Definition :

The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative passed in 1948 for foreign aid to Western Europe. The United States transferred over $12 billion (equivalent to $130 billion in 2019) in economic recovery programs to Western European economies after the end of World War II. Replacing an earlier proposal for a Morgenthau Plan, it operated for four years beginning on April 3, 1948. The goals of the United States were to rebuild war-torn regions, remove trade barriers, modernize industry, improve European prosperity, and prevent the spread of communism.The Marshall Plan required a reduction of interstate barriers, a dropping of many regulations, and encouraged an increase in productivity, as well as the adoption of modern business procedures.

Soviet Negotiation

After Marshall's appointment in January 1947, administration officials met with Soviet Foreign Minister Vyacheslav Molotov and others to press for an economically self-sufficient Germany, including a detailed accounting of the industrial plants, goods and infrastructure already removed by the Soviets in their occupied zone.

Molotov refrained from supplying accounts of Soviet assets. The Soviets took a punitive approach, pressing for a delay rather than an acceleration in economic rehabilitation, demanding unconditional fulfillment of all prior reparation claims, and pressing for progress toward nationwide socioeconomic transformation.

After six weeks of negotiations, Molotov rejected all of the American and British proposals. Molotov also rejected the counter-offer to scrap the British-American "Bizonia" and to include the Soviet zone within the newly constructed Germany.

Marshall was particularly discouraged after personally meeting with Stalin to explain that the United States could not possibly abandon its position on Germany, while Stalin expressed little interest in a solution to German economic problems.

Opinion :

It was not large enough to have significantly accelerated recovery by financing investment, aiding the reconstruction of damaged infrastructure, or easing commodity bottlenecks. We argue, however, that the Marshall Plan did play a major role in setting the stage for post-World War II Western Europe's rapid growth. The conditions attached to Marshall Plan aid pushed European political economy in a direction that left its post World War II "mixed economies" with more "market" and less "controls" in the mix.

* Domestic campaign for supportEdit

Prior to passing and enacting the Marshall Plan, President Truman and George Marshall started a domestic overhaul of public opinion from coast to coast. The purpose of this campaign was to sway public opinion in their direction and to inform the common person of what the Marshall Plan was and what the Plan would ultimately do. They spent months attempting to convince Americans that their cause was just and that they should embrace the higher taxes that would come in the foreseeable future.

A copious amount of propaganda ended up being highly effective in swaying public opinion towards supporting the Marshall Plan. During the nationwide campaign for support, "more than a million pieces of pro-Marshall Plan publications-booklets, leaflets, reprints, and fact sheets", were disseminated. Truman's and Marshall's efforts proved to be effective. A Gallup Poll taken between the months of July and December 1947 shows the percentage of Americans unaware of the Marshall Plan fell from 51% to 36% nationwide. By the time the Marshall Plan was ready to be implemented, there was a general consensus throughout the American public that this was the right policy for both America, and the countries who would be receiving aid.

* Change in American ideologyEdit

During the period leading up to World War II, Americans were highly isolationist, and many called The Marshall Plan a "milestone" for American ideology. By looking at polling data over time from pre-World War II to post-World War II, one would find that there was a change in public opinion in regards to ideology. Americans swapped their isolationist ideals for a much more global internationalist ideology after World War II.

* Polling dataEdit

In a National Opinion Research Center (NORC) poll taken in April 1945, a cross-section of Americans were asked, "If our government keeps on sending lendlease materials, which we may not get paid for, to friendly countries for about three years after the war, do you think this will mean more jobs or fewer jobs for most Americans, or won't it make any difference?" 75% said the same or more jobs; 10% said fewer.

Before proposing anything to Congress in 1947, the Truman administration made an elaborate effort to organize public opinion in favor of the Marshall Plan spending, reaching out to numerous national organizations representing business, labor, farmers, women, and other interest groups. Political scientist Ralph Levering points out that:

Mounting large public relations campaigns and supporting private groups such as the Citizens Committee for the Marshall Plan, the administration carefully built public and bipartisan Congressional support before bringing these measures to a vote.

Public opinion polls in 1947 consistently showed strong support for the Marshall plan among Americans. Furthermore, Gallup polls in England, France, and Italy showed favorable majorities over 60%.

Criticism :

Laissez-faire criticismEdit

Laissez-faire criticism of the Marshall Plan came from a number of economists. Wilhelm Röpke, who influenced German Minister for Economy Ludwig Erhard in his economic recovery program, believed recovery would be found in eliminating central planning and restoring a market economy in Europe, especially in those countries which had adopted more fascist and corporatist economic policies. Röpke criticized the Marshall Plan for forestalling the transition to the free market by subsidizing the current, failing systems. Erhard put Röpke's theory into practice and would later credit Röpke's influence for West Germany's preeminent success.

Henry Hazlitt criticized the Marshall Plan in his 1947 book Will Dollars Save the World?, arguing that economic recovery comes through savings, capital accumulation, and private enterprise, and not through large cash subsidies. Austrian School economist Ludwig von Mises criticized the Marshall Plan in 1951, believing that "the American subsidies make it possible for [Europe's] governments to conceal partially the disastrous effects of the various socialist measures they have adopted".Some critics and Congressmen at the time believed that America was giving too much aid to Europe. America had already given Europe $9 billion in other forms of help in previous years. The Marshall Plan gave another $13 billion, equivalent to about $100 billion in 2010 value.

Modern criticismEdit

However, its role in the rapid recovery has been debated. Most reject the idea that it alone miraculously revived Europe since the evidence shows that a general recovery was already underway. The Marshall Plan grants were provided at a rate that was not much higher in terms of flow than the previous UNRRA aid and represented less than 3% of the combined national income of the recipient countries between 1948 and 1951,^[7] which would mean an increase in GDP growth of only 0.3%. In addition, there is no correlation between the amount of aid received and the speed of recovery: both France and the United Kingdom received more aid, but West Germany recovered significantly faster.

Criticism of the Marshall Plan became prominent among historians of the revisionist school, such as Walter LaFeber, during the 1960s and 1970s. They argued that the plan was American economic imperialism and that it was an attempt to gain control over Western Europe just as the Soviets controlled Eastern Europe economically through the Comecon. In a review of West Germany's economy from 1945 to 1951, German analyst Werner Abelshauser concluded that "foreign aid was not crucial in starting the recovery or in keeping it going". The economic recoveries of France, Italy, and Belgium, Cowen argues, began a few months before the flow of US money. Belgium, the country that relied earliest and most heavily on free-market economic policies after its liberation in 1944, experienced swift recovery and avoided the severe housing and food shortages seen in the rest of continental Europe.