The War Ends and The Golden Era of United States Foreign Policy Begins: Cold War 1

Harry Targ

 (This is a long essay but it is important as we celebrate VE Day that we understand the world of 1945 in all its complexities)

 

The United States Political Economy and the World in 1945

As World War II was ending, the prospects for the United States political economy appeared contradictory. On the one hand the U. S. economy grew dramatically because of the war while every other large power experienced extreme physical devastation from the bombs and bullets exploded on their home territories. 

U. S. industrial productivity increased by two and one-half times since the war began, exports grew by a factor of four, and for the first time the scientific and academic communities were drawn into a united government-led struggle to defeat fascism (Targ, 1986, 16-18).  The use of the human and material resources of the country, particularly research and development, led to the construction of the ultimate weapon, the atomic bomb, which gave military power of such magnitude to the U. S., that its leaders could singlehandedly make decisions to destroy the earth. In general, the changes in the United States economy were carried out with the willing participation of most of the American people, from wealthy capitalists to working people. In fact, the picture of the future looked so bright that, as early as 1941, Henry Luce the publisher of Time and Life magazines proclaimed that the twentieth century would be the "American Century."

Despite the enormous growth of the U.S. economy and the seeming dominance of its economic and military power, political and economic leaders expressed concern about the prospect of continuing on the same economic and political path after the war as had occurred during it. Increased industrial production and trade during the war resulted from radical increases in demand for products to fight the war. With war over, demand might decline, and economic stagnation could set in. For example, the air transport industry, so dependent upon war, might see government demand for planes decline precipitously.

Also, the war, which was the cause that brought competing groups in society together, would be over. Conflict between capital and labor might resume, since most of the issues that divided workers, and their bosses had not been solved. These included rising prices and low wages and corporate opposition to union recognition. These issues were put on hold for the duration of the war. In addition, millions of young men and women would be returning from the theaters of war expecting jobs and other opportunities. This could displace all those workers, men and women, whites and blacks, who had worked in the factories, mines, and fields during the war.

 In short, political and economic elites feared that the United States might  return to depression as the war ended. With the threat of radicalism and revolution from the 1930s still in peoples' minds, some leaders thought, the survival of the capitalist economic system, itself, might be jeopardized if domestic and foreign policies were not carefully constructed to save and enhance the dominance of U. S. capital. Protecting U. S. capitalism then became the central motivation and focus of attention of U.S. foreign policy makers in the post- World War II period much as it had been after other wars, such as the Civil War and World War I.  

 The Means of Production: Industry, Finance, and Technology

 The U. S. experienced an unparalleled economic spurt of growth because of World War II. The gross national product increased from $91 billion in 1939 to $220 billion in 1945. In just one sector, steel production increased by one-half. In 1947 the U. S. was responsible for one-third of all foreign trade in the world and by 1948 American corporations produced 41 % of all goods and services in the world . David Horowitz estimated that at the war's end three-quarters of the world's invested capital came from the United States as had two-thirds of the world's industrial capacity (Horowitz, 1971, 74).

 Even though the U.S. economy experienced declining growth rates in 1946 (a 20.6 percent real decline in the rate of growth of the GNP) and 1947 (1.5 % real decline) and stagnation in 1949 (a 0.4 % real growth rate), the development of U.S economic institutions and the government were unprecedented (Dollars and Sense, 1996, 126). Dowd (1977, 115) listed several features of the early post-World War II U.S. economy which shaped the destiny of the nation and the global political economy. He said that there was:

1.            a vast increase in both the absolute and the relative power of super corporations-within and between industries, sectors, and nations;

2.            an equally striking increase in both the quantitative and the qualitative role of the state at all functional and geographic levels;

3.            the strengthening and spread of "consumerism" in the U. S. and its replication in all the leading and lesser capitalist and non-capitalist economies.

4.            the reestablishment of a global capitalist empire, under the leadership and control of the U. S.

5.            the concomitant growth of a "military-industrial complex;"

 6.      an extraordinary accumulation of debt by persons, businesses, and governments.

 7.     and required and facilitated by all these changes, the extension and refinement of mass communications techniques for commercial and political exhortation and manipulation: the lubricant of global monopoly capitalism.

Another way to look at the shape of the U.S. political economy after World WarII is provided by the Smaller War Plants Corporation report presented to a special Senate Committee to Study Problems of American Small Business in 1946. This report emphasized that the U.S. economy as the war was ending was considerably more concentrated in fewer and fewer corporate hands than before the war.  For example, small firms with less than 500 employees accounted for 52 percent of total manufacturing employment in 1939 but only 38 percent in 1944. Big corporations, while representing only 2 percent of all manufacturing firms in the U.S., accounted for 62 percent of total employment. Firms with over 10,000 employees grew from 13 percent of total employment in 1939 to 31 percent in 1944.

