Marshall Plan

Labour Under the Marshall Plan: The Politics of Productivity and the Marketing of Management Sciences

If one year in the post-war period saw the world’s fate politically sealed, it was 1947. In that year the emerging Cold War took a quantum leap forward, while the development with the biggest impact was undoubtedly the announcement of the Marshall Plan for aid to Europe. The Chairman of the US Senate Foreign Relations Committee suggested that it would be ‘the turning point in history for a hundred years to come’.

Marshall Aid would secure America’s economic influence over Western Europe. It crystallised the split between East and West, preparing the ground for the North Atlantic Alliance and NATO. For trade unionists the Marshall Plan led directly to a split in the World Federation of Trade unions, formalising a division in the ranks of organised labour that lasted for sixty years.

Named after US Secretary of State George Marshall, it was not so much a ‘plan’ as a catchall concept that served a variety of ends. In an immediate sense, it was a humanitarian programme to relieve economic hardship, shortages of food and raw materials. More selfishly, it was meant to bolster European purchasing power for American goods and so ward off the prospect of a post-war US recession. Beyond that, the aid programme was about restructuring the international economy to allow the US to derive the maximum benefit from its huge economic potential. The Plan’s anti-communist angle was well advertised in US congressional debates. But then the more sophisticated American strategists saw Europe’s ‘problem’ as economic rather than political: communism was only a threat as long as the European economy was failing to deliver goods and living standards.

There was no lack of awareness among European trade unions that the aid would come with strings. A fear of being bounced into polarised politics, with the agenda set elsewhere, led Europeans to discuss the creation of a possible “third force” in world politics. But thinking here was often vague, confused and riddled with contradictions, and could hardly withstand the polarising tendencies abroad. Pressure to ‘chose sides’ was irresistible. Union leaders eventually persuaded themselves that the offer of aid could be approached pragmatically in the same spirit as collective bargaining, involving an expectation of give and take. Some reasoned that an aid programme would need to be planned, and that would give the parties of the left - society’s natural planners - a key role in guiding the programme and so strengthening their position.

Fears about US interference in European domestic affairs were also allayed by assurances from the American labour movement, which vigorously supported the humanitarian angle in the aid programme. US labour stressed the need for the Marshall Plan to be a ‘people’s programme’. Claiming that the American Federation of Labour had an ‘indispensible service to perform’, its president argued, ‘The wage earners of this country can convince the wage earners of Europe that our government does not seek power over their lives or wants to possess their land’. Or as US labour leader, Jim Carey, told the WFTU executive board:

I am here to talk to you not about ideologies, because we have no American ideologies to export, but about food and coal and fertilisers and agricultural machinery and power plants and transportation and cotton and steel…

But, of course, ‘foreign interference’ could not simply be wished away. As Senator Henry Cabot Lodge observed: ‘God knows this Marshall Plan is going to be the biggest damned interference in international affairs that there has ever been in history…I don’t think we have to be so sensitive about interfering in the internal affairs of these countries’.

American unions insisted on a role in administering the labour side of the Marshall Plan. A Labour Division comprising some 65 union officials on secondment was established, with most of them based in European capitals. They were to advise on labour and manpower policy, ensure that Marshall Plan propaganda found its target among European workers, and generally to show the acceptable face of the aid programme to European trade unionists. They were expected to help European labour develop policy perspectives with values powerful enough to match the appeal of international communism. As Marshall Plan chief Paul Hoffman saw the task, in labour terms it would be a contest between ‘the American production line and the communist party line’.

Once organisational splits occurred among unions in the recipient countries, these Marshall Plan labour officers were largely involved in helping wage the anti-communist struggle. Without their knowledge, some of their work was bound up with operations financed by the Central Intelligence Agency. A secret ‘administrator’s fund’ existed within the Marshall Plan for ‘financing without indication of source’ projects approved by the CIA. And while Marshall Plan administrators were often willing to interfere to secure corporate interests, they tended to reject calls to intervene in favour of social and welfare reforms beneficial to workers.

From 1950 onwards the American trade unionists involved in administering the programme became increasingly disillusioned with its direction. With less influence than their fellow administrators seconded from business, little was left for them beyond a supporting role in selling to European workers what was in essence a bogus story of how America achieved high levels of productivity – one that downplayed the key role of capital investment while stressing the alleged compliant position of US labour. As a US Information Service pamphlet put it: ‘the secret of the high productivity of the United States is not in the machine…it lies in the unreserved collaboration of the worker and the boss’. Labour-management partnership in free enterprise rather than socialism was the emphasis. Part of a longer term aim to create a climate of ideas and values compatible with US interests, the productivity initiatives were presented to Europeans as ideologically neutral -- something that workers and managers could subscribe to as simple common sense, without the need for industrial conflict.

