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By Mark C. Jensen


The Montréal Review, November 2017



            When I mentioned my interest in writing about the Cold War to some friends, their daughter, a graduate student in economics, said “you’d better.  We didn’t live through it and pretty soon you guys won’t remember.”

            Of course the subject, and its era, suffer no shortage of records or ambitious histories. Vastness presents the real challenge; it’s as if “Game of Thrones” went on for forty-five years.  Our strong memories of the Cold War’s intense episodes, especially the bitter tragedy of Vietnam, don’t provide much insight on the conflict as a whole.  The real hostilities and near-misses make it especially easy to discount the merely disquieting early episodes that, I believe, had an outsized impact on the surprising conclusion.

My own effort to better understand this sprawling epic became this essay about the importance of initial conditions, the outsized rewards of self-interested generosity, and some courageous French legislators.  And while I would be reluctant to draw analogies to any specific current foreign policy issue, these stories do illustrate the risks of a hard and brittle isolation.


I recently watched “The Last Man on the Moon,” a biographical documentary about the astronaut Gene Cernan.  It is a great adventure story - - the risks they faced! - - and a lasting testament to the engineering, manufacturing and operational achievements of hundreds of thousands of people on the ground.  The rockets, the spacecraft and even the astronauts’ equipment struck me as more impressive and eerily beautiful than I remembered as a grade schooler, when the space program seemed like a cool but totally normal thing. 

Apollo’s sublimity is captured in the famous images of and from the moon, a sunlit desert in a sky forever black.  The gorgeous blue and white-sworled earth looked familiar, but stunningly small and isolated in the depthless universe.  Cernan himself made a poignant remote clip of his own lunar craft taking off from the moon with the Earth in the background, the tiny capsule carrying the last two human visitors on the long journey home.

The Cernan documentary also made me think the space program was kind of crazy.  Put aside the danger, the loss of two astronauts in a capsule fire in 1967, the astronomical cost (sorry), the comparatively modest scientific results (far cheaper unmanned projects, like the Hubble telescope and probes of almost every planet, have yielded much more information), the moon’s very inutility for, say, a manned base or mining operation.  Put all that aside.  What was the rush?  It would have been just as exciting in 1979 or 1989.  It would be riveting news today.

Every American then knew the answer. We wanted to get there before the Soviets.  The country had been repeatedly shocked by Soviet achievements in space:  Sputnik, the first unmanned space orbiter, and Yuri Gagarin, the first human in space.  They had sent up a space dog, too.  These served as barely coded demonstrations of Soviet weapons delivery capabilities, like North Korea’s ongoing missile demonstrations.  The Cernan documentary replayed part of the American response:  one set of cameras set up to display the power of the five rockets arrayed beneath the first stage of the 30-story Saturn V, all having to fire in perfect symmetry to reach the moon.  That crotch-shot was for a very specific audience. 

Don’t get me wrong.  The Apollo program was just what it looked like.  It was peaceful, it was exciting, it expanded the boundaries of science and technology, it was more than cool - - it was quite intentionally awesome.  It just wouldn’t have made any sense outside the strange logic of the Cold War.

Apollo was also a proxy for what was truly crazy:  the manufacture of thousands - - thousands! - - of thermonuclear warheads and their delivery mechanisms, airplanes, submarines and missiles.  The reason for these numbers was redundancy, which, if you think about it, is only ever a reason to make too much.   The US military felt it needed to have enough weapons in enough places to be able to counter, and to counter overwhelmingly, a successful Soviet first strike. Redundancy would in theory deter the Soviets from striking first.  Of course, once we had that many weapons, the Soviets would become that much more concerned about their own ability to counter a US first strike.  Each side meant to show that it would always be able to commit genocide.

The cost of the US nuclear program has been estimated at $5.5 trillion, at least 30 times the huge cost of Apollo, which NASA has estimated at a mere $170 billion (in 2005 dollars).  That made it, as Tom Wickersham put it, “the most expensive war that was never fought.”   And, it goes without saying, not fighting a war with these weapons was the best possible outcome.  The US spent over five trillion dollars on weapons that it intended never to use.  Unlike the Vietnam War, another project that could only be justified in Cold War terms, this dangerous and almost intentionally wasteful military spending prompted only bipartisan budget approval votes.

My point is that people treated the Cold War as the most important problem in the world.  That’s why it was so astonishing when one superpower seemed simply to give up.


            The gates at Bornholmer Bridge were opened and crowds poured through, as the overwhelmed East Berlin border guards looked on.  Like millions of Americans, I watched the story unfold on NBC Nightly News, Thursday, November 9, 1989.  The conflict that had overshadowed everything the postwar generation had known about politics, domestic as well as international, seemed to evaporate before our eyes.  One of the East German border guards, overcome with emotion, could not stop asking himself, “Why have I been standing here for the past twenty years?”

The story of that night is far more contingent and exciting than it appeared on NBC.  (Please read “The Collapse” by Mary Elise Sarotte.)  But all the Warsaw Pact regimes were fated for dramatic change for one simple reason:  the Soviet leadership had decided not to intervene to protect them.  In 1988 and early 1989, Mikhail Gorbachev had even made speeches effectively abandoning the Brezhnev doctrine, which declared that the Soviet Union would use its army to protect “socialism” in countries where it existed.   To be sure, history counseled against taking Soviet pronouncements too literally.