 The report suggested that, because of the distribution of war contracts to the 100 or so largest corporations in the United States, the concentration resulting from the war was even greater than it was in the 1930s. In the thirties, the U.S. economy was controlled by small numbers of corporations. For example, before the war the 45 largest transportation companies controlled 92 percent of all transportation facilities in the country, 40 public utilities owned more than 80 percent of all public-utility facilities, the country's 20 largest banks held 27 percent of total loans and investments of all banks, 17 life-insurance companies had 81.5 percent of all assets of such companies, the 200 largest non-financial corporations owned about 55 percent of all the assets of all non-financial corporations, and, finally, one-tenth of one percent of all corporations owned 52 percent of all corporate assets in the country. Again, this was before World War II (Smaller War Plants Corporation, 1972, 170-171).

 Wartime defense contracts totaling $175 billion went to the largest corporations in America. Many of the facilities paid for by the government, i.e. taxpayers, remained in the hands of these corporations after the war. As a result wartime defense needs led to a dramatic escalation of corporate and financial concentration in the U.S. economy after the war. 802 corporations that listed on The Securities and Exchange Commission had increases in net working capital of 64 percent between 1939 and 1945. The Smaller War Plants Commission concluded with the prediction that 

 “Economic concentration will probably be higher in the postwar years than before the war as a result of: The production improvements and scientific research which big business gained during the war; the increase in the liquid funds and general financial strength of big business; the ability of big business to keep its name and trade-marks before the public eye during the war; and finally the fact that big business will probably acquire greater share of the war built facilities which it operated than will small business, regardless of whether economic conditions are prosperous or depressed” (Smaller War Plants Corporation, 1972, 177).

Along with the growth in the size of both manufacturing and financial corporations during the war, technological achievements spurred by the war contributed to U. S. global economic dominance. These advances included radar and other electronics discoveries, antibiotics, synthetic rubber, atomic power, computers, and a host of inventions spun off of modern weapons systems. Perhaps most critical for the future of U.S. capitalism was the integration of science (often through the university), government, and the corporate sector. The separate, and often conflictual, relationship between the scholarly and research community and the state and economy, was replaced by a collaboration that would make fighting the Cold War possible.   

 The Relations of Production

 By the beginning of the twentieth century there was a shift in the nature of work from farms to factories and from craft-based jobs to assembly-line mass production industries. The concept of "Fordism" referred to the modern mass production/ mass consumption economy that had its start with the Ford Motor Company after 1914.  It began with the mass-production of the low-cost Model T Ford automobile and the initiation of the $5 a day job for those that produced cars on speedy assembly lines. The economy after World War I was based on the production of masses of goods by workers to be consumed by workers.

The human resources for constructing a Fordist economy came from mass migrations of people from Europe, Asia, and later Latin America as well as the large movement of residents of the U. S. from the rural South to great urban areas. In these locales workers produced steel, cars, electronics products, and clothing. Also, cattle, pigs, and sheep were slaughtered. By the first decade of the twentieth century hundreds of thousands of workers were congregated in manufacturing plants or sweat shops in big cities and small towns. 

Resistance to equality for minorities and women in the workplace, a key feature of labor history, was temporarily and partially overcome by the needs for workers during World War II. With millions of white men off to war, an enormous need for new workers, to produce the vehicles, the aircraft, the processed foods and other products, existed. This opened doors for Black and women workers who did all kinds of work earning higher wages than before the war. The image of "Rosie the Riveter," the skilled woman machinist constructing airplanes to fight fascism became very popular. 

 As the war ended, economic and political elites found themselves with a workforce problem: what to do with all the returning veterans who left the factory jobs and now expected to return while most newly hired African American and women factory workers fully expected to continue to work and earn higher wages than they had in lesser paying service jobs. For the economists, the issue was posed as one of creating 60 million jobs to satisfy the needs of the society or, as it turned out, channeling significant numbers of these workers in other directions such as convincing the women workers to "return to the home and family". The fear of return to Depression was not only a fear of declining demand for the goods produced by the biggest corporations in the nation and the world, but also how to respond to the enormous demand for work. 

Capitalists faced other problems in 1945 as well. In the decade before World War II, labor militancy rose to new heights. Millions of new workers joined the growing CIO industrial unions. Expectations were raised about wages, working conditions, and safety and health at work. The war put these demands on hold. Leaders of the two labor federations, the CIO and the AFL, committed their organizations to refrain from strikes during the war. Labor accepted wage freezes in exchange for price controls and guarantees from the government that companies would not be allowed to try and bust unions during the period of the "no-strike" pledge. While some unauthorized strikes did occur in auto, mining, and other sectors, for the most part workers agreed to forestall lingering demands for better wages and working conditions, and workers control until after fascism was defeated. 

 With the end of war, some labor leaders again raised unresolved issues. They said that with so many changes brought about by the war, in the economy, the international system, in the workplace, in government, 1946 should be a time for public dialogue on the very basis of government, and most fundamentally, the role of the American working class in shaping the destiny of the U. S. political and economic system. From the vantage point of big capital, the major corporations and banks, renewed worker militancy was a threat to the expansion of U.S. capitalism and "the American Century."