The key bodies here, designed to ‘sell’ the idea of scientific management and practical business unionism to workers and managers, were American-funded national productivity councils. They sponsored study visits to the United States by thousands of workers, brought over to see ‘the American way’ at first hand, with the expectation that they would return as evangelists. The first productivity council to be established, in Britain, saw itself engaged in ‘one of the largest experiments in adult education ever undertaken’. Hard on its heals came university-based management science courses with access to Marshall funding, leading in due course to the cult of the business school, institutions that would soon litter the academic landscape.

In the final analysis, the Marshall Plan disappointed those who hoped to shape it as a workers’ programme. Where it was influential was in developing among European labour a consciousness – indeed a resigned acceptance – of the need for an increasing level of worker productivity, with all that implied for the role of unions in the workplace and their relationship with capital. Cultivating this new ‘common sense’ was perhaps the Marshall Plan’s greatest achievement with a lasting effect on labour in its struggle for greater material reward and control over the process through which wealth is created.

Cover of Carew's book on the Marshall Plan

What Reviewers Thought

Anthony Carew’s ﬁne book . . . gives a balanced view of the political and economic objectives of the Marshall Plan…lt is a very helpful survey, which provides the essential background for the author’s discussion of how Marshall Planners sought to reshape the political alignment in various European countries.
James E Cronin, Social History
This study is an important contribution to our knowledge of the Marshall Plan and its implications. .. Anthony Carew’s book forcefully conveys the long-term implications of this [Communist] defeat while presenting a ﬁrst-rate analysis of the period in which it transpired.
Kees van der Pijl, International Review of Social History
Anthony Carew’s admirable book. . .is the ﬁrst book in English to recount something of what actually happened on the ground, and it does so in one of the key areas of the Plan: industrial relations. This is a study which offers a new and original contribution on the real impact of the ERP. . .Carew’s very carefully balanced judgements on the murkier side of American activities…will have to be taken into consideration in all future accounts... the main thrust of this lucid and well-constructed book dwells on the political triumph of American managerialism as projected by the ECA.
David Ellwood, History
Carew’s study is by far the best. . .a comparative study of the effects of the Marshall Plan’s productivity programmes on the labour movements of Britain, France, Germany and Italy . . . [his] well-balanced account concludes that the Plan was never merely an anti-labour conspiracy…
Carl Levy, Industrial Relations Journal
This is an important, well-argued and deeply researched investigation of an hitherto neglected subject — the impact of the Marshall Plan on the European labour movement... Dr Carew’s judgement is both discriminating and compelling.
Anthony Adamthwaite, International Affairs
ln a ﬁne empirical study Anthony Carew discusses. . .the Marshall Plan which he regards as the decisive factor in US-European relations. . .His particular interest, and fascinating it is too, is how labour came to be integrated into the workings of the Marshall Plan. His research has been impressive ... looking not only to the archives of the predictable institutions, but demonstrating the necessity of a thorough haul through Foreign Office, State Department and embassy papers, establishing him firmly within the Fredrick Forsyth school of historiography. lf for no other reason, this attention to such a wide range of international source material makes Labour Under the Marshall Plan a welcome landmark in contemporary labour history.
Bill Schwarz, Capital and Class
. . .a thought-provoking and extensively researched book, written in a highly readable style, presenting well-argued and judiciously balanced conclusions.
Marie Stinson, The Industrial Tutor
Carew’s book is rich in background information on the US aid agencies, on the post- war labour movements in the four West European countries, and on the differing post- war policies of the split US labour movement. He also goes into much detail on the decline of the World Federation of Trade Unions. ..His book has drawn together much of the material of a fascinating and dramatic story still to be told.
Robert A. Senser, Monthly Labor Review
…what Marxism Today lacks is a sense of history, and the assorted savants it uses from the Financial Times would be well advised to read Anthony Carew‘s excellent book on the Marshall Plan‘s labour movement politics before next time they sit down to tell us about “innovative new thinking in industrial relations". ..[Carew] is right to bring discussion of the Marshall Plan down to the factory ﬂoor level and away from the speeches of politicians, diplomats and bankers. The topics he discusses are very much alive today and form a key part of the contemporary agenda of labour movement discussion in Britain and abroad.
Denis MacShane, former Labour MP and Minister of State for Europe, Tribune
Carew’s account is ‘polished, temperate, persuasive, useful and highly original [and] makes a substantial contribution to the emerging debate between those who emphasise the primacy of the American role in shaping the new Atlantic order and those who claim its importance has been exaggerated.
John Gillingham, American Historical Review
Readers of Metascience will perhaps be primarily interested in the relationship of academic social science and the more practical managerial sciences to Marshall Plan labour policies: and to the question of whether these sciences ‘worked’ as ideology. Carew highlights nicely the close connection between the Marshall officials and the Ford Foundation, which quickly became the leading funding agent for social science research and business education in the US…Carew shows succinctly how the political and economic needs of postwar capitalism were translated into neutral technocratic language, and then absorbed by the European labour movements…We would do well to learn the lesson from the Marshall Plan, just how difficult it is to argue for more egalitarian and participatory forms of workplace organisation when using the technocratic language of the management sciences.
Richard Gillespie, Metascience
I got hold of your fabulous Labour under the Marshall Plan and find it absolutely invaluable. I previously knew of the role of the Marshall Plan in promoting the productivity agenda, but your extensive elaboration is so useful, and likewise your clarifying the interplay with politics and the rightward drift after the Second World War. As you say in the conclusion these are big issues.

