Dark Continent, page 37
The debate over the Marshall Plan has highlighted the significance of other aspects of American economic influence. These include not merely the new gospel of productivity, but also attitudes to fiscal policy, investment strategy and class harmony. In general, Marshall Planners tried to encourage European policy-makers to boost consumer spending (in order to reduce social discontent and the likely spread of the communist virus), and to break free of the rigid social hierarchies of the past in a kind of European New Deal.
Perhaps most important of all, in the long run, was the broader political impact of the American presence in western Europe. The Cold War—at its height in the early 1950s—induced not only fear and alarm but also a greater degree of cooperation among the nation-states of western Europe than had ever been seen in the past. Washington’s ambitious visions of closely coordinated European planning may have been quickly thwarted by devious Europeans like Bevin and Schuman. But American money and security could not be gained without strings attached, and these—by tying the recipients to some form of inter-state dialogue—changed the international economic environment in western Europe. In particular, they laid the foundations of the astonishing revival of trade which lay at the heart of the boom in the mid-1950s. France and especially Britain, locked into expensive imperial commitments, were less inclined to take advantage of such opportunities than the Benelux states, West Germany or Italy. But through the European Payments Union and later the European Economic Community—all encouraged by American policy-makers—intra-European trade boomed. Noting how quickly Germans had abandoned the old inter-war obsessions with land and autarky, Elizabeth Wiskemann commented in 1956 that “in a Europe which has plans to prevent sharp recessions in trade and their consequences, in a Europe which is striving after peaceful integration, and whose communications have seemed to melt distances to nothing, the aim of national self-sufficiency seems to have become irrelevant.”23
European governments, though, were not simply the passive recipients of American generosity. They had effectively thwarted a return to isolationism by dragging Washington back into Europe with their scare stories of the menace of communism. If the Americans were now the imperialists, they were there (in Lundestad’s words) “by invitation.” The Europeans too had their priorities and strategies, and the post-war boom needs to be assessed in the light of their domestic policy choices. To be sure, the old concerns about inflation (especially during the Korean War), the balance of payments and the balanced budget had not disappeared: they survived particularly in countries like Italy and Germany which came out of the recent past with a deep mistrust of étatisme. But by the 1960s, governments across western Europe were placing demand management, the pursuit of full employment and economic growth above price stability. In other words, they were more willing than ever before to accept a degree of inflation in return for prosperity. “In all European countries,” Postan wrote, “economic growth became a universal creed and a common expectation to which governments were expected to conform. To this extent economic growth was the product of economic growthmanship.”24
We can chart the development of the new creed fairly precisely. In the early 1950s, the annual reports of the new OEEC (the Organization for European Economic Cooperation) spotlighted the need to improve productivity as the key to expansion. In 1956 it used the phrase “economic growth” for the first time. When the organization was refounded in 1960 as the OECD, article 1 of its founding charter stated that the organization aimed “to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries.” In Walt Rostow’s The Stages of Economic Growth (subtitled “a Non-Communist Manifesto”)—which explained “takeoff” into prosperity as a universal, historical process—the growth creed acquired its gospel.25
“Growthmanship” was not only to be found in official circles. In the private sector, too, confidence grew out of the uncertainty of the early 1950s, and private investment soared alongside public. Indeed, the striking feature of the post-war boom was the way public and private sectors seemed to have achieved a mutually acceptable and beneficial symbiosis. As the egalitarian mood of liberation faded, the socialist assault on capitalism failed to materialize; planning gave way to nationalization, and then to “direction” and “guidance.” The planned economy which the CDU had committed itself to in Germany in early 1947 melted before the triumph of Ludwig Erhard’s “social market economy.” In Britain, where Labour seemed initially so hostile to the private sector, employers were treated with a respect which would have startled, say, the more directive Dutch authorities; even in France, “planification” turned out to be a largely hands-off affair, though apparently none the less successful for that. “What was it,” asked Andrew Shonfield, perhaps the most acute analyst of the new European economy, “that converted capitalism from the cataclysmic failure which it appeared to be in the 1930s into the great engine of prosperity of the post-war world?” The answer, according to him, lay in the “changing balance of public and private power.”26
Contrary to the UN Economic Commission for Europe’s 1953 fears, private-enterprise economies achieved high rates of investment and growth rivalling those in eastern Europe. Entrepreneurs benefited from official demand management and full-employment policies, and could invest more confidently in the knowledge that counter-cyclical economic management by the state was smoothing out the trade fluctuations which had bedevilled inter-war economic life. As this management was widely regarded as resting on scientific foundations, it is not surprising that Shonfield should have concluded confidently that there was “no reason to suppose that the patterns of the past … will reassert themselves in the future.” Wise policy, social solidarity and adaptable institutional cooperation guaranteed for western Europe one of the most remarkable achievements of its history.27
THE WELFARE STATES
