The Marshall Plan: Contrary to Popular Opinion, Re-Industrialisation of Europe Was the Main Focus of the Marshall Plan, Using the Traditional Policy Toolbox, Including Heavy Protection of Manufacturing Industries

New African, April 2011 | Go to article overview

The Marshall Plan: Contrary to Popular Opinion, Re-Industrialisation of Europe Was the Main Focus of the Marshall Plan, Using the Traditional Policy Toolbox, Including Heavy Protection of Manufacturing Industries


THE MARSHALL PLAN WAS NOT A SIMPLE PROGRAMME for transferring massive sums of money to struggling countries, but an explicit--and eventually successful--attempt to reindustrialise Europe, say Erik Reinert and Ha-Joon Chang.

It follows that if Africa really wants economic prosperity, it should study and draw valuable lessons from the Marshall Plan's dark twin: the Morgenthau Plan implemented in Germany in 1945.

Reinert tells the story best: When it was clear that the Allies would win the Second World War, the question of what to do with Germany, which in three decades had precipitated two World Wars, reared its head. Henry Morgenthau Jr, the US secretary of the treasury from 1934 to 1945, formulated a plan to keep Germany from ever again threatening world peace.

Germany, he argued, had to be entirely deindustrialised and turned into an agricultural nation. (Africa, are we listening?) All industrial equipment was to be removed or destroyed, the mines were to be flooded with water or concrete. This programme was approved by the Allies during a meeting in Canada in late 1943, and was immediately implemented when Germany capitulated in 1945. During 1946 and 1947, however, it became clear that the Morgenthau Plan was causing serious economic problems in Germany: deindustrialisation caused agricultural productivity to plummet. This was indeed an interesting experiment.

The mechanisms of synergy between industry and agriculture, so key to Enlightenment economists, also worked in reverse: killing industry reduced the productivity of the agricultural sector. Many of those who had lost their jobs in industry returned to the farm, and the biblical mechanisms of diminishing returns became the dominating mechanisms in the economy.

[ILLUSTRATION OMITTED]

The former US president, Herbert Hoover, who at the time played the role or the old and wise statesman, was sent to Germany with orders to report to Washington what the problem was. His investigation took place in early 1947, and he wrote three reports. In the last, dated 18 March 1947, Hoover concluded: "There is the illusion that the New Germany left after the annexations can be reduced to a 'pastoral state'. It cannot be done unless we exterminate or move 25,000,000 out of it."

Observing the dark consequences of deindustrialisation, Hoover had reinvented the old mercantilist theory or population: an industrial state can feed and maintain a far larger population than an agricultural state occupying the same territory. …

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