            It turned out, however, that the policy of nonintervention had been quite a long time in the making.  During the mass demonstrations of the Solidarity movement in Poland in late 1980 and 1981, Leonid Brezhnev and his advisers firmly decided not to intervene, but kept this decision to themselves.  As historian and former Soviet official Vladislav Zukov has explained, Soviet leaders at the time actually did not view their military actions in Hungary (1956) or Czechoslovakia (1968) as unmitigated successes; rather, the actions had been expensive and morale-sapping internally, and nothing short of disastrous in international relations.  The decision to invade Afghanistan, on Christmas Day 1979, had already brought the same combination of expense, disappointment and international outrage.  Even KGB head Yuri Andropov, a hard-liner who had supported all of the prior military actions, opposed direct action in Poland: “The quota of interventions abroad has been exhausted.” At that point, however, Brezhnev was still able to bluff Polish leaders into thinking that the Red Army might “go in,” which was enough to embolden the Polish government to declare martial law.  

The Kremlin’s inaction in Poland foreshadowed its policy in 1989.  The historian Matthew Ouimet even concluded that “Though still unaware of their accomplishment, the Polish people had forced the Soviet colossus into a retreat from which it would never recover.”    And the factors driving the Kremlin’s Poland policy only got worse during the 1980s.  The Soviet economy’s expenses and revenues both went the wrong direction.  Defense-related expenditures remained around an astonishing 40% of the government’s budget, due in part to the Afghanistan action, and policymakers unquestionably felt pressured by the (somewhat speculative) plans of Reagan’s Strategic Defense Initiative.   The cost of the arms race, together with the Chernobyl nuclear accident, accounted for much of Gorbachev’s eagerness to negotiate disarmament treaties.   The cost of more distant Soviet alliances, with billions of dollars annually going to Vietnam, Cuba and Syria, also became much harder to justify.

Worse, the Soviets had no way to replace, much less raise, foreign exchange revenue from the sale of oil.  Prompted in part by President Reagan’s pressure on Saudi Arabia and other friendly OPEC states to re-open the spigots, oil prices plunged from $38 per barrel in 1979 (about $120 in today’s dollars) to under $15 in 1986 (about $35 today).  This left Gorbachev’s government with two principal sources of revenue, raising consumer prices or raising taxes (which amounted to much the same thing in the planned economy).

As he was retreating from the Brezhnev doctrine, Gorbachev finally went to a third option, cutting military expenses.  Citing a “severe financial crisis,” in January 1989 Gorbachev announced a 14% reduction in forces in Eastern Europe, and a 19% cut in arms production.  The last Soviet troops marched out of Afghanistan in February 1989.   With this in mind, it no longer seems surprising that the Soviet Union stood by as Polish citizens voted for Solidarity that June; as Hungary, influenced by a billion West German marks, opened its border with Austria to a stream of East German “vacationers” in August; and as East German officials bungled their way into opening the Berlin border crossings in November.  

Zubok concluded that “The Soviet leaders did not have the money to influence the events in Central and Eastern Europe. . .”  Gorbachev seems to have had a long-term goal of integrating Russia and the former Soviet dominions into a common European home; he even asked the first President Bush to consider a new Marshall Plan, a request that was promptly declined.

This is not to say that the Soviet Union’s retreat and collapse was economically ordained.  Gorbachev plainly wanted to reform the country under his political leadership, not abandon it.  But in making the political and economic decision not to use force to retain Eastern Europe, Gorbachev and his many political allies underestimated the dissatisfaction in the Soviet republics, and the extent to which the threat of force held the structure together.  Everyone noticed that the emperor had doffed his clothes.  Independence movements first popped up in the Baltic states and then across the empire, leading finally to the emergence of Russia itself behind the charismatic (but deeply flawed) Boris Yeltsin.  When Yeltsin almost personally stopped the attempted coup aimed at Gorbachev in August 1991, it was clear that there was nothing left of the Soviet Union.

The West breathed a sigh of relief as the Soviet enemy - - and, with China’s very different reform, virtually all traces of communism as an economic system - - disappeared.  But I felt as though I must have missed something. Like everyone born after about 1940, I had grown up hearing very effective, consistent, bipartisan warnings about the existential threat posed by the Soviet Union.   And by the late 1970s, after the loss of the Vietnam war, the shock of the 1979 Iranian revolution (belated blowback from the “covert” CIA sponsored 1953 coup) and the first wave of industrial decline, the US hardly looked like a sure winner.  With the economy beset with persistent inflation, high unemployment, and dependency on increasingly hostile oil exporters, US stock indices reached new lows in the summer of 1982. 

After the Soviet Union’s fall, many commentators tried to assign political credit for winning the Cold War, if “winning” is what happened.  The more I read about it, however, the more I wondered how Gorbachev found himself in such a poor strategic position that he felt compelled to abandon it.  That situation was inherited over generations.


