How did the Cold War shape American economic recovery during the 1950s
This paper shall take a look at how the Cold War influenced the shaping of Americas economic recovery during the 1950s.
The Cold War
During the Second World War, the Soviet Union had been seen as an ally of the Western democracies in the fight against the Axis formed by the Nazi Germany, Fascist Italy and Japan. As the Second World War was about to conclude, the future of the Eastern Europe became contentious between the Soviet Union and the Western Allies. In the perspective of the Soviet Union, it was seen that since the Soviet Union had been invaded from Eastern Europe with some countries from this region actively participating in the invasion, the Soviet Union was determined to have it as its area of influence.
Through this, the Soviet Union would install friendly regimes in these countries. This strategy was seen as meant for the protection of its European borders from future invasions. The Soviet regime was communist and this meant that communist regimes would be installed in the Eastern European countries. The Red Army was engaged in the liberation of the countries in Eastern Europe and this meant that the Soviet Union was better positioned to influence the type of government that would come in place after the war.
In the mind of the Soviet Union, an agreement was struck between them and the Western powers in regard to the Eastern Europe being an area of influence of the Soviet Union. Thus the Soviet Union would be able to dominate in this region without raising eyebrows amongst the Western democracies.
In the year 1945, the leader of the Soviet Union, Joseph Stalin, announced that freely elected governments in Poland, Czechoslovakia amongst other Eastern European countries would be seen as being anti-Soviet Union and that this was not going to be allowed. In the year 1946, the British premier, Winston Churchill claimed that an iron curtain had descended across the continent in reference to the rising communist influence in Eastern Europe. The Cold War emerged from the political struggles witnessed in Eastern Europe between the Soviet Union and the Western Allies. By the year 1948, the Soviet Union had managed to install communist regimes in Poland, Bulgaria, Hungary, Romania, and Czechoslovakia.
The United States and its allies were determined to stop the activities of the Soviet Union which included the spread of communism and its influence in the world. Though the Western allies and the United States were unable to stop the influence of the Soviet Union in Eastern Europe, they looked determined to stop the influence of the Soviet Union in the Western part of Europe. During the period of the Second World War, communist parties in Western Europe had made substantial gains in popularity following their resistance to the Nazi occupation. In France and Italy in particular, the communist parties stood a realistic chance of being elected. However, Britain and the United States would not allow the spread of communism to go this far.
Historiography
There have been different and often conflicting explanations describing the causes of the Cold War and its duration. These explanations are in most instances grounded in deep, if unacknowledged ideological and philosophical differences. Those defending the United States policies insist that the Cold War was as a result of the expansion and ideological maneuvers of the Soviet Union whereas the critics attribute the Cold War to the expansionist of the US policies which also played part in the development of the scenario. These policies were responsible for starting and sustaining the war for such a long time.
Revisionists for instance cite the long American economical expansionism history and argue that both the economic interests and ideological beliefs played a pivotal role in shaping the United States policies which precipitated and sustained the War. Others have argued that the Cold War was in part as a result of the United States obsession with national security that incorporated global concerns which had emerged in the period after the Second World War. In this regard, the United States was determined not to allow any country or coalition of countries to dominate the world especially Europe and Asia. This was meant to ensure that the United States enjoyed the dominance monopoly ensuring that it fashioned an international economic environment that was open to the United States foreign trade and investment policies, and also to bring on board the developing countries in Asia, Africa and Latin America integrating them in the global economy. It is argued that such expansion missions of the United States were in conflict with the Soviet Unions concern for its own security.
The influence of the Soviet Unions foreign policies is contestable owing to the fact that there is little information on the same available for analysis. Many scholars however see the leadership of the communist Soviet Union as of persistent ideologues and expansionists whereas others pose questions regarding the long-assumed relations between the Soviet Unions repressive internal policies and the foreign policy adopted by the Soviet Union. Bureaucratic differences found in the Soviet decision making elite and the security concerns that were a major area of interest for the Soviet Union are instead highlighted. There is an agreement by most scholars that the major objective of the Soviet in the Cold war was to maintain and safeguard against futuristic aggression from Germany which included securing borders and some form of a buffer zone in Eastern Europe. Other objectives included building up Soviet Union industrial base and maintaining a powerful military in the region. These objectives advanced by the Soviet Union clashed with the Western interests in terms of ideals, economy, and security requirements.