Therefore, the context for so many of the public policy decisions of the early post-World War II period involved several things. First, the United States had become the world's dominant economic power because of the incredible growth in productivity during the war. Second, because of the war's devastation, the reconstitution of the global economy, and national economies, would inevitably lead to a significant U.S. world role. Third, the U.S. economy had been concentrated and centralized to such an extent that small numbers of corporations and banks controlled large shares of all that was produced, invested, traded, and loaned both at home and around the globe. Fourth, while these conditions opened the possibility of U.S. economic hegemony for a long time to come ("the American Century"), the future was fraught with dangers for U.S. capitalism. There were the dangers of insufficient demand (for consumer and military products), labor militancy, alternative visions of economic organization (socialism abroad and/or at home), large-scale support for creating some kind of workers' state, and particularly significant pressure to broaden the welfare state that the New Deal had created. 

Given this history, economics and politics were fundamentally interconnected as were domestic and foreign policy. The very future of America as a capitalist society was at stake in the contestation that ensued. And the foreign policies that were established in the 1940s had consequences for the globalization process of the next fifty years. This period was one of intense ideological conflict over basic values that would determine American society. (Fones-Wolf, 1994, 5).

 Institutionalizing the Global Political Economy

With World War II ended, the finance ministers of the capitalist nations in the anti-fascist alliancemet at Bretton Woods in New Hampshire (1944) to create global economic institutions that would have profound impact on the international economy and national economic policy. The first institution, the International Monetary Fund, was designed to regularize future economic exchanges between nations through the stabilization of exchange rates between national currencies and internationally accepted currencies, such as the dollar.

 Also, when nations experienced imbalances of trade such that they lacked enough of the international currency to pay for imports, the IMF was authorized to provide short-term loans to rectify their financial problems. The IMF would not provide all the loan money, but, working with private banks, would arrange a program of assistance to countries that met requirements. Increasingly, the IMF used its influence over international banking to demand that countries carry out certain domestic economic policies to receive assistance and that IMF administrators would have the right to participate in the economic decision-making of the recipient country. The IMF agenda became one that in recent years has been called "neoliberalism." It required that debtor nations dramatically reduce state involvement in the economy, cut back on public services and social safety nets, reduce trade barriers and domestic rules impairing foreign penetration, and engage in thorough privatization of formerly state owned or run businesses. While the vision of the IMF role in shaping the destiny of the world's national economies was more measured in the 1940s, by the end of the Cold War in the 1990s, the IMF and international banks played a significant role in determining the economic destiny of most countries in the world.

At Bretton Woods, the leaders of the capitalist world also created the International Bank for Reconstruction and Development, more commonly known as the World Bank. The World Bank provided more long-term loans, sometimes for specific projects such as irrigation for export oriented agricultural projects, harbor and transportation construction to facilitate moving goods from fields to market, and other infrastructure  projects. Over the years the World Bank as an institution evolved with a variety of programs. The Bank and the IMF became the two preeminent international institutions influencing economic change around the globe. Their vision, their programs, and their personnel, made them intimate partners with private international banking institutions and multinational corporations in shaping the global economic agenda.

Also the capitalist world needed to promote trade between nations. In 1947, non-socialist states created the General Agreement on Tariffs and Trade (GATT). Participation was limited and accords on tariff reductions among the nations were initially modest. But over the years, through a series of negotiations, more countries joined the trading system and agreements reduced trade restrictions considerably. In 1994, the United States and most of the world's nations created the World Trade Organization (WTO) to reduce barriers to free trade of goods and services and investments. Also. regional trading regimes, such as the European Union (EU), the North American Free Trade Agreement (NAFTA), and Asia-Pacific Economic Cooperation (APEC) assumed new prominence in the last decade of the twentieth century.  

In all three, the IMF, World Bank, and GATT, the United States and the other G-7 nations (Canada, France, Germany, Italy, Japan, and Great Britain) dominated the policies and programs of these institutions. With few exceptions, Communist countries were kept out of them. Poor countries were obliged to change their own economic policies and political allegiances if they wished to receive the services and benefits of the international economic organizations. The clearest illustration of this was the repeated rejections of requests for loans from regimes hostile to the United States such as Chile in the years in which Marxist Salvador Allende was president, or Nicaragua in the 1980s when the Sandinista Front for National Liberation ruled the state. The vulnerability of poorer countries increased qualitatively in the 1970s when the oil shocks dramatically increased the price of oil on the world market and poor countries incurred increased debts to the international financial community. The spirit of Third World nationalism and resistance to capitalist penetration was severely weakened as international debt increased from billions to trillions of dollars (Ellwood, 2002, 48). As multinational corporations and banks increased international economic activities, the status and power of U.S. workers declined.