In trying to understand how the Soviet Union got boxed in to its hermetically sealed Eurasian fortress, I found it very easy to get sidetracked; with eight U.S. Presidents, at least six Soviet Central Committee General Secretaries (a bit harder to count), and Cold War-related governmental violence in dozens of countries and on every continent except (to my knowledge) Australia, there were a lot of subplots. But the net result of these machinations and eruptions was a stalemate.   A stripped-down summary might go something like this: 

After the two most destructive wars in world history, the exhausted victors desperately wanted to avoid a World War III, though they judged it unwise to say so.  Instead, each focused on consolidating their hegemony in the European and East Asian territories under their respective occupations:  the Americans using money whenever possible, the impoverished Soviets preferring soldiers.  In one hot spot, Germany, neither side rose to the other’s provocations, resulting in a mutually tolerable division on wartime borders by 1949 (though each side officially objected to it).  The Korean War did result from communist aggression and involved direct fighting between American and Soviet-allied Chinese armies, but by 1953 the conflict bogged down on the original border; neither the territory nor the principles were important enough for either party to push further.  An exodus of young and energetic people from East Germany forced the Soviet Union and its “allies” to close their western borders, walling their own people in.  The struggle became a long political and economic siege of the Soviet bloc.   China gradually permitted private ownership and trade after Mao’s death in 1974, abandoning collectivist principles in favor of a more worldly and much richer empire.  When the Soviet Union, overburdened by its foreign commitments, did not object to the opening of Eastern European borders in 1989, its satellite governments fell, soon followed by the USSR itself.

I don’t mean this to diminish the importance of the arms race, famous superpower confrontations or proxy wars.  If these had turned out differently, the Cold War might have ended far more dramatically (and not in a good way).  I have also cheated, by referencing a “long political and economic siege,” which encompasses war or insurrection in Vietnam, Hungary, Cuba, Czechoslovakia and Afghanistan, as well as the massive buildup of increasingly dusty nuclear weapons.  Each of these subjects is of major importance in its own right; the mere side effects of the bipolar rivalry killed millions.  But none turned out to be decisive.

“An end has been put to the Cold War and to the arms race,” declared Mikhail Gorbachev in his farewell address.  “The threat of nuclear war has been removed.”  He might have added that the principals’ casualties were surprisingly light.  The US and USSR learned fairly quickly to keep their own armies apart.        


At the Yalta and Potsdam summit conferences in February and July 1945, as World War II ground to an end, the weary “Big Three” leaders of the US, Britain and the Soviet Union found many issues on which they could agree not to disagree.  As Tony Judt explained, the parties still had self-interested reasons to work together.  Specifically, at Yalta in early 1945, each side was most concerned about keeping the other engaged against Germany, about preventing the other from making what was perceived as a separate peace with Germany  - - another separate peace, each would have said, in reference to the Allies’ pre-war concession of Czech territory to Hitler at Munich in 1938, and to the 1939 Soviet-Nazi nonaggression pact.   No one wanted to face the undivided attention of the Wehrmacht.  Germany’s “unconditional surrender” was reaffirmed as the Allies’ central commitment.  The US, moreover, still insisted on gaining Stalin’s commitment to open a second (really a third, counting China) front against Japan within 90 days of Germany’s surrender.   US military plans in February 1945 still anticipated that an invasion of Japan’s home islands could at best be completed in six months to a year.

Most of the European territorial settlements were simply consistent with the location of the armies.  The borders of Bulgaria, Hungary, Romania, Finland and Italy were settled in official treaties, and the parties would in time respect the informal, “secret” territorial understanding Churchill made with Stalin, the last piece of which meant that Stalin would not intervene in Greece.  Given the size and proven effectiveness of those armies, formalizing borders was still a clear step toward de-escalation.  The Big Three also signed the Declaration on Liberated Europe, “[t]o foster the conditions in which the liberated peoples may exercise those [democratic] rights, all three governments will jointly assist the people in any European liberated state or former Axis satellite state in Europe . . .”

As to Germany, too, an official consensus emerged. The Nazis should be tried and punished for their war crimes as expeditiously as possible.  Eventually all occupying forces would be withdrawn and Germany should become a single state, disarmed, neutral and democratic.   For the present, the three powers would divide both the country and the city of Berlin into three zones (later a slice would be assigned to France) of “administrative” responsibility.  

These points did not suit either side’s strategic concerns, however.  Given that Russia had been invaded from the west three times in the past 150 years, Stalin would never give up armed control of an Eastern European buffer zone.  But even that was not as important as preventing Germany from rising again; in the era of mechanized transport, Germany was still right next door.  The Red Army would not be leaving Eastern Germany anytime soon.  The root-and-branch elimination of fascism was an equally immediate national security priority.  

The US and its allies most feared “another Munich.”   The key error, they thought, had been the failure of Britain and France to stand up to Hitler’s designs on Czechoslovakia (and never mind the self-disabling American neutrality laws).  They worried, accordingly, about the Red Army divisions that Stalin had kept in the Soviet sector of Germany and every Eastern European state except, at first, Czechoslovakia.  The western European states were now poor, weak and barely armed.   The US badly wanted to reduce its military commitment, but without American forces as a deterrent, the Red Army could march straight through to the coast of France.   Western Germany might represent a sort of buffer against that outcome, and if that meant ignoring the wartime activities of a few capable German administrators, well, the alternative might be worse.

Thus, as Judt observed, the de facto solution to the problem of Germany would be just about the opposite of the official consensus:  a divided state; each side aligned with and supporting a different foreign military power; a long militarized border.  One side left, the other right. 


In early 1946, barely six months after Hiroshima and the Japanese surrender, Treasury officials were stunned by the Soviet Union’s announcement that it would not participate in long-planned postwar financial arrangements. Though the plans had been initiated by the legendary British economist John Maynard Keynes, and dominated by the US and British delegations, their objective was considered noncontroversial, even in a way altruistic.