Balance of Power
During the Cold War period, the power distribution in the world impacted on the way each of the Cold War parties perceived their national interests which as a consequent shaped their actions. By the year 1939, the great powers in the world included Great Britain, France, Germany, Japan, the United States and the Soviet Union. However, by the year 1945, the United States looked distinct having magnified its power in respect to its mobilization during the Second World War, destruction of the other rivals and the exhaustion of the allies during the War. This follows that by the end of the war the United States emerged as the only nation with a powerful navy and air-force, and also enjoyed monopoly of atomic weapons, and was in control of almost half of the manufacturing capacity of the world. The United States also had extensive oil reserves domestically and also had control of vast oil fields in the Latin Americas and the Middle East.
The balance of power during the Cold War was in favor of the United States as it was not devastated by the war more like the other participating nations. It has been argued that irrespective of a surge in the military power of the Soviet Union in the 1970s and an economic turn down witnessed in the United States economic trend in the 70s, the distribution of power in the world always remained skewed against the Soviet Union in the period of the Cold War. There is an argument that if the definition of power could be factoring elements like popular support, industrial infrastructure, skilled labor, and technological advancement, then bipolarity could only be identified in the post war era in the military senses to be precise. In the wake of reality, the Soviet Union is said to have been an inconclusive superpower during the Cold War era. The imbalance is well defined when the Western alliance is drawn in comparison to the Soviet Bloc.
Cold War an Ideological Conflict
There is no doubt that the Cold War was what can be defined as a political, social, economic, and militaristic strategy phenomenon that characterized the world after the Second World War. The war was often determined by the ideological underpinnings that were defined by the alignments to the contesting regimes in the world. After the Nazi had invaded the Soviet Union in 1941, it marked the end of the Soviet-Nazi alliance and World War II pitted the axis against the Alliance of the United States, Britain and the communist Soviet Union. The Germans were defeated and a fault line in the international relations within the Alliance emerged. The odds were now against the leftist Soviet Union and this reflected on the groundwork for the emergence of the superpower tension that was to grace the post war era
The 1930 Depression and the World War II had built upon the existing social and political differences and had generated popular demands for economical reforms. Of the Western powers, it is only the United States which did not shift towards the leftist tendencies in the years after the Second World War. It should however be noted that though the Republican Party was able to gain control of both houses of the Congress, the New Deal could not be rolled back. Though the Western economies had to endure periods of stagnation and conspicuous inequities, they experienced unprecedented economic growth in the late 1940s all the way to the opening years of the 1970s. After this period, most were able to function efficiently enabling them to sustain the military power, open up an expansion benefit in the welfare state and also legitimize their political and economical institutions.
The success of the Western economies in this period meant that the failures of the pre-war capitalism had been addressed and that anti-capitalistic tendencies had been undercut through the support of the moderate elites who were able to associate their prosperity with that of the United States thereby sustaining the cohesion of the Western Alliance. The defeat of the extreme right that was being advanced by the axis during the Second World War ensured divisions in the non-communist countries. This was responsible for the facilitation at least in Western Europe and Japan of the emergence of a welfare state capitalism and alignment with the United States. The Cold War also justified the repressive treatment directed towards indigenous communists among other radical groups that had emerged in the name of national security.
It has to be noted that the Soviet Union had entered the post war era having won massive esteem following the part it had played in defeating the Nazi German. To the Soviet Union, triumph in the war had meant that the Communist Party was consolidated and this was reflected in the way communist parties in Europe and around the world gained popularity. In France, Italy, Greece, China, and Vietnam among other countries, communist parties together with their allies were destined to take power. In the Third World, the Soviet Unions model for rapid economical transition from agrarian society to an industrialized society looked more appealing. However, the appeal for communism begun to decline as the Cold War progressed.
