the conflict for the US was economics. Kennan never really developed an intuition for that.

Kennan cuts an interesting tragic figure in this telling of the story. Object lesson for all intellectual descendants of kremlinology. It’s a futile nerd pastime beyond a point. Good for setting up the chessboard, but not for winning the tic-tac-toe game that follows.

This is why I have zero interest in red-string Trumpology. It just doesn’t matter past a very early point of diminishing returns. Like Stalin, he fancies himself a master negotiator 4d chess guy. In both cases the solution is to ignore and build actual value outside his domain.

Marshall Plan achieves 60% growth by 1952. Marshall eventually gets the Nobel. Total 14.3B in 1952 $ disbursed. UK 3.2B, France 2.7B, Italy 1.5B, FRG 1.4B. In today’s money, 10x, or about 130B. Or 800B as a fraction of GDP (1.1%). Not counting non-Marshall military aid.

Loooong wonky chapter on whether the Plan actually worked as advertised and eulogized, including views of revisionists like Alan Milward.

Conclusion: it was politically decisive at a unique and fragile time under unique destabilizing forces, but not economically the driver.

It is silly to view it as a pure economic intervention. It functioned to prime the pump of recovery and preserve capitalist economies under the shadow of belligerent Stalinism. It had mixed results in creating US style economics, but it bent the arc of history anti-communist.

All the European recipients reshaped it to their needs using local levers, but it avoided post WWI Dawes plan errors, and arrested the cycle of reparations bankrolled by US aid. And got Germany effect was historic.

Overall qualitatively priceless and historic.

That spherical-cow economists doubt it did anything suggests economics is mostly bullshit.

But the fact that it’s unique effects haven’t been replicated in plans inspired by it suggest its defenders misunderstand it too. It was a unique surgery not a general model. 

Whew done with final chapter on echoes of 1947-52 in 1989-2015. Not going to review in detail since it’s not about Marshall Plan per se.

But interesting commentary on why expansion of NATO and EU post-Soviet collapse made all the mistakes Marshall Plan painstakingly avoided.

The big lesson is that without acknowledging a historical Russian sphere of interest and thoughtlessly expanding NATO and EU with confused democratization goals pursued by a military alliance, is what has led to today.

Post-Communist weakened Russia has reverted to its historical mean: using Eastern Europe as a buffer to preserve a sense of security wrt to open land border with West that has been vulnerable since Napoleon.

NATO expansion under Clinton naively assumed democracy = peace.

There was no Marshall Plan style economic component from the US and the EU had no interest in such a role wrt Eastern Europe. Way to pay it forward EU.

Russia under Putin simply changed tactics to cyber and info war to keep NATO confined. Strategy proved wildly successful.

After Hungary, Ukraine, Kosovo etc, bang, he managed to Trumple over the US and own NATO. Props to the dude.

He went from burning documents in East Germany to clawing back the sphere of influence that Gorbachev and Yeltsin lost.

Total supervillain but at least a competent one.

Historical memory of delicate, context-sensitive surgery of 1948-52, informed by the careful kremlinology of Kennan (who foresaw problems of NATO expansion before he died in 2005 at 101) was lost in the US.

Clinton made the fateful errors, smooth-talking himself into delusion.

The book ends with a loooong cast of characters section, text of Marshall Plan and Truman Doctrine speeches, and tons of data and photos. This book really badly wants to be a rich hypertext book. 

So what did I learn of relevance to Post-Covid? I’m tempted to say “nothing.” We can’t try this in 2020.

We lack the statesmen/women capable of drawing the right lessons and using this as meaningful precedent for anything.

Post 1989 post-history suggests we learned nothing.

The Marshall Plan was a rare, lucky success among schemes of its sort. 

And even then, the loose ends and 1990s aftershocks it created scripted out present mess.

The Marshall Plan (intended) and NATO (unintended scope creep) eventually led, via a long causal chain, to Trumpism and even Covid response failure. A key cause can’t be a key to the cure. 

tldr of this live-read: If Covid-recovery needs a Marshall Plan style effort, we’re boned.

Seek inspiration elsewhere.

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About Venkatesh Rao

Venkat is the founder and editor-in-chief of ribbonfarm. Follow him on Twitter


  1. Since you are interested in time:

  2. Germany paid reparations to Israel and it seems to have worked out well, contrary to your argument. By the way, the entire Cold War was unnecessary and preventable. Stalin didn’t want to be in a Cold War. He had no desire or capacity to attack Western Europe, something that was revealed from internal documents he wrote. The CIA at the time knew this, but Western leaders wanted the Cold War, especially US leaders in ambitions for empire building.