The key to Keynes’ vision was facilitating international trade, aimed at preventing the breakdown that had occurred in the early 1930s.  German reparations payments under the Versailles treaty had been Hitler’s political stalking horse.  The US had done its share of damage by insisting on loan repayments from its Great War allies, and passing the trade-inhibiting Smoot-Hawley Tariff Act at the outset of the Great Depression in early 1930.  These actions as a whole were sharply deflationary; they had reduced trade and taken currency out of circulation.  Deflation both reflected and engendered a lack of trust; by acting as though economics is a zero-sum game aimed at accumulating the most currency, economic actors both domestic and international managed to send growth well below zero.  In a sharp turnaround, American leaders had since discovered their own interest in helping European countries become self-sufficient again as soon as possible.  To put it more bluntly, the US wanted to end its military and economic aid to its allies as soon as it could.

Beginning at the famous 1944 conference at the Bretton Woods resort in New Hampshire, delegates adopted followed Keynes’ roadmap, using American capital.  The key components included a General Agreement on Tariffs and Trade (GATT, later the World Trade Organization) to reduce tariffs in an orderly way, and a specialized central bank, the International Monetary Fund, which would facilitate - - stand as trusted intermediary in - - foreign exchange transactions under an agreed dollar-based currency exchange system. 

The elements of Bretton Woods all sounded duly technical and unobtrusive - - no one would force governments or private companies to trade - - and even generous: the US put up most of the capital!  It nevertheless proved to be an arduous journey.  Yes, trade was voluntary, and most western governments, impoverished by the war, saw little choice but to participate.  But proud governments in the west took their time adjusting to the fixed exchange rates; an even larger problem was the creation of an extra-national system of trade outside of government control.

That was where Stalin got off the train.  The Soviet refusal seemed inexplicable to US Treasury officials when it occurred, February 1946.  From their perspective, it was like offering free membership in a club, with no strings attached.  They asked the State Department’s top Soviet expert for an explanation.


George Kennan was, almost uniquely among US diplomats, a very experienced observer of Soviet leadership. With barely concealed condescension over his colleagues’ ignorance, he took Treasury’s inquiry about Bretton Woods as an excuse to send the 19-page “Long Telegram” on February 22, 1946.

In compelling, often quite beautiful language, sometimes clipped with telegram shorthand, Kennan explained Soviet thinking:  “USSR still lives in antagonistic ‘capitalist encirclement’ with which in the long run there can be no permanent peaceful coexistence.”  He quoted a Stalin speech - - from 1927!

“In course of further development of international revolution there will emerge two centers of world significance: a socialist center  . . . and a capitalist center . . . Battle between these two centers for command of world economy will decide fate of capitalism and of communism in entire world.”

It is more than a little depressing to think that for 45 years most of the world would be caught up in the very struggle Stalin had so long wanted to fight. 

Kennan went on to explain that Stalin needed an eternal struggle with a hostile outside world, no matter how fictional.  It was a story ordinary Russians remembered from the tsarist years, and still critical to domestic politics.  In Stalin’s modern retelling, the capitalist countries were corrupt and riddled with internal conflicts that will inevitably lead to war between them.  That would be good for the USSR.  A capitalist intervention against the USSR “would be disastrous to those who undertook it, [but] would cause renewed delay in progress of Soviet socialism and must therefore be forestalled at all costs.”  In short, Kennan felt the Soviet Union would play capitalist countries against each other, but would back down when confronted directly.

Stalin’s mythical worldview arose from an almost poignant need to hide insecurity:

“Nevertheless, all these theses, however baseless and disproven, are being boldly put forward again today.  What does this indicate?  It indicates that Soviet party line is not based on any objective analysis of situation beyond Russia’s borders; that is has, indeed, little to do with conditions outside of Russia; that it arises mainly from basic inner-Russian necessities which existed before the war and exist today. . . .

“[T]hey have always feared foreign penetration, feared direct contact between western world and their own, feared what would happen if Russians learned truth about world without or if foreigners learned truth about world within. . . .

“Only in this land which had never known a friendly neighbor . . . could a doctrine thrive which viewed economic conflicts of interest as insoluble by peaceful means. . .  In this dogma, with its basic altruism of purpose, they found justification for the their instinctive fear of outside world, for the dictatorship without which they did not know how to rule, for cruelties they did not dare not to inflict, for sacrifices they felt bound to demand.  In the name of Marxism they sacrificed every single ethical value in their methods and tactics.  Today they cannot dispense with it.  It is fig leaf of their moral and intellectual respectability.”

So, what did Kennan recommend in response to this implacable foe?  Although he was an early advocate of “containment,” his initial analysis suggests that the Soviets would mostly contain themselves.  Rather, he advocated a five-part approach that reads, as much as anything, like a program of self-improvement: 

(i) study the enemy; (ii) educate the US public about the problems and dangers; (iii) “solve internal problems of our own society;” (iv) advocate “a much more positive and constructive picture of the world we would like to see;” and (v) “have courage and self confidence to cling to our own methods and conceptions of human society.  After all, the greatest danger that can befall us . . . is that we shall allow ourselves to become like those which whom we are coping.”

Stalin got ahold of the Long Telegram quickly, and was extremely irritated by it.  He nevertheless continued to behave just as Kennan described.


Stalin’s decision to drop out of the Bretton Woods system didn’t doom the economies of the Soviet bloc.  The region is easily large and diverse enough to have recovered and developed on its own.   But he did not intend to let it develop on its own.