The World Economy
The Cold Wars effects boiled down to the economic status of the world. The transnational ideological conflict was intimately linked to the national economical development and the evolving global economy. Economic transformation reorganized power relations amongst and also within nations. The reconstruction, reform, and relative resilience of the capitalistic system were in sharp contrast with the communist approach to economy. Capitalism which found itself on the defensive due to its association with the Great Depression of the 1930s and the fascism made a come back in the period after the Second World War. The economic packages developed by the United States including the Marshall Plan did support the reconstruction of the Western Europe economy and Japan, and also aided in the promotion of the European economical integration. Renewed capitalism was also responsible for the forging of a stable global financial order during the Bretton Woods Conference in the year 1944 and also through the General Agreement on Tariffs and Trade (GATT) which encouraged the lowering of and the scraping of other obstructions to the free-flow of goods and capital. These aspects coupled by the increasing military spending levels helped in the sustenance of the period of economic growth.
Though the domination of the United States in the world with respect to technology and finance was to reduce over time, the vigor of West German and Japanese economies coupled by the emergence of new economies with a western orientation like Taiwan and the South Korea were vital for the supremacy of the western economy. There were difficulties faced by the Western economies especially the energy crisis of the 1970s but the communist Soviet Union failed to gain a lasting advantage from it. The Soviet Union also had its share of misfortunes in the economy. The roots of the misfortunes in the Soviet Union economy can be traced back to the 1920s with the Stalinist system, militaristic competition with the United States and China which forced the Soviet Union to devote most of the gross national product to the defense leaving economic development in shambles.
American Economy
In the United States, the Second World War and the Great Depression are the most recognizable economic events of the 20th century. The impacts of the war were definitely adverse and far reaching. The Second World War was in itself a decisive end to the Great Depression. It is argued that the federal government emerged from the war as a potential economic actor with the capability of regulating economic activities and at the same time able to partly have control of the economy via expenditure and consumption. The American industrial capability was revitalized during the war period and most sectors of the industries were oriented war activities. Thus, some were sharply oriented towards the production of defense gadgets whereas others were depended on the war. There was organization of the labor movements which gained strength from the war and offered a counterbalance to both the government and the private sector.
The war period had been characterized by a growth in scientific and technological innovations leaving a lasting expectation of innovativeness among many scientists, engineers, citizens and government officials. Also it can be argued that the significant rise in income amongst Americans and the subsequent rise in the quality of life in the War period left many citizens expecting permanent upgrading in regard to their material circumstances even at the time when fear of the return of the depression engulfed many people across the world. The Second World War had caused devastating damages to all leading world economies with the exception of the United States. This meant that the United States was destined to enjoy unmatched economic and political prowess after the war.
The Great Depression and World War II
During the 1930s, the world economies were faced with recession and the period came to be known as the Great Depression. In this decade, individuals were forced to live in abject poverty characterized with desperation for the basic human wants including food, shelter and clothing. The depression affected the American economy greatly and by 1933, one out four Americans was unemployed. By 1941, the unemployment rate had fallen to just below 10 percent. This was before the food stamp program and the unemployment insurance were put in place. The government had few policies that were designed to aid the less fortunate members of the society. It has to be observed that during this period, most women were not in employment and therefore in case the men husbands lost their jobs, the household was destined to suffer a great deal. America was not the only country to bear the consequences of the Great Depression as many other major economies of the world at the time also felt the bite of the depression. The Second World War initiated by the Nazi Germany found most economies still struggling with the impacts of the Depression.