This “unexpectedly dazzling” revival of capitalism took place, of course, in a world where the extension of state power was accepted not only in the economic sphere itself, but also in the area of social welfare. For many commentators at the time, the two—a booming economy and an extended welfare state—seemed closely connected. “Without the underpinning of welfare-state policies,” argued the SPD reformist Karl Schiller, “the free market economic system might well have collapsed … Welfare state and dynamic market economy are mutually indispensable.”28
In the Thatcher years, of course, such ideas came under attack. Spending on the welfare state, it was argued, had actually held back economic growth, not helped it forward. Less an argument about the economics of the 1950s than about the politics of the 1980s, it must be said that the historical record fails to bear out such a critical assessment. In Britain spending on welfare was actually a lower proportion of GDP than it was in West Germany, for example. In western Europe as a whole, low growth was accompanied by low spending on social services.29
Because the state’s post-war involvement in social welfare coincided with the consolidation of European democracy, some have argued that it was an essentially democratic phenomenon. The phrase “welfare state” had, after all, been coined in opposition to Hitler. In 1950 Attlee talked of his government having laid “the foundations of the Welfare State,” and within a few years the term had passed into common usage. It seemed to mark a watershed in the relationship between state and individual, and perhaps also as the sociologist T. H. Marshall argued, to inaugurate a new understanding of the notion of citizenship in a democracy, with social and economic rights now added to political ones.30
But Marshall’s linkage of democracy and welfare reflected the specific experiences of Britain and Sweden. Elsewhere, post-war welfare arrangements reflected strong continuities with pre-war conservative and fascist regimes, while in eastern Europe they emerged under communism. It is salutary to remember that the term “the life-ensuring state,” introduced into West German discussions of social policy by the constitutional lawyer Ernst Forsthoff, had in fact been first employed by him—approvingly—in 1938 in the context of the Third Reich. Post-war Italian social services, too, basically worked through the network of semi-autonomous agencies set up under Mussolini.31
Yet despite these continuities of tradition, the Second World War did separate two very different policy environments. The world of the post-war welfare state was one of full employment, fast population growth and relative internal and external peace inside Europe. Inter-war social policy, by contrast, had been made against a backdrop of mass unemployment, fears of population decline, revolution, political extremism and war. In both eras, the state took the lead, but whereas before 1940 it aimed to secure the health of the collectivity, the family, and above all, the nation, after the war it acted chiefly in order to expand opportunity and choices for the individual citizen. Each epoch reacted against its predecessor: post-1918 against the individualism of mid-nineteenth-century liberalism, post-1945 against inter-war collectivism. To that extent Marshall’s stress on citizenship hits the mark.
The post-war welfare state reflected some real differences of philosophy and institution across western Europe. West Germany, for instance, like the UK, had an ambitious housing policy and was building hundreds of thousands of council homes each year, while the postwar “sack of Rome” and the sprawling concrete jungle surrounding Athens testified to the indifference of the state in southern Europe where housing was concerned. The British welfare system was financed through national taxation, free at the point of delivery and designed to provide a basic minimum to all citizens. In France, Belgium and Germany on the other hand, the government supported voluntary insurance schemes where contributions were linked to earnings. In these systems, welfare arrangements perpetuated existing income and status differences and were thus basically conservative in their social impact, whereas in Sweden the state was at the other extreme, intervening actively to reduce income inequality. Thus there were, according to one scholar, at least “three worlds” or models of welfare capitalism in western Europe: conservative Catholic; liberal; and social democratic.
Everywhere, though, state spending on social services was rising. In the UK, spending on social services as a percentage of GNP rose from 11.3 per cent in 1938 to 16.3 in 1955 and 23.2 per cent in 1970. Over the same period total public expenditure was rising from 30.0 per cent of GNP to 47.1 per cent by 1970, by which point social services accounted for nearly half of all public spending. Across most of western Europe, public spending rose after the war proportionate to national income; simultaneously the composition of that spending changed, as the proportion spent on defence fell and welfare rose. Because national income itself was rising fast, as a result of the boom, the result was that per capita welfare spending by the state everywhere rose dramatically, accelerating in the 1960s before slowing down once more at the start of the following decade. During the two decades of the economic boom, moreover, the divergences between different countries became less apparent. In 1950, for example, it was only in Denmark, Britain, Norway and Sweden that the proportion of the labour force covered by accident, health, old-age and unemployment insurance topped 70 per cent; by 1970, this figure had been reached everywhere except in the southern fringe of Greece, Portugal and Spain.32
To generalize, it seems as though the war had created—or intensified—a demand for social solidarity, while the economic upswing created the resources to support this change. Nor, of course, should it be forgotten that the change in attitudes applied to government revenues as well as spending: in other words, after 1945 people enjoying the security of full employment accepted rates of taxation which would have seemed unthinkable ten or twenty years earlier. Why they did so remains a question entirely ignored by historians—the history of taxation is not the most glamorous of subjects—yet it is a fundamental feature of the post-war evolution of west European society which marks off its own experience of capitalism from that of the USA or Asia.33