 The Emergence of the Anti-Communist Political Culture

To foster support for the dramatic new U.S. foreign policies, the executive branch launched a campaign against "communism" from the beginning of the Cold War. President Truman issued Executive Order 9835 in March 1947 that instituted a federal loyalty program that required sworn statements by all federal employees that they had not been a member of the Communist Party of the United States or groups affiliated with it. This inspired similar loyalty oath requirements at all levels of government. The Truman Administration created the Attorney General's list, which was a list of suspect organizations believed to be affiliated with the Communist Party. Federal employees who had belonged to any of these groups would be subject to dismissal. Two thousand employees were fired from their jobs and over 200 resigned in anticipation of dismissal.

One of the most aggressive executive agencies in the struggle against communism was the Federal Bureau of Investigation, headed by J. Edgar Hoover. The FBI infiltrated groups, wrote books denouncing people with suspicious ideas (like giving support for racial justice), hounded suspected radicals in their homes and on their jobs and through the statements by Hoover linked every public criticism with foreign and subversive causes. 

 Congress launched its own attacks on communism, in Hollywood, in the schools, in the public sector, in unions, through the technique of the Congressional hearing. From 1946 to 1954 there were 135 Congressional investigations of "communism" in Hollywood, the main activity organized by the House Committee on Un-American Activities (HUAC). Individual Senators and Congresspersons began to build careers fighting Communism at home. Congressman Richard Nixon gained fame attacking former New Deal administrator, Alger Hiss. Senator Joseph McCarthy, for whom the whole anti-communist phenomenon was mistakenly credited, announced that there were hundreds of Communists in the State Department.  Of greatest importance to workers was the passage in 1947 of the Taft-Hartley Act which was designed to limit workers trade union rights. Union leaders had to sign anti- Communist loyalty oaths or their unions would get decertified. 

Not only would anti-Communism frame the understanding Americans had about the Soviet Union and China, but such a frame would pervade virtually all political consciousness: about class, race, and gender. Labor militants were labeled “Communists” to reduce their effectiveness in organizing. Further, people who defended government and community responsibility, or who criticized commercialism were attacked as being,  subversive, and  Communist. The bottom line for all this was that the anti-Communist impulse in American life served the interests and needs of capitalism by smearing social reform in postwar America. Particularly, anti Communism was used to gain support for the emerging US foreign policy of economic and military dominance in the world  and to build domestic opposition to labor demands at home. The political conditions were being created to support the globalization of U.S. power and influence.

Economics and Ideology: Selling Free Enterprise

 “Less obvious…was the struggle led by national business leaders…to reshape the ideas, images, and attitudes through which Americans understood their world, specifically their understanding of their relationship to the corporation and the state. … The struggle to undercut organized labor’s and the state’s ideological hold over the working class and to protect this vision took place within a variety of contexts”(Elizabeth A. Fones-Wolf, Selling Free Enterprise: The Business Assault on Labor and Liberalism 1945-60).

 In two brilliant books, Selling Free Enterprise (1994) and Waves of Opposition (2006), Fones-Wolf described the public sphere, media, education, religious institutions, and political assemblies as sites for critical debate about the kind of society that could best serve workers. (The histories she presents cover the 1930s through the 1950s, but the lessons of her history bear upon the ideological struggles in our own day).

 In the first book, the author described the open-ended possibilities for political change, it was hoped, which could have been crafted as World War II ended. As suggested above, the war began at a time when workers, through their own mass action, had created the Congress of Industrial Organizations (CIO), a militant federation of four million factory workers in electronics, steel, auto, meat packing, mining and smelting, and other industrial and white-collar unions. To help the war effort, CIO unions pledged to avoid strikes in the name of national security. But, when the war ended, workers expected to play a significant role in constructing public policy and shaping the kind of political and economic system that would serve their needs.

 Fones-Wolf documented the worldview that guided workers and their unions after the war. They believed in the right of workers to form unions that would represent their interests at the point of production. They believed that government must play a basic role in promoting an improved quality of life for all. They believed that workers derived their freedom and happiness from active participation in communities at the local and national levels. And the character of “free enterprise” was to be circumscribed by the common good. The public good was more important than private property.

 The capitalist class, Fones-Wolf argued, had a diametrically opposed view of the political, economic, and even cultural world that needed to be created after the war. Unions represented tyranny, not the interests of workers. Government was a hindrance to human well-being. The more government insinuated into the lives of people the worse off they would be. Community, unless it was organized by human relations offices of big corporations, restricted freedom. Individualism, not community, was the bulwark of a free society. And basic to individualism, the capitalists argued, was the “free market,” “free enterprise,” and private property.

 Selling Free Enterprise described the battles over these two fundamentally different worldviews, community versus individualism, in factories, in schools, in churches, in local elections. Such capitalist arms as the National Association of Manufacturers and the Chamber of Commerce employed factory owners, clergymen, educators and think tanks, the press, radio and television to promote their vision of post-war America using millions of dollars and penetrating every city and town across the United States.

 Although the labor movement, peace and justice activists, moderate church people and others challenged the “free enterprise” model of society from 1945 until 1960, they were no match for the money and power of big capital. The free marketeers also utilized the Cold War and the specter of “worldwide communism” to purge those forces that sought to create an egalitarian and communitarian America. While the different ideologies were contested in the 1940s and 1950s, by the early 1960s the capitalist class had achieved ideological hegemony.