The World War II can be said to have got its roots from the Great Depression which was an economical upheaval that caused destabilization in most governments, economics, and the across the world. In Germany which was the epicenter for the Second World War, Hitler with his Nazi Party gained fame because Hitler promised to have the capability of reforming and transforming the weaker Germany economy to make it a stronger militaristic and efficient economic power able to control its own destiny both in Europe and the world at large. In the United States, President Franklin Roosevelt delivered promises on how he would enact the New Deal meant for the reconstruction of the American capitalistic society and governance on a new basis. As the years went by, the New Deal advanced by Roosevelt was only able to mitigate some of the impacts of the Great Depression but not to end the economic crisis that had been caused. In the year 1939, the Second World War begun in Europe with the Germany invasion of Poland, a time when indicators continued to point to the fact that the United States was still suffering from the impacts of the depression. For instance, it is argued that in the years after 1929, the gross domestic product of the United States was on a decline for four consecutive years before steadily and haltingly climbing back to the 1929 level which only came to be exceeded in 1936.
The Government Role in 1950s
The 1950s is considered as the socially most exciting decade in American history. This period was characterized by baby boom in the United States as the population surge was witnessed during this time. In the previous decade, most men had been busy participating in the War and women had moved to take up jobs in the industries. During the 1950s, unemployment rate and inflation was relatively low.
At this time, women still kept their careers despite the fact that the war had ended. This is well reflected in the Economic Report of the President covering the 1950s decade. The report revealed that women employment had risen close to 20 . The living standard was also on a steady rise during this time. The United States was on the move and the people were moving from the countryside to the cities then to suburbs. This was attributed partly to the ease of owning a home through the Veteran Administration and Federal Housing Administration mortgages provided by the government. Since most individuals had begun raising a family, it meant that households would prefer moving from a single bedroom apartment to owning a home of their own. There was an upsurge in the population during the 1950s which was attributed to most young couples settling down to start family life.
Politically, the United States political views were centered on communist threat, corruption, and the Koreas. Though there was some influence from the social and economic aspects, the United States was driven by the urge to continue dominating the world. The American public was more concerned with the national security concerns and the governance of Presidents Truman and Eisenhower based their policy framework on taking the required steps to bring an assurance to the populace that the United States would hold onto its dominance and democratic tenets. President Harry S. Truman was behind the Truman Doctrine, the Marshall Plan, and the NATO formation in an effort to stimulate economic recovery in the war-torn Western Europe at the same time ensuring the protection of the Western Allies. The three actions by the Truman administration was meant to stop the spread of communism.
In the 1950s, the Korean War broke where the South Koreans were attacked by the Communist North. The Truman administration committed the United States forces in June of 1950 and a long battle for the control of the Korean Peninsula ensued. Truman however was able to control the War to avoid a major conflict with China and possibly the Soviet Union. Domestically, President Truman introduced the loyalty program which greatly changed national priorities whereby emphasis was put on the security issues. In this program, the political beliefs and associations of any federal employee was to be reviewed by the established Loyalty Review Board. This lent legitimacy to the future McCarthyism observations through the induction of paranoia without foundation.
President Dwight D. Eisenhower assumed office in the year 1953 and managed to negotiate a truce with North Korea which culminated in the ending of the War by the establishment of the 38th Parallel. During this time, the fear of communist subversion inside the United States came to be known as McCarthyism. Ever since the onset of the Cold War, there had been widespread fear of emissaries, saboteurs, and security risks as presented in the various reports by the House Un-American Activities Committee and also by the arrests made by the FBI. The Republican Senator by the name Joseph R. McCarthy enhanced the public suspicions and fears by arguing that the Department of State was knowingly involved in the harboring of the communists disguised as federal employees. McCarthyism was an unfounded theory as it failed to provide any evidence of the alleged claims but still was able to dent President Eisenhowers credibility. Nevertheless, the Cold War was a top priority of the Eisenhower administration during this time. The President commented on the world of turmoil that was created by the calculated pressures of communism when addressing the state of the Union for the first time. This statement provided an insight in what would be the Presidents foreign policy framework and also the strategy to be adopted during this period.