Vladimir Putin, speaking from deep personal experience, has said that a planned economy “is less efficient than a market economy.  History has staged two experiments that are very well known in the world:  East Germany and West Germany, North Korea and South Korea.”

Putin stated his conclusion carefully.  Communism was never an economic system; Marx left such details to be sorted out after the revolution.  Lenin, the communists’ other accredited theorist, was in practice somewhat flexible on the question of private enterprise.   It was Stalin’s government that implemented the planned economy, to fill in the yawning gap in Marxist theory and, more to his point, to secure its own political control, a goal the founders would have appreciated.

         Stalin had absorbed both the economic and political lessons of his predecessors.  And Marx did make important insights about the excesses of the Industrial Revolution in England and Germany.   The need for capital to acquire machinery and raw materials for the large scale manufacturing and transportation that dominated that era, gave the few who had capital an extraordinary, self-perpetuating advantage over all other economic participants.  Therefore, he continued, the low pay, terrible conditions and near-servitude of the workers were inherent in capitalism.  These criticisms helped to inform many later reforms in capitalist countries, such as antitrust and labor laws.  But they don’t necessarily lead to communism. 

         Marx then proceeded to jump the shark.  He read the contemporary philosopher G.W.F. Hegel to conclude that (a) human progress must inevitably occur and (b) when it does occur, it can only do so through a pendulum-like process of thesis, antithesis and synthesis.  Applying this “rationalist” view, Marx speculated that industrial capitalism must progress in its then-current manner until it (i) reached a level of efficiency that everyone’s needs could easily be met and (ii) became so harsh that it provoked its antithesis, a workers’ revolution; the revolution would in turn be followed by (and we can hardly blame Hegel for this) (iii) a synthesis, some kind of unmediated equality in which each person’s voluntary contributions would suffice to provide a decent living for everyone.  Since no other path was even theoretically possible, mere reform would actually hinder or delay the day of revolution.  Perhaps in fear of appearing to endorse any such counterproductive efforts at consensus-building, Marx gave no guidance on how to achieve and administer their mythical end state. 

         Thus Marx provided a successful political game plan for Lenin.  Lenin’s genius was to act out Marx’ disdain for merely liberal reformers, whom he had viewed as apologists for the status quo.  On his famous return to the Finland Station in wartime Petrograd in 1917, Lenin rejected coalition efforts and ruthlessly eliminated or discredited “false friends” on the left.  In the peculiar vacuum left by Tsar Nicholas’ forced abdication, the failure of Russia’s war effort and the longstanding unhappiness of soldiers, farmers and urban laborers, Lenin’s Bolsheviks made themselves the only viable alternative to the failed republican coalition. 

         After Lenin’s death in 1924, Stalin demonstrated his mastery of these political principles, periodically eliminating almost everyone who might have an independent power base.  The long game, according to theory, was to wait for revolutions to break out in the rest of the developed nations; in the meantime, the Five Year plans would assure that the Communist party retained control.

         Stalin, however, ignored one of Marx’ key points:  workers' lives were wasted in the mills of the Industrial Revolution.  By setting prices and production quotas, and assigning employment, the Soviet planners would waste workers’ lives as efficiently as any 19th century industrialists.

         Stalin also ignored the capacity of developed countries to evolve; under Marxist theory, they were doomed anyway.  But in the century after the Industrial Revolution, advanced economies did evolve dramatically and in unexpected ways.  The changes have to do with the creativity of “market forces,” of course, but also the negotiated balance between the freedoms of citizens and the functions performed by the government to foster safety and fair play.   The earliest of these government functions are as familiar as wallpaper: national defense, public safety, issuance of widely accepted currency, judicial enforcement of private contracts and - - a 19th century innovation - - corporation laws limiting shareholder liability.  Then in the late 19th and early 20th centuries, suffrage was granted to historically excluded groups, i.e., women and minorities; courts evolved the common law doctrine of negligence to assign responsibility for the inevitable accidents of modern technology; responding in part to the challenge of socialism, legislatures enacted laws to protect workers, consumers and, much later, the environment from the “externalities” of private business.  Imperfect as our society is, it does have a high level of group trust:  a large population of consumers, workers, business owners and investors who deal with each other without undue fear that they will be treated unfairly.  Those millions of decisionmakers enable “market forces” to work. 

The thought of millions of decisionmakers would have sent Stalin into a cold sweat. Marx had seen the future, and the duty of communist leaders was to make sure nobody got in its way.


The superpower rivalry broke out into the open in March 1946, when Winston Churchill delivered his “Iron Curtain” speech in Fulton, Missouri.  Churchill was a private citizen at the time - - better to say, a representative of the British loyal opposition - - but President Truman’s attendance signaled the intended importance of the message.  Referring to a fire safety mechanism used in theaters, he railed against Moscow’s efforts to shut down political debate, travel and communications in what became the Soviet bloc.

In truth, this was only the first step in a long debate, in which each side strenuously argued that the other was “to blame” for breaking up the shared vision of world peace.   The finger pointing was nonsense.  The long-term aims of the superpowers were irreconcilable, and both parties well knew it.

Churchill was right that the Soviet Union cared little about the democratic principles in the Declaration on Liberated Europe.   Polish elections resulted in an uneerie 80% vote for Moscow’s local affiliate.  But the ever-sensitive Soviets kept their story alive. “It’s got to look democratic,” (East) German communist leader Walter Ulbricht instructed his comrades in 1945, “but we must have everything in control.”  Thus Communists appeared to accept poor electoral results in Germany, Hungary and Austria, settling for minority roles in coalition governments with center-left parties - - so long as they got a few key ministries.  Control over Interior or Justice ministries, coupled with the presence of the Red Army, proved more than enough to arrest, intimidate and expel opponents and rivals. 

