Lecture 9.doc

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30 Mar 2012

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Lecture 9: 11/16/10
Last Class:
-Algeria (successful revolution)
-Congo (unsuccessful revolution)
-diametrically opposed states
Cold War is different from other confrontations. It was not just military or political; it
covered every facet of life: economic, military, social and political. No field was
untouched by the Cold War.
The Economic
-A military showdown was not a possibility because there could be no winner
-Focus was shifted from military (proxy) into an economic competition. Each tried to
prove the superiority of their economic systems hoping to score a point through
their own ideology as the better of the two (capitalism and communism)
-In general: communism is a centralized economy where the state controls e
In capitalism, there is a free market that bends to supply and demands
Each of these economic systems experienced a change in the 40s
Western Europe:
After the devastation of WWII, the Americans were eager to improve the lot of
Western Europe’s economy. They wanted to provide a general standard of living that
will hold the system together. For the Americans to introduce the Marshall Plan was
not only to create a market for America but to make sure Western Europe does not
Marshall Aid pours in 11 billion dollars in the first year.
In France and Britain, central planning was accepted. Nationalization and central
planning was never part of the capitalist system. Italy also accepts central planning.
-States agree to provide a social welfare for the West German population.
Thereafter, 6 Western European countries join together – the ECSC of Rome 1957: an
economic alliance that agrees to share economic development.
What this ensured was the economic miracles that ensued from the mid-50s to the
mid-60s. The West German economy grew by 312% - no other state matched this
growth in Western Europe. Most other states grew by 10% to 14%.
The British decided not to join this economic community (EEC) believing that the
Commonwealth would provide the same prosperity. They applied several times but in
each case they were denied for particular reasons.
Eastern Europe experienced a similar prosperity, but not to the same degree. In 1949,
COMECON was created whereby each state would experience economic development
– satellite states as well.
Hungary, Romania and Slovakia (members of COMECON and prior allies of Hitler)
realized that they had to change course – they also had to pay reparations to Russia.
“Reparations to Economic Cooperation” COMECON created to facilitate economic
United States and the Soviet Union both fought tooth and nail to prove the superiority
of their own economic system.
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The Truman administration was concerned that a reparation of 1919 would happen.
They feared that the capitalist system would crash like after WWI. The Marshall Plan
was necessary to enlarge the American market.
The United States had an army of 10 million people – they wanted to demobilize 80%
and wanted to guarantee that the soldiers would have a job.
Truman ensured that the returning soldiers would find jobs and housing in the United
States. The GI Bill afforded the soldiers free education and employment.
If all of these soldiers found employment, production would go up and because they
have an income, they would purchase the products they created. This is the Marshall
Plan at home.
It was mostly successful and this led to an unprecedented boom. 1945-46, the baby
boom happened. The baby boom was a result of the employment, housing and
education of the soldiers. 40 million babies were born.
When Eisenhower took over, he wanted to follow the same direction; he wanted to
offer his own population the American dream good salary, cheap housing, etc. to
prove the superiority of the capitalist economic system.
There is a spectacular growth in GNP – the social class that carries the economy grew
by 30% - never was the middle class so big as during the Eisenhower administration.
This was one of the greatest years in American prosperity. Growth of population
Growth of middle class
Most of these jobs were from the military-industrial complex – so many people began
working for the state/military. Some say that it was impossible to end the Cold War
because if it ended, 40% of the workforce would be cut (millions of people).
Eisenhower is concerned with this.
Kennedy continued in the same way as Eisenhower. He adopted not an American
dream but a great society. To ensure American prosperity, there required a
continuous growth of the middle class, etc. He came up with several ideas: the
economy was Keynesian huge projects (roads, railways, projects all paid for with
government money). There is movement from the eastern seaboard to the south
(Florida, etc.) Kennedy also offers a New Frontier: social, economic and domestic
developments. He wants a fair and equal society: Medicare, increase in minimum
wage, solve ethnic/racial issues, free education, and well-being of the middle class.
Most of these goals were not achieved.
The New Frontier was to prove the superiority of the capitalist system.
He offered to establish a free corps “Ambassadors of the Free World” 10s of
thousands of American worked for meager wages, etc. in very poor situations. It was
a successful movement.
The Soviet Union:
The moment Stalin died, Khrushchev proposed a shift from a heavy industry to a light
industry, he hoped to improve the standard of living in the Soviet Union
He had tremendous ideas (they were all bad). He wanted to irrigate the Virgin Lands
to make them into fields of cotton and grain. Ever since Stalin brought in
industrialization, Russia had troubles feedings its population.
He told the Americans that they would overtake them in 3 years. The irrigation
brought in brought in much more grain. Once he saw the results of the first two years
(exporting cotton) – he thought that communism was within reach whereby the state
would wither away because everyone would work (their own decision).
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