#70 The ‘Third World’ & Development
Both the German KfW and the Japanese DBJ development banks provide models for Economic growth. The Americans have to be credited with the German and Japanese recovery. Both banks provide many of the conditions that poorer countries today desperately need: development banks. The KfW and DBJ were key mechanisms in the recovery process after 1945. Yet this model has not been repeated in Africa or Latin America. There remains much argument in the literature on whether a repeat of development banks could create conditions for development. Several attempts made to copy KfW failed; governments and politicians did not accept the arm’s-length policy that was essential governance to make such institutions successful.
The Americans and the older European powers ignored the lessons from these two experiences. The key component of development banks was long-term loans which provided the requisite new financial resource that is the requisite for industrialisation. Private banks do not seem able or willing to provide such loans. The Soviet government in the 1960s provided such loans to China before they fell out with each other. The Chaebols, family-owned corporations in South Korea who dominated that market, also provided this type of loan within their own dynasties.
The extra scarce resources necessary for industrialisation, have always needed special conditions. Development banks, social government to government loans, or special free enterprise global enterprises can provide these conditions.
The needs of the ‘Third World’ in the 1940s and 50s were similar but different, they did not have experienced industrialised personnel. The ‘Third World’ countries were seen solely as markets for American goods and opportunities for investments by US capital, similar to their role as colonies but with the important exception that now they were to be ruled by their own people.
Instead, the Americans set about attempting to rid the entire world of communism. Right at the beginning of their global ascendancy, after 1945, they began to fight the world’s people, who simply wanted a bit of the wealth the Americans had already obtained. This would be a never-ending struggle to dictate how people should rule themselves, with a slew of wars they could never win. They began at home; it was called McCarthyism.
USA: McCarthyism
Senator Joseph McCarthy led a government-supported campaign from the late 1940s to the late 1950s, to rid the USA of anyone with left-leaning tendencies. It was argued at the time, with justification, that he set up a witch hunt to track down subversives: people antagonistic to the high ideals which USA ideology had persuaded themselves was their own God-given destiny, mentioned above.
McCarthy set up the House of Un-American Activities and began accusing people of 'The Left'. They were asked in public, "Are you or have you ever been a member of the Communist Party? Have you been sympathetic to the Communist Party?" McCarthy and his allies were consumed by fear and paranoia as if American civilisation was about to be taken over. The campaign was focused on people in academia, the arts and entertainment, labour union activists, and those in public service. These were accusations of subversion or treason, often without proper evidence.
Revolutionary Trades Unions in the USA
In the first two decades of the twentieth century, some of the trade unions became aggressive in their demands. This was the period of Eugene Debs and William Heywood, leaders of the IWW, the Industrial Workers of the World, colloquially known as the Wobblies. The IWW was a revolutionary trades union movement whose central tenet was that workers should unite as a social class and should aim to overthrow capitalism. The IWW attempted to unite smaller industrial unions to bring smaller unions under a single umbrella. The AFL, the American Federation of Labor, stood against the IWW. So too did the central government.
In the first decade of the 20th century, the militia had been brought in to suppress strikes; men were killed or imprisoned, and many deported. Politicians and businessmen united to suppress the movement with whatever means they could muster, including lynchings.
This was a movement that reached across the USA and continued through the 1920 and 1930s. By the 1940s McCarthy intended to suppress the IWW in the same manner as the Communist party.
The McCarthy campaign was aggressive, aimed against anyone with communist sympathies. It was called a ‘red scare’. President Truman screened all government employees.
McCarthyism was unrelenting over 10 years from 1952. The movement destroyed careers, led some people to imprisonment, and created blacklists. Some workers were unable to work. It achieved its national purpose: to rid United States politics of any structure that might obtain power through democratic means. The best and most creative or self-confident young people on the left were destroyed, often unable to find work of any kind. McCarthyism gutted America's socialist movements for at least a generation.
The small Communist Party survived. The small academic publisher Monthly Review also remained in existence. But the guts had been taken out of the trade unions. Before the 1939/45 war, there had been a thriving union left-leaning movement in every city in the Union. There had been vicious struggles between industry and unions. McCarthyism provided an American nation where there was only a single political system; anyone thinking otherwise was treason.
Recommended Reading
USA Policy post-1945:
The major title covering the period from 1943 to 1945 and the negotiations which created the basic infrastructure of the post-1945 global economy at the village of Bretton Woods in the eastern USA, see:
Gabriel Kolko, The Politics of War: The World and United States Foreign Policy, 1943- 1945, New York: Random House, 1968. This basic book covers the US economy, cutting British imperial aims down to size, checking the left parties throughout Europe post-1945, handling the Soviet Union in eastern Europe, setting up the United Nations, planning the future of Germany, and the Nuclear bombing of Japan.
Also, see:
Nicholas John Spykman, America's Strategy and World Politics, Harcourt Brace, 1942. This was the first geopolitical study written by an