            On the other hand, the US and Britain dreaded the prospect of a unified Germany, also specified by treaty, if Red Army divisions would forever remain on the Polish border.  In the meantime, humanitarian concerns made western Germany an economic dependent.  After poor harvests in 1945 and 1946, and a near-record freeze in 1947, food shortages swept across Europe.  The equally desperate need to repair war-damaged transportation and manufacturing capacity made it even harder to address shortages of food and consumer goods.

These responsibilities fell to the occupiers.  The British borrowed money from the US to import wheat and potatoes to northwestern Germany; the costs of occupation far exceeded the reparations to which the British were entitled.  The US was also unhappy:  “the unconditional surrender of Germany  . . . has left us with the sole responsibility for a section of Germany which has never been economically self-supporting in modern times and the capacity of which for self-support has been catastrophically reduced . . .” observed Kennan.  In an effort to alleviate this absurd situation - - to enable the Germans to come closer to supporting themselves - - the US and British broke their Yalta obligations by suspending reparations from their zones of Germany (to the Soviet Union and everywhere else), and combining their zones into an economic Bizone in 1946.  But the Soviet Union and France, Hitler’s direct victims, still wanted their reparations.

Shortages contributed to a mood of depression  - - a potentially dangerous indicator of a return of political extremism.   After another bad winter, working class living standards in Paris had actually declined since liberation, to about 50% of prewar levels in the spring of 1947.  Janet Flanner wrote in the New Yorker of “a climate of indubitable and growing malaise in Paris, and perhaps all over Europe, as if the French people, or all European people, expected something to happen, or, worse, expected nothing to happen.”  Kennan, too, commented on Europe’s “profound exhaustion of physical plant and spiritual vigor.”

To avert this looming crisis, US Secretary of State George Marshall put forward his game-changing proposal.  In a commencement speech at Harvard in June 1947 he proposed to replace the failing program of emergency loans with a program of American grants, which war-damaged countries could use for longer-term investments of their own design.  The Marshall Plan would provide its intended benefits, and a few more.  

First, the use of grants intentionally deviated from the crippling debt financing used in the 1920s, which had the effect of deflating Western European economies.  Second, the plan required the recipients to coordinate their large-scale economic planning, since it would have made little sense for each country to use the funds to rebuild their steel industries all at once.  Cleverly, the aid was delivered in goods, which the recipients could then sell to generate cash:  it stimulated the US economy and made recipients more creditworthy trading partners.  Third, Marshall Plan aid proved to be large enough to restore economic confidence. 

I have never liked using the word “confidence” in this way, as it implies that economic problems can be solved with a change of attitude, a punch in the shoulder or little bit of Prozac.  What actually changes is the direction of fear: a critical mass of economic actors becomes more worried about missing future opportunities than about a future recession.   A store manager, long burdened by bad checks or excess inventory, might suddenly face the prospect of running out of the latest appliances and losing customers to rivals.  American Millennials gave this attitude an acronym, FOMO, fear of missing out.  FOMO doesn’t even require that most of the pessimists change their minds - - only that there be a meaningful increase in the number of boom-expecting actors and in the amounts those actors are willing to put at risk.  If enough of those early-adopters succeed (to use another phrase that came along much later), the change in behavior will ripple through the economy.  

As it turned out, the Marshall Plan worked, and just as important, was seen to have worked.   In early 1949, French Finance Minister Maurice Petsche celebrated the influx of fuel, wheat and cotton, “a great lifting of the heart goes from us toward the generous American people and toward its leaders.” Those were the Marshall Plan’s intended and foreseeable consequences.  The unintended consequences included creation of the precursors to the European Union and the further isolation of the Soviet bloc.


Long before a dollar of aid emerged, the Marshall Plan also turned the Soviet Union down the road to disaster.  Despite Stalin’s refusal to join Bretton Woods, Marshall proposed to include Eastern European countries (not quite yet a bloc) and the Soviet Union in his aid plan.  This was certainly a calculated risk on Marshall’s part - - how it would have flown in Congress is anyone’s guess - - but a shrewd one.  If the offer had only been extended to Western European countries, Stalin would have accused the US of seeking to buy alliances and to undermine communism:  he could have painted the US as the party dropping the Iron Curtain.   And there was a low risk of complications.  Marshall had to believe that Stalin wasn’t any more likely to accept Western aid than he was to change his mind about Bretton Woods.

Yet the offer was not entirely insincere. Things weren’t going well diplomatically by 1947, it is true, but further conferences about Germany were still scheduled.  Moreover, the Soviet Union and Eastern Europe could very much have used the aid.  The nationalist “Uncle Joe” of World War II would gladly have accepted additional aid to restore his weakened and besieged homeland. So, the offer can also be seen as an invitation to restart or reframe the relationship, and a second chance for Stalin to participate in the European trade relations.