I wanted in particular to pick up on your discussion of the ‘third force’ – I was not familiar with the scale and prominence the idea. In fact (I think) the only place I'd come across it was in a remark by Bevin: "It is for us, as Europeans, and as a Social Democratic Government, and not the Americans, to give the lead in the spiritual, moral and political sphere to all democratic elements in Western Europe which are anti-Communist and at the same time genuinely progressive and reformist, believing in freedom, planning and social justice – what one might call the Third Force." (Bullock, 1983, p. 513)

I come at this debate initially from the perspective of Keynes scholarship: my PhD thesis was published (in 2006) under the title Keynes’s General Theory, the rate of interest and ‘Keynesian economics’: Keynes Betrayed. Since I've been at the TUC, I've been trying to approach Keynes from the perspective of the labour movement and of power relations more broadly. I attach an essay indicating where I have got to, published at the start of this year in a book of essays under the post-Keynesian economics umbrella. You will see I put Keynes in a tradition including J. A. Hobson, concerned with distribution and demand, and involving re- balancing economic activity from external to internal impetus.

My sense is that this tradition is not only compatible with a third force but substantiates an agenda that is distinct and powerful – and not revisionist, in the sense of your definition in your conclusion.

We differ on Bevin and Gaitskell: I have them both seeking to deliver third force doctrine according to my definitions. Above all Bevin's position was based on an uncannily sound macroeconomic intuition, and emerged first from his railing against the gold standard. A vital part of my ideal third force is a reformed financial architecture. Bretton Woods fell far short, but the European Payments Union was well conceived (and based entirely on Keynes’s clearing union proposal that was rejected by the Americans) and momentarily at least delivered. European economies were able to take advantage of a low world rate of interest, and domestic initiative was shielded from the usual barriers from international finance (admittedly Korea was important). In parallel on the domestic front (as in other countries) the Attlee government kept the Bank of England muzzled, even if the legislation was gravely inadequate.

When it comes to outcomes I would argue that the stellar economic performance you rightly report of the 1950s had nothing to do with productivity and so aggregate supply doctrine, but instead followed across Europe from very vigorous aggregate demand. Productivity followed as effect not cause. This was third force policy in action, if not claimed and understood as such. In this way I think the Western European Union substantial not least because it promoted the clearing approach. But plainly these various infrastructures did not endure.

And I think here the European Coal and Steel Community is an important part of the story. While the Western European Union was compatible with a third force, the ECSC was wholly of the productivist agenda, and equally on the monetary side junked the EPU and set things on a more orthodox trajectory. And the ECSC bulldozed the WEU - Bullock's account at this point of the machinations of Germany France and the US, with Bevin at death's door, seems to me important and disturbing. Certainly I also reckon revisionists were at work, and Healey and Crosland would be up there for me. But I can’t help but have Gaitskell and Bevin as different. Though ultimately it is the substance of the third force that is potentially of paramount importance.
Dr Geoff Tily, Senior Economist at the Trades Union Congress

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