Strangely, perhaps, the expansion of the state’s responsibilities in the 1950s and 1960s was accompanied by a growing sense of disillusionment. “All the impulses and ideals of the 1940s to recreate, rebuild and replan have now collapsed,” lamented the British social theorist Richard Titmuss. Rising expectations had certainly raised hopes and demands, and pushed poverty thresholds upwards. But neither the “rediscovery of poverty” of the early 1960s, nor the more general concern at the nature of welfare provision, could be wholly attributed to rising expectations. The limits of the new welfare democracy were becoming clear.34
As the egalitarian hopes of the 1940s faded, people slowly realized that the coming of the welfare state had made little difference to inequalities of wealth. Income distribution was not significantly altered (outside Scandinavia) since there was little attempt to use either the tax or the benefits system for broader redistributive purposes. For whom, then, had the welfare state come into existence? It looked increasingly as though the answer was not for the poor but rather for the better-off, the middle classes and that element of the old working class which was sharing in the fruits of full employment. This suspicion underpins a new view of the origins of the welfare state, which now tends to be seen as the outcome not so much of heroic working-class pressure as of middle-class interest groups, do-gooding paternalistic intellectuals and the risk-averse of all social strata.35
What was so surprising about this? It was just a further instance of the way post-war west European democracy had been stabilized by the middle classes turning radical agendas to their own ends. “It may look at first sight as if the bourgeoisie had, as usual, filched what should have gone to the workers,” Marshall wrote. “But in the circumstances, that was bound to happen in a free democracy and is bound to go on happening in the Welfare State. For the Welfare State is not the dictatorship of the proletariat and is not pledged to liquidate the bourgeoisie.”36
What some saw as the product of 1950s individualism, irresponsibility and selfishness, others regarded more neutrally as the growth of acquisitiveness and affluence. But the coming of the Affluent Society did pose new challenges to the Welfare State, which was linked in people’s minds with the years of austerity, and based on a principle of universality that the rise in living standards made seem less urgent and even “rather silly.” “The acquisitive society,” Marshall concluded, “has succeeded in expanding its frontiers and converting its natural antagonists to its own creed.”
THE INDIVIDUALISTIC MOBILIZATION OF EUROPE
“Many people of my generation,” wrote Shonfield in 1965, “who in the 1930s had come to take for granted the ineradicable destructiveness of capitalism, have lived through a major personal experience in witnessing the metamorphosis of the system since the war.” This metamorphosis could be interpreted negatively—by disappointed socialists—in terms of waning social responsibility and the decline of wartime egalitarian goals; it could also, however, be cast in a more positive light as part of a profound social transformation—what Alessandro Pizzorno termed the “individualistic mobilization” of Europe. Capitalism’s success eroded class rivalries and replaced the activist and utopian mass politics of the inter-war era with a more bloodless politics of consumption and management. Goods, not gods, were what people wanted.37
The origins of Europe’s consumer society of course could be traced back well before the Second World War. If Henry Ford’s USA was the prototype, it is true that even in inter-war Europe first signs could be found of the change in attitudes and aspirations that would become so evident in the 1950s and 1960s. Opening the 1934 Berlin Automobile Show, Hitler had stated that:
As long as the automobile remains a means of transport for especially privileged circles, it is with a bitter feeling that millions of obedient, diligent, and able fellows, who in many cases live lives of limited opportunities, know themselves to be denied a mode of transportation that would open for them, especially on Sundays and holidays, a source of unknown, joyous happiness … The class-emphasizing and therefore socially divisive character that has been attached to the automobile must be removed; the car must not remain an object of luxury but must become an object of use!38
Such bold proclamations, however, ran up against the realities of the 1930s. Hitler’s words were belied by the fact that economic stringency and war mobilization prevented a single Volkswagen being sold to the public in the Third Reich. But once the war ended, the popular tolerance of rationing and austerity quickly vanished. Even when people recognized the fairness of rationing, they increasingly demanded its ending and the reinstatement of the market. From the early 1950s onwards, as wartime controls were cast aside, the outlines of the new shopping culture became clearer.
The production of desires preceded the purchase of goods. Well before more than a small minority were able to afford the new consumer durables and other wonders, advertising agencies and retailers had revolutionized their practices. In the words of the Burton’s Manager’s Guide for 1953: “Create desire to possess strong enough to overcome a natural antipathy to parting with money and you will make sale after sale.” Traditional salesmanship was transformed. Women, far from being ignored, were spotlighted as the “motor” of “modern life”: advertisers saw them in the 1950s chiefly in domestic terms and concentrated on “hitting the housewife.” “You can’t do any longer without electricity, espresso and Cola,” ran one German ad. “But you can do without cooking! All these wonders are now yours, dear housewife! What your grandmother and mother had to suffer through by hand, a tiny miracle machine will handle in seconds … Tell your husband to dig a little deeper into his pocket!” “I put the woman in first place,” commented an Italian businessman, “then the dog, the horse and finally the man.” By the early sixties, advertisers were starting to distinguish the “little Mums” from the “timid mouse-burger” and the sexy, single “Cosmo girl” whom models popularized with the new “leaping about” style.39