He was cautious not to endanger the American economy but still determined to address the threat presented by the Soviet Union. He therefore relied heavily on the building of the nuclear weapons in the hope that the thought of a possible nuclear devastation would be enough to slow down the communism from spreading. In the year 1955, he revealed the Open Sky policy which demanded that both the Soviet Union and the United States open up their skies to enable aerial inspection, exchanging of charts on military facilities, and have an agreement on regulations to conduct surveillance flights. The Soviet Union was however not ready to embrace this policy as it regarded it as a form of espionage. The launch of the Sputnik satellite by the Soviet Union in the year 1957 was regarded as a major concern for the United States security. The anxiety that followed led to an increase in space research amongst the Americans resulting in the launch of the Exploration in the year 1958. During the same year, President Eisenhower signed a bill that established the National Aeronautics and Space Administration (NASA) though he appeared reluctant to relinquish the Pentagons control on matters to do with the space research and instruction.
Before he left office, President Eisenhower issued a warning regarding the future trends and the dangers associated with the garrison state. He observed that the incident of a strong military establishment and an enormous arms industry was a relatively new concept to the American people. He was of the view that the government was to ensure that acquiring of the unnecessary influence irrespective of whether it was sought after or not was to be guarded by what he referred to as the military-industrial complex. Eisenhower was afraid that the military-industrial complex was threatening to extremely develop and consume the national resources. He warned that the American government and people were supposed to avoid plundering the available resources impulsively with little regard for the future.
The economy during the 1950s was rather stable when compared to the previous years which were characterized by instability of the economy. The economic success of the 1950s can be attributed to the lack of major events which could have caused major problems and breakthroughs for the economy. The steady growth of the economy saw the United States achieve the peak of economic development during the 1960s. There were two major inflations which characterized the American economy during the 1950s. The first one was after the Second World War followed by another on the onset of the Korean War. After the World War II, there was an expectation of collapse in the American economy only for the recession to hit during 1948 and lasted up to mid of 1950s. The Federal Reserve Board is claimed to have played a crucial part in the inflationary conditions experienced during the 1950s. Its policies were reliant on the general quantitative devices of credit control which included open market operations, discount rates, and alterations in the reserve quotients. The quantitative devices were used vigorously by the board to respond to the various recessions and economic meltdowns with the hope curb the resultant inflations.
The two Presidents of this era, Truman and Eisenhower, shared a common view in regard to political economy. Though Truman advocated for the use of federal funding in rejuvenation of the sluggish economy, they were both opposed to budget deficits due to the dangers associated by inflation.
Eisenhowers administration believed in taking a financial responsibility in the sense that the government was to be responsible for the stimulation of the economic growth aimed at raising production without singling out one interest group for benefits. Eisenhower viewed unbalanced budget as promoting inflation which was responsible for increasing domestic problems. In 1953, when Eisenhower assumed office, there was a mild recession in the United States prompted by the Korean armistices sharp military cutback. Eisenhower was determined to bring down the federal spending which resulted in substantial reductions in proposals that had been advanced by the Trumans administration. Apart from the political developments, other developments in the business sector occurred during the 1950s. There was an increase in the housing supply with improved quality. The movement of individuals from the cities to suburbs was the main feature of the new constructions and the rise in the health and living standards. During the 1950s, there was unprecedented growth in the economy leading to the prosperity of other financial intermediaries including the Insurance companies and private firms which emerged to absorb the extra personal savings. Towards the end of the 1950s decade, the economy recorded a sharp downfall. This begun in the summer of 1957 reaching its lowest ebb in the spring of 1958 as various sectors of the economy recorded plummeting growth. The industrial production recorded close to 15 fall, corporate profits fell by 25, whereas the unemployment rate recorded an increase to slightly above 7.
The rise of the concept of rights
During the 1950s, Americans became conscious of their rights as elaborated by the activities that took place during this period in time. The creation of the GI Bill of Rights meant that the United States was on the verge of civil rights movement during this period. It must be noted that the Supreme Court ruling on the Brown v. Topeka Board of Education aimed at desegregating the American school system. This resulted in an upsurge in the number of school enrollment of the African American children. It is no doubt that the 1950s saw the number of college students more than doubling as accessibility to education was no longer a preserve of the few. During the 1950s, it must also be noted that Martin Luther King Junior was emerging as the front bearer of the civil rights movement when he led the 1955 boycott of city buses in Montgomery, Alabama for a period exceeding fifty weeks. Despite the ruling by the Supreme Court on the Brown v. Board of Education, in the year 1957, federal troops were deployed to oversee the integration of students at Little Rock High School in Little Rock, Arkansas.
