5. The Foundations of Policy

The basis for U.S. policy in the Cold War era is outlined with considerable clarity in the internal record of planning.⁶⁵ With unprecedented economic and military preeminence, the U.S. prepared to become the first truly global power. Not surprisingly, corporate and state managers hoped to use this power to design a world order that would serve the interests they represented.

During the war, U.S. planners developed the concept of a "Grand Area," a region understood to be "strategically necessary for world control," subordinated to the needs of the American economy. In its early stages, the Grand Area was conceived as a U.S.-led non-German bloc. It was to incorporate the Western hemisphere, the Far East, and the former British empire, which was to be dismantled along with other regional systems and incorporated under U.S. control. Meanwhile the U.S. extended its own regional systems in Latin America and the Pacific on the principle, expressed by Abe Fortas in internal discussion, that these steps were justified "as part of our obligation to the security of the world... what was good for us was good for the world." British officials were unimpressed, denouncing "the economic imperialism of American business interests, which is quite active under the cloak of a benevolent and avuncular internationalism," and is "attempting to elbow us out." As it became clear that Germany would be defeated, the Grand Area concept was extended to include the Eurasian land mass as well, insofar as possible. These general plans were applied to particular regions with much consistency.

With regard to the Soviet Union, the doves were reconciled to a form of "containment" in which the Soviet Union would control most of the areas occupied by the Red Army in the war against Hitler. The hawks had broader aspirations, as expressed in the roll back strategy of NSC 68. U.S. policy towards the Soviet Union has fluctuated between these positions over the years, reflecting in part the problem of controlling the far-flung domains "defended" by U.S. power, in part the need for a credible enemy to ensure that the public remains willing to support intervention and to provide a subsidy to advanced industry through the military system.

The Grand Area was to have a definite structure. The industrial societies were to be reconstituted with much of the traditional order restored, but within the overarching framework of U.S. power. They were to be organized under their "natural leaders," Germany and Japan. Early moves towards democratization under the military occupation caused deep concern in Washington and the business community. They were reversed by the late 1940s, with firm steps to weaken the labor movement and ensure the dominance of the traditional business sectors, linked to U.S. capital. Britain was later to undergo a similar process, as did the United States itself.⁶⁶

Moves towards a European economic community, it was assumed, would improve economic performance, reconcile all social sectors to business dominance, and create markets and investment opportunities for U.S. corporations. Japan was to become a regional leader within a U.S.-dominated global system. The thought that Japan might become a serious competitor was then too exotic to be considered: as late as the 1960s, the Kennedy administration was still concerned with finding means to ensure Japan's viability. This was finally established by the Vietnam war, which was costly to the United States but highly beneficial to the Japanese economy, as the Korean war had been.

There are some surprising illusions about these matters. Thus, Alan Tonelson, then editor of Foreign Policy, refers to the U.S. effort to build up "industrial centers in Western Europe and Japan in the stated hope that they would soon rival the United States." There was neither such a hope nor such an expectation. With regard to Japan, for example, Army Under-secretary William Draper, the former vice-president of Dillon, Read & Co. who played a major role in efforts to revive the German and Japanese economies in such a way as to ensure the dominance of the business classes, "considered it doubtful that Japan would ever sell enough to the United States to earn the dollars needed to pay for American raw materials." The illusions about U.S. hopes are on a par with the belief that the United States (or anyone else) has gone to war for "the defense of freedom," disseminated by James Reston and other ideologues.⁶⁷

By 1947, it was perceived that European recovery was foundering and that large-scale U.S. initiatives were required for it to proceed along the desired lines. The first major policy initiative to this end was the Marshall Plan. In his comprehensive study of this program, Michael Hogan outlines its primary motivation as the encouragement of a European economic federation much like the United States, with over $2 billion annually in U.S. aid in the early years "to avert `economic, social and political' chaos in Europe, contain Communism (meaning not Soviet intervention but the success of the indigenous Communist parties), prevent the collapse of America's export trade, and achieve the goal of multilateralism." Such an economic stimulus was required "to protect individual initiative and private enterprise both on the Continent and in the United States." The alternative would be "experiments with socialist enterprise and government controls," which would "jeopardize private enterprise" in the United States as well. A major concern was the "dollar gap," which prevented Europe from purchasing U.S. manufactured goods, with grave implications for the domestic economy.⁶⁸

65 For further details, and references where not specifically cited, see sources cited in the introduction. Also Gabriel Kolko, Confronting the Third World (see note 5).

66 See chapter 11.

67 Tonelson, NYT, April 13, 1986, reviewing Turning the Tide, where he finds a "theoretical problem" in my account of U.S. foreign policy because of this alleged U.S. effort. For similarly fallacious argument, see economic historian Charles Kindelberger, who cites Japan as a "difficult counterexample" to the theory that U.S. foreign policy is motivated by self-interest on the grounds that Japan is not "a puppet of the United States"; by the same logic, one could prove that China and Rumania disprove the theory that Soviet policy was motivated by self-interest. The argument holds only if one adds the assumption that the U.S. and USSR are omnipotent. In the real world, they were motivated by self-interest, but faced limits to their power. Kindelberger, Public Policy, Summer 1971. For further discussion, see my For Reasons of State (Pantheon, 1973), p. 45-6. Draper, cited by Michael Schaller, American Occupation of Japan (Oxford, 1985), 127. Reston, see above, p. 18.

68 Hogan, The Marshall Plan (Cambridge, 1987), 42-3, 45, citing a May 1947 memorandum by William Clayton; 91-2.