 Fones-Wolf wrote Waves of Opposition to describe the efforts of labor and progressive groups to have their voices heard on radio, the dominant medium for news and culture from the 1930s until the late 1950s. Corporate elites, CEOs of the major radio networks, and government agents limited the rights of trade unionists to have access to the air waves. Exceptions were noted in the post-war period when AFL and CIO paid programs appeared on national radio and a few union locals were able to buy airtime in their communities to run programs describing the activities of their locals. In a few instances, local labor owned or operated radio stations. One of the longest efforts was WCFL, out of Chicago. It was a “voice of labor” station operating from the 1920s to the 1970s. But Fones-Wolf pointed out, it took major struggles for labor to gain recognition and access to the air waves. With corporate media concentration, the modest foothold labor had in radio, and even less in television, was lost.

 The struggles, so graphically described by Fones-Wolf, are being played out today. The age of “neo-liberalism,” ushered in by the Reagan administration was sold to the American people in ideological terms. A worldview based on individualism, free enterprise, private property, limited government, and the magic of the marketplace was slickly packaged and sold while state/corporate power was used to crush the labor movement. Even the modest “welfare state” model of public/private sector collaboration was challenged by neo-liberal spokespersons.

 With increasing media concentration, approximately ten media conglomerates control about fifty percent of all we read, see, and hear, neoliberalism crushed any alternative visions that stepped in its path. Even when policies are discussed, neo-liberalism reflected in talk radio and rightwing television dominates what and how issues are debated.

While Fones-Wolf’s story is about the defeat of workers, it does suggest two things. First, struggles for a better future must be fought on the ideological as well as the policy levels. Fundamental concepts such as community versus individualism, government versus free enterprise, and worker rights versus corporate control must be debated. The case should be made that the communitarian, participatory, egalitarian vision of a just society is deeply embedded in United States history.

 Second, in the past workers and progressives used a variety of techniques to bring their message to the people including demanding access to major media. In our own day struggles to gain access to and control of media outlets, including television and the press, remain important. In addition, the vision of community once again needs to be brought to union halls, churches, public libraries, and all other social institutions and open spaces where people must decide on their collective future.  

 Launching the Cold War: The Struggle Against International Communism

 Upon the death of President Roosevelt, the new chief executive, Harry Truman, conferred with the major foreign policy advisers of the U.S. government.  Roosevelt was as interested in promoting U.S. capitalist penetration of Eastern Europe as was Truman, but it was the latter who believed that force and intimidation were appropriate tools to achieve these goals. Roosevelt simply had believed that such goals were achievable through diplomacy and the promotion of cooperation.

The confrontational approach to the Soviet Union became institutionalized at the allied conference, at Potsdam in the summer, 1945. It was followed by the U.S. use of atomic bombs on Japan without consulting with the Soviet Union.  The United States demonstrated that it had a monopoly on the most powerful weapon humankind had ever seen. 

After the defeat of Japan in August 1945 until the onset of the Korean War in June, 1950, one confrontation after another occurred between the U. S. and the Soviet Union. U.S. policy moved from cool and demanding postures visa vis the Soviet Union to construction of an economic, then military alliance against the Soviets. By the time the Korean War started, and the U.S. sent troops to defend the South Korean regime, there was no turning back.  The growing anti-Soviet policy was coupled with a virulent anti-communist campaign of domestic repression that targeted critics of the new global foreign policy. U.S. policymakers believed that the spread of socialist states abroad or reformist ideas at home constituted a long-term threat to the spread of U.S. capitalist institutions around the world. 

President Truman in March, 1947 spoke to Congress and the  American people about a long-term struggle between the forces of freedom and tyranny; that the United States must lead the free world against totalitarianism, ie. the Soviet Union, around the world. The $400 million aid package that he requested for Greece, defined by him as being threatened by “international communism,” and Turkey was modest but the proclamation was not. It made official what seemed to be the case since 1945 (or 1917); that the U. S. was launching a war against the capital of socialism, the Soviet Union. The long-term U.S. goal was a world order that would maximize capital accumulation and profit. The Socialist Bloc and independent nationalist and/or radical regimes stood in the way of achieving the global U.S. vision. (Kolko and Kolko)

The modest request for aid to Greece and Turkey (and earlier aid to Great Britain in 1946) opened the floodgates for economic and other kinds of assistance to be used for political purposes. The most significant example of this was the Marshall Plan, the $14 billion economic assistance program for Western Europe. Truman Administrators were concerned about the "dollar gap," the lack of dollars in the hands of potential European customers for American goods. Also,these administrators feared the growing popularity of communists and other radicals, particularly in France and Italy, and the danger that they might be elected to public office in nationwide elections. Further, the Truman Administration was firmly committed to the construction of capitalist states and a modest degree of economic integration of capitalist states in Europe. The massive aid program with strings attached could be the vehicle for U.S. penetration of Europe. Of course, many Americans were also motivated to support the aid program because of humanitarian impulses as well as economic interest.

The atomic monopoly and a program of aggressive diplomacy had the opposite effect for which it was intended; that is to weaken the Soviet economy and reduce its international power and influence. The Truman Doctrine, the Marshall Plan, and the formation of the North Atlantic Treaty Organization (NATO)-the defense pact of the western powers led by the United States-stimulated the creation of a Soviet-led bloc of Eastern European states. Also the socialist vision and struggles for national liberation around the world loosely inspired by the anti-capitalist orientation of the Soviet Union generated international legitimacy for the weak but significant Euro-Asian power. A bipolar world was under construction.

With growing tensions in international relations, particularly due to the Soviet  atomic  test  and the Chinese revolution of 1949, and increasing economic and political problems at home, President Truman's last Secretary of State Dean Acheson, assigned aide, Paul Nitze the task of preparing a lengthy analysis of the prospects for the United States political, economic, and military position in  the world in the 1950s. Nitze was asked to make recommendations for U.S. defense policy in the years ahead. Up until that time, the Truman Administration had insisted on a ceiling on defense expenditures so that it could balance the budget and limit the danger of inflation. When Nitze began his report, U.S. defense expenditures were $12 billion.

The final report, long classified, was known as National Security Council (NSC) Document 68. It was circulated in the Truman Administration in the winter, 1949-1950, and, in June, 1950, because of the Korean War, became defense policy for years to come.  NSC-68 predicted that the Soviet Union would achieve military equality with the United States by 1954. It claimed also that the Soviet economy was strong and growing.

 Consequently, the U.S. should initiate a program of dramatic increases in defense expenditures making the nation the hub of free world defense against Communism.  Concretely, it urged the increase of U.S. defense expenditures to as much as $50 billion a year and prioritize defense as the number one commitment of the government before any other programs are  instituted. NSC-68 was essentially a rationale for the U.S. to launch an arms race until such time as the Cold War is won.  

The Permanent War Economy

 The Permanent War Economy had its roots in World War II plans in the Roosevelt and Truman Administrations to keep alive the partnership of corporations, the government, and the military in the post-war world. The PWE was a way to maintain demand for goods and services that would continue economic growth, capital accumulation, and enormous profits for the biggest corporations in the world.

 The PWE required demonic enemies, “threats to national security,” to justify the expenditure over the next forty to fifty years of over thirteen trillion dollars (Center for Defense Information).  The “communist threat,” “the war on drugs,” the threat of “terrorism” and the mystical Al-Qaeda, has kept a pliant public in a state of fear ever since. 

 Along with the security threat, Americans were told that there was a connection between continuous military spending and a robust high job, high wage economy.  According to industrial engineer Seymour Melman, by the 1960s, one in ten jobs was directly or indirectly connected to military spending.

 In the end, United States foreign policy has been significantly driven by this PWE.

The impacts on people everywhere have been horrific.  At least 100,000 U.S. soldiers have died in military actions since the end of World War II and three or more times that figure disabled from participation in war. As Ruth Sivard’s data indicates (World Military and Social Expenditures, 1996) almost six million citizens from countries in which the U.S. had some military operations died, from the Greek civil war in the 1940s to Gulf War in the 1990s; that is before Afghanistan and Iraq wars in this century.

 Further, a whole array of studies has shown that public and private investments for non-military purposes, education, health care, transportation, consumer goods, and environmental protection for example, would have led to more secure jobs, research and development, and improved quality of life than investment in war. 

 The National Priorities Project, http://nationalpriorities.org, provides data on the costs of military spending for wars on Iraq and Afghanistan by nation, state, and congressional district. In addition, they estimate what nonmilitary comparable funding would provide for such political units. As suggested above, NSC 68 and the Korean War that justified its recommendations, established the principle that military spending would perpetually remain the number one priority of the United States government ever since.

Fighting Hot and Cold Wars in the Third World

The label, "Third World" like most labels has a bias and by virtue of oversimplification, distorts the complexities of historical reality. Third World came to refer to nations that were sometimes called "less developed," "underdeveloped," "emerging nations," countries experiencing "nation-building," or the countries of the "south." While each of these labels reflected part of the meaning of the countries being considered, Third World signified nations that were not exclusively allied with the industrial capitalist countries or the Soviet Bloc (although some were affiliated with one or another pole in the global struggle). 

Most Third World countries, in Asia, Africa, Latin America, and  the Middle East had lower levels of economic development and usually this was so because of their experience as colonies or neo-colonies of industrialized  nations. During the entire period of the Cold War these were countries that experienced struggles over political and economic independence. Oftentimes, U.S. policymakers would erroneously define a conflict in such a country as  caused by "international communism," ignoring the local context of fundamental conflicts of interest. Therefore, the “Cold War” between the United States and the Soviet Union would be fought through arms races and aggressive language. “Hot Wars” would be fought in the poor countries of Asia, Africa, Latin America, and the Middle East

Through the years of   the Cold War, the U.S. would support dictators around the world if they committed themselves to the cause of anti-communism. Indigenous conflicts, as those between Koreans with different ideologies, class positions, and relationships to the history of colonialism and anti-colonialism in the country, would be ignored. Interventionist policies would be defended as involving the struggle between international communism and the "free world."  Soviet participation in essentially civil war settings would be assumed, never proven. Further, the lives of people of color would be expendable as literally millions would die in places like Korea, Vietnam, Iran, Guatemala, Chile, Angola, and Nicaragua. Many of the countries that would be battlegrounds during the Cold War or closely aligned to the U.S. would eventually become the sites for foreign investment and the development of “off-shore” manufacturing facilities.  Between 1945 and 1995 over ten million people would be killed in wars in which the United States had a role.

The Challenge to U.S Dominance: The Changing Global Political Economy

 When World War II ended, the U. S. was the economic giant. Even with the Soviet challenge and the construction of the Socialist bloc, the United States had no peer as to industrial productivity, capital accumulation, research and development, scientific advances, technological sophistication, and its developing high mass production and consumption economy. This economic might was paralleled by military superiority and political power on the global stage. Institutions were established, such as the International Monetary Fund and World Bank, that could facilitate the penetration of U.S. capitalism all around the globe. The system of international trade, which now is global, was created. Only socialist states and radical and nationalist regimes and movements stood in the way of the complete globalization of U.S. capital.

It is out of this constellation of economic factors that U. S. foreign policy evolved. It was built on the commitment to defeat those forces around the world that defeated or might close their doors to U.S. capital penetration. To mobilize a skeptical public, foreign policy, as well as domestic policies, was framed as a struggle between freedom and tyranny. The Soviet Union and its allies, third world revolutionaries, radicals in western countries and radicals at home were all part of the common enemy. Thus was launched the Cold War foreign policy of the United States which would continue until the collapse of the Soviet Union.

 

Sources:

Alperovitz, Gar. Atomic Diplomacy: Hiroshima and Potsdam. New York: Vintage, 1965.

 Aronowitz, Stanley. False Promises: The Making of American Working-Class Consciousness. New York: McGraw, 1973.

Barnet, Richard, J. Intervention and Revolution. New York: New American Library, 1972.

Bernstein, Barton J. , and Allen Matusow, eds. The Truman Administration: A Documentary History. New York: Harper, 1966.

Blake, David H. , and Robert S. Walters. The Politics of Global Economic Relations. Englewood Cliffs, N.J.: Prentice,    1976.

 Bliss, Howard, and M. Glen Johnson. Consensus at the Crossroads. New York: Dodd, 1972.

Boyer, Richard O. , and Herbert M. Morais. Labor's Untold Story. New York: United Electrical,

Radio, and Machine Workers of America, 1955.\

Clayton, James L The Economic Impact of the Cold War. New York: Harcourt, 1970.

De Conde, Alexander. A History of American Foreign Policy. Vol. 2. New York: Scribner's, 1978.

Donovan, John C. The Cold Warriors: A Policy-Making Elite. Lexington, Mass.: Heath, 1974.

Dowd, Douglas F. The Twisted Dream: Capitalist Development in the United States Since 1776. Cambridge, Mass.: Winthrop, 1977.

Economic Commission for Europe. Economic Survey of Europe in 1949. Geneva: United Nations, 1950.

Economic Notes May, Sept., 1980.

Fann, K. T. , and Donald C. Hodges, ed. Readings in U.S.Imperialism. Boston: Porter Sargent, 1971*

 

Feis, Herbert. From Trust to Terror: The Onset of the Cold War, 1945-1950. New York: Norton, 1970.

Gardner, Lloyd C. , Arthur Schlesinger, Jr. , and Hans J. Morgenthau. The Origins of the Cold War. Waltham, Mass.: Genn, 1970.

Graebner, Norman A. Cold War Diplomacy 1945—1960. Princeton: Van Nostrand, 1962.

Green, James R. "Fighting on Two Fronts: Working Class Militancy in the 1940s." Radical America 9, Nos. 4—5 (1975): 32.

 . The World of the Worker. New York: Hill and Wang, 1980.

Halberstam, David. The Best and the Brightest. New York: Fawcett, 1972.

Halle, Louis J. The Cold War as History. New York: Harper, 1967.

 Hamby, Alonzo L. Beyond the New Deal: Harry S. Truman and American Liberalism. New York: Columbia UP, 1973.  

Harriman, Averill. ' 'U.S.-Soviet Relations and the Beginning of the Cold War." Consensus at the Crossroads. Ed. Howard Bliss and M. Glen Johnson. New York: Dodd, 1972. 102-11.

 

Hawley, James. 'International Banking and the Internationalization of Capital." U.S. Capitalism in Crisis, New York: Union for Radical Political Economics, 1978

Hoopes, Townsend. The Limits of Intervention. New York: Vintage, 1969.

Horowitz, David. The Free World Colossus. New York: Hill and Wang, 1971.

Jones, Joseph. The Fifteen Weeks. New York: Viking, 1955.

Kennan, George F. American Diplomacy, 19m—1950. New York: Mentor Books, 1952.

. Memoirs 1925-1950. Boston: Little, 1967.

. Memoirs 1950-1963. Boston: Little, 1967.

 Kissinger, Henry A. American Foreign Policy. New York: Norton, 1974.

 \Kolko, Gabriel. The Roots of American Foreign Policy. Boston: Beacon, 1969.

. The Politics of War. New York: Vintage, 1968.

   

Kolko, Joyce, and Gabriel Kolko. The Limits of Power: The World and United States Foreign Policy, 1945—54. New York: Harper, 1972.

 

Krasner, Stephen D, "American Policy and Global Economic Stability." America in a Changing World Political Economy. Ed. William P. Avery and David P. Rapkin. New York: Longmans, 1982. 29—49.

Laibman, David. "USA and USSR in Economic Race. " Economic Notes Jan./Feb, 1980.

Lasch, Christopher. The Agony of the American Left. New York: Knopf, 1969.

Laszlo, Ervin, Robert Baker, Jr., Elliott Eisenberg, and Raman Venkata. The Objectives of the New International Economic Order. New York: Pergamon, 1978.

 Lipsitz, George. Class and Culture in Cold War America. New York: Praeger, 1981.

MacEwan, Arthur. "The Development of the Crisis in the World Economy." U.S. Capitalism in Crisis. New York: Union for Radical Political Economics, 1978.

Magdoff, Harry, and Paul M. Sweezy. "The Deepening Crisis of US. Capitalism," Monthly Review Oct. 1981: 1-17.

Marquit, Erwin, The Socialist Countries. Minneapolis: Marxist Educational Press, 1978.

Nathan, James A. , and James K. Oliver. United States Foreign Policy and World Order. Boston: Little, 1976.

Nesbitt, Prexy. "Trilateralism and the Rhodesian Problem: An Effort to Manage the Zimbabwean Liberation Struggle. Trilateralism. Ed. Holly Sklar. Boston: South End, 1980. 379—403.

Nove, Alec. An Economic History of the U.S.S.R. Baltimore: Pelican, 1972.

Oglesby, Carl, and Richard Shaull. Containment and Change. New York: Macmillan, 1967.

Parenti, Michael, ed. Trends and Tragedies in American Foreign Policy. Boston: Little, 1971.

Paterson, Thomas G. Soviet-American Confrontation: Postwar Reconstruction and the Origins of the Cold War. Baltimore: Johns Hopkins UP, 1973.

Pursell, Carroll W. , Jr. The Military-Industrial Complex. New York: Harper, 1972.

Reagan, Ronald. "Transcript of the President's News Conference on Foreign and Domestic Matters." New York Times 17 June 1981: 13.

Rostow, W, Stages of Economic Growth. Cambridge, Eng.: Cambridge UP, 1961.

Salpukas, Agis. "Allure of Risky Deals in Metals." New York Times 15 June 1981.

 

Schurmann, Franz. The Logic of World Power. New York: Pantheon, 1974*

Seidman, Joel. American Labor From Defense to Reconversion. Chicago: U of Chicago P, 1953.

Spanier, John. American Foreign Policy Since World War Il. New York: Holt, 1980.

Stone, I.F. The Hidden History of the Korean War. New York: Monthly Review, 1969.

 Szymanski, Albert. Is the Red Flag Flying? London: Zed, 1979.

Targ, Harry, Strategy of an Empire in Decline, MEP. 1986. 

United States. Dept. of Commerce. Bureau of the Census. Historical Statistics of the United

States: Colonial Times to 1957. Washington: GPO, 1960

 

United States. Dept, of Commerce. Bureau of the Census. Statistical Abstract of the United States, 1951; 1979; 1980; 981. Washington: GPO.

United States. Dept. of Labor. Handbook of Labor Statistics. Washington: GPO, Dec. 1980.

Walton, Richard J. Cold War and Counter Revolution: The Foreign Policy of John F* Kennedy. Baltimore: Penguin, 1972.

Walton, Richard J. Henry Wallace, Harry Truman and the Cold War. New York: Viking, 1976.

 Weisskopf, Thomas E. ' 'United States Foreign Private Investment: An Empirical Survey." The Capitalist System. Ed. Richard C. Edwards, Michael Reich, and Thomas E. Weisskopf. Englewood Cliffs: Prentice, 1972.

 Williams, William A. The Contours of American History. Chicago: Quadrangle, 1966.

. The Great Evasion. Chicago: Quadrangle, 1968.

 . The Roots of the Modern American Empire. New York: Vintage, 1962.

. The Tragedy of American Diplomacy„ New York: Delta, 1972.

Williams, Winston. "Why Business Won't Invest." New York Times 31 Jan. 1982, sec. 3:

 

Wittner, Lawrence S. Cold War America. New York: Praeger, 1974.