The American President Dwight Eisenhower emphasized on the importance of integration where both the whites and the blacks would be seen as equal citizens with equal access to opportunities. Though he reiterated his commitment to the attainment of equality among Americans, his actions were in reverse of what he proclaimed. In a speech delivered to the leadership of the black people in the United States, Eisenhower was categorical that though he was more anxious like no other individual to foresee the Blacks being treated as equal citizens they had to be patient.
The evolution of the democratic and capitalistic nation
A capitalist society is that in which there is an economic system which is free of influence from the government. In a capitalistic society, the means of production are privately owned and market forces are the major determinants of the market trends. The Western societies believed that the free market idea in a capitalistic society would lead to absolute individual freedom. In democratic capitalism, it is usually held that the commercial sector should engage in the creation of wealth and rising of the living standards whereas the role of the government should be restricted to regulation and reinforcement of a level playing ground. The evolution of a democratic and capitalistic nation can be traced back to the Cold War era where it was feared that the communist spread was gaining momentum after the completion of the Second World War.
The expansion of the Communist meant that the areas affected adopted the socialist policies which looked a threat to the capitalism form of economy advanced by the United States and its Western allies. In the period of the Cold War, the Soviet Union created a socialist economy in East Germany and other satellite states found in Eastern Europe including Poland, Hungary, Yugoslavia, and Czechoslovakia among others. According to the Soviet Union, the causes of the Cold War were blamed on the United States with its monopolistic capitalist tendencies. It was argued that the West was out to frustrate the unstoppable humanity movement towards ultimate socialism with their capitalistic nature. According to Allan H. Meltzer, capitalism is said to have spread over the years to cover most of the world economies today. He claims that the spread of capitalism had to endure threats and hostilities from the communist regimes. Communism was criticized capitalism basing on the inequality in the income distribution as generated by the market system.
In a democratic capitalism, people do not and are not required to limit the collective action in the provision of public goods such as security matters. It therefore does not make a clear distinction between private and public responsibility and authority. The people however may be allowed to democratically participate in increasing or reducing the governments involvement in the particular matters. The people can therefore vote a government which emphasizes on the income redistribution which may be achieved in two ways. One is the format which allows for economic growth being achieved through lowering of tax rates and little government regulation whereas the other carries out the redistribution of the incomes with an expanded government role.
The state and the democracy
As much as the two concepts looks related, they are very distinct in nature. In political terms, a State can be defined as a sovereign political entity responsible for running the governance issues within its jurisdiction independently. The term is often used to refer to a country. The state therefore does not provide for a particular form of government for it generally refers to a self-governing entity. Thus a State can be democratic, dictatorial, and theocratic or governed by any other form of government. A democracy on the other hand is a political model of governance which allows for the peoples participation. A democratic government therefore rules with the mandate of the majority having been put in office through an electoral system. Democracy is thus a form of government in which the constitution is established to guarantee the fundamental individual and political rights, fair and free elections, and independence of the judiciary.
Conclusion
The Cold War was a period that was characterized by many events in the world as the two superpowers struggled for the dominance and recognition in the globe. During this period, there was great tension that gripped the world especially with the threat of nuclear war precipitated by the atomic bomb technologies advanced by these great nations. In the 1950s however, the United States having been fresh from a major war embarked on economic vibrancy while at the same time enhancing the containment of the Soviet Union in its mission to spread Communism. The United States having emerged from the War as the only stronger economy compared to its competitors was determined to use its influence to curb the spread of the Communism across the globe. Europe became the epicenter for the competition between the capitalist and democratic West and the Communist Soviet Union.
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