As it happened, Stalin was not amused.   His response to Marshall’s olive branch set a precedent that no later leader dared violate.  When invited to Paris to discuss Marshall Plan implementation in June 1947, most communist-dominated governments of Eastern Europe correctly saw Soviet disinterest as a signal to decline.  But Jan Masaryk, the non-communist foreign minister of Czechoslovakia’s coalition government, promptly accepted the Franco-British invitation.  This response had to be immediately walked back.  Although the Red Army did not occupy Czechoslovakia at the time, Czech leaders were summoned to meeting with Stalin himself and then issued a statement:  “Czechoslovak participation would be construed as an act directed against friendship with the Soviet Union and the rest of our allies.  That is why the government unanimously decided it will not take part in this conference.”  That “unanimously” was an especially nice touch.

Now Stalin had twice sharply rejected Western, specifically Anglo-American, economic programs.  He had forced his Czech “allies” to very publicly reverse their position on American aid, explicitly attributing their change of attitude to the demands of Moscow’s friendship.  (The unfortunate Masaryk would fall out of a window in Prague’s foreign ministry the next year.)  Stalin well knew that his country lagged far behind the United States in industrial capability and sheer wealth, and but for the war would have lagged Britain, Germany and France as well.  Yet he had refused aid and trading relations, and now plainly intended to isolate Eastern Europe as well.  It appeared to be nothing more than a perverse assertion of his political supremacy.

Stalin was certainly a tyrant, but there was more to his strategy than mere opposition.  A true believer and a serious scholar of Marxism, he seems to have believed that capitalism would either advance toward revolution or degenerate into another war between greedy imperialists.  Thus Bretton Woods and the Marshall Plan were especially insidious, apparently generous efforts to undermine socialism in its secure homeland.  As we have seen, wiping out mere liberals, mere apologists for capitalism, was a central tenet of Marxist doctrine and Leninist political tactics; in fact, Stalin would soon redouble his efforts in that direction.  (One imagines him in a soliloquy: “It’s my own fault, really, for being too nice.”) 

Stalin both misunderstood and miscalculated.  He misunderstood the economics.  Isolating his bloc was profoundly demotivating.  A shopkeeper in Budapest would never have to worry about losing customers to a rival who stocked Belgian chocolate; an East German electronics manufacturer would likewise never be concerned about gaining market share in Cleveland.  Participation in Europe’s postwar economy would have greatly reduced incentives for East German emigration as well, the very public embarrassment that required a prison wall.   Accepting Marshall Aid would not have been completely consistent with Marxist philosophy, but Lenin had shown significant flexibility when the country had been in dire economic straights.   “It doesn’t matter if the cat is black or white,” Deng Xiaoping famously said while reforming Chinese communism, “as long as it catches mice.”

He miscalculated, in that the western countries proved willing and able to work together in a common cause, motivated in no small part by Stalin’s own over-reaction.  Having been caught off guard by Marshall’s calculated offer of generosity, Stalin promptly convened European communist party leaders, western and eastern, in Szklarska Poreba, Poland in September 1947, to get everyone on the same page via the new “Cominform.”   No longer would the party tolerate “rightist” deviations, like that of Masaryk, or “Titoist” deviations, i.e., Yugoslav leader Marshall Tito’s independent effort to set up a personality cult.  The hard line straightjacketed the western communist parties, which lost both their independence and their credibility as advocates for their own nations’ interests.  Indeed it provided George Orwell with further inspiration for “Newspeak” - - a language constructed to allow for no negative sentiments about the fictional totalitarian regime - - when he wrote his most famous novel the next year, its title inverting the last two digits of 1948.


It was a considerable political accomplishment to catch Stalin out.  This achievement would not have had long-lasting consequences, however, if Anglo-American plans for European self-sufficiency had not worked.  For American allies to regain their economic independence, the goal of punishing Germany would be subordinated to a restoration of trade, of the intra-European “division of labor” that had preceded the world wars.  Specifically, the French would have to work with the Germans.  And that was a problem.

In the postwar condominium over Germany, France’s position had been closer to Russia’s.  French leaders sought to extract additional reparations from Germany, while restricting its re-industrialization and forbidding rearmament; recognizing a new and independent state was a nonstarter.  This was not an unreasonable position, as France had been even more thoroughly abused than Russia.  Three German invasions in the past 75 years had resulted in: crushing military defeats in 1870 and 1940; near-defeat turned into a Pyrrhic victory in 1918, and only with the help of powerful allies; four years of terror under Marshall Petain’s puppet government, ended only by the Allies’ liberation in 1944.

French hostility to German restoration went deeper than merely logical security concerns.  After liberation, vigilante groups, often composed of “resistantialistes” whose support for the resistance had been recent in origin, had taken revenge on suspected German collaborators.  And there was acute sensitivity to France’s sudden dependence on the US and Britain for economic and military security, as well as its new status as a second-tier power.  Nowhere was this sensitivity made clearer than in General DeGaulle’s speech to liberated Paris in August 1944:

“Paris!  Paris humiliated!  Paris broken! Paris martyrized! But Paris liberated!  Liberated by itself, by its own people with the help of the armies of France, with the support and aid of France as a whole, of fighting France, of the only France, of the true France, of eternal France.”

For DeGaulle, who had spent much of the war in England, this was more than just slipping free from dependency on the much-resented US and British; he needed to proclaim that the French people could still stand - - were already standing - - on their own.

As we have seen, however, the reality was that France had fallen into a near-depression by 1947, and was temporarily rejuvenated by the announcement of the Marshall Plan.  But the political situation remained extremely tense.  As Rosemary Wakeman has written, French Communists, a major political force in the Paris region, protested vehemently against American anti-communism.  When they were kicked out of the French cabinet in May 1947, after the breakdown in negotiations with the Soviet Union over Germany, the Communists staged major strikes throughout the rest of 1947, culminating in a violent march led by Renault factory workers at Vel d’Hiv on November 22.   They derided the Marshall Plan as “Coca-colonisation.”   

            By March 1948, the British and Americans had given up on dealing with Stalin and wanted to move quickly to put their European recovery plans into effect.  In London, they pushed through a Six-Party Agreement to establish a unified West German state, which would be able to participate in the Marshall Plan. 

Inevitably, French Communists and Gaullist nationalists adamantly opposed the London accord from opposite sides of the political spectrum.  Janet Flanner reported that the Communists had “plastered the boulevards with a Party poster, which, for once, was generally popular:  ‘L’Allemagne d’Abord? Non!’ ”

This sentiment was hardly confined to the political extremes.  Flanner observed that the Six-Power plan left many French feeling that “France figures not as one-sixth but as one-twelfth.”  “[M]ost frightening of all,” she continued, “any plan for unifying western Germany instead of isolating each of its provinces, reminds them of Germany’s organizing genius, which Parisians can see at work again, as it was during the Occupation, simply by shutting their eyes, and can hear, like an echo of the rhythm of Nazi feet along the Champs-Elysees.” 

These sentiments were so strong that the cabinet instructed Foreign Minister Georges Bidault to withdraw from the London agreement in May 1948, throwing the entire recovery plan into jeopardy.  Even with additional security guarantees from the US and UK, Bidault’s politically exposed French government felt they needed to seek approval of the National Assembly. 

With obvious reluctance, Bidault rebuffed criticisms of the Socialist party within his governing coalition.  “There is not the slightest chance of combining Marshall Aid and the rejection of Germany which would all the same conform to fifty per cent of our desires.  There are moments when it is necessary to know how to act to bring things to an end.  If we want to act alone, we will lose everything.”

Having narrowly held the cabinet together and holding little hope of success, Bidault then took his case to the Assembly.   “His three years of peace as France’s leading diplomat of the younger generation,” observed Janet Flanner, “seemed to have cost him more than the long years of war, during which he functioned as . . . the bold and successful chief of the underground forces in France.”  He argued that France would gain some benefit from the London accords, despite serious shortcomings; again, he put the real issue more starkly: that the Assembly must choose between cooperation with close friends and international isolation.

Flanner gave American readers a timeless description of the proceedings, which it seemed could only have taken place in Paris.  “As the talk grew more tense, the daytime hours did not suffice for it, and Deputies took to arguing all night and voting at dawn; in all Paris, for those hours, only Parliament and the Montmartre night clubs were up and hard at it, with some of the city’s few taxis working both stands, carrying the dissimilar, tired stragglers home.”

In the end, the Socialists within the governing coalition held the deciding votes.  On June 17, 1948, they swung the vote in favor of the London agreement (citing their objections as future negotiating points), simultaneously choosing to keep the coalition government together and to keep France allied with the western bloc.  The final vote was 297-289.

Tony Judt later characterized French leaders as having accepted a “European solution to France’s German problem, in effect neutralizing Germany by harnessing it to a collective project.  In those three years France had, in effect, to come to terms with the abrupt negation of three hundred years of history.  In the circumstances this was no small achievement.”  Norman Stone went even further, calling the vote “one of the deciding moments of French history, in that the main danger was now recognized as Soviet, and the way forward, the elaboration of a pan-European system which the French would have a hand in managing.”


Within a week of the French vote, West Germany was formed and introduced its own currency.  Stalin again overreacted, cutting off entry into West Berlin (which was surrounded by overwhelming Red Army forces).  The US and Britain responded with the famous Berlin Airlift, flying in supplies for almost a year, before Stalin, fearful of starting a war over the issue, backed down.  Still, he’d drawn his borders and boxed himself in with his allies.

These decisions did not preordain the collapse of the Soviet empire in 1989.  Stalin’s successor, Nikita Khrushchev, who disavowed much of Stalin’s legacy, and Khrushchev’s successors could have made different decisions in their own rights.  Instead, they doubled down on Stalin’s view of empire and economics.  They used the Red Army to quell uprisings in Budapest in 1956 and Prague in 1968; they “solved” the crisis of emigration out of East Germany by building fortified border walls not only in Berlin (1961) but around the entire country.   And despite the evident futility of Khrushchev’s promise to catch up to the US GDP per capita by 1970, they never gave up on central planning.   In 1964, the economist Abel Aganbegyan made a wry counterprediction that the entire population would need to work full time on rebalancing the ever more complex annual economic plan by 1980.

It was no sure thing, either, that the western alliance, reflected in organizations like NATO and the precursors of the European Union and World Trade Organization, would stay together.  The US in particular made a number of strategic errors, the worst of which was Vietnam.  But those mistakes did not make the Soviet system any more palatable.  Left and right would always agree on that, if not always for the same reasons.  The Soviets lost their bet that the capitalist countries would fragment or collapse.

Stalin emphatically decided to isolate his new empire, physically and economically.  He chose the losing strategy that his successors continued for decades, and that Gorbachev attempted, unsuccessfully, to escape.


Mark C. Jensen is an attorney and writer who lives in Brookline, Massachusetts.  He holds an AB in Mathematics from Dartmouth College and a JD from Duke University School of Law, and is of counsel with Nutter, McLennen & Fish of Boston.  He recently completed a memoir entitled “QoL: Memories of an Intrepid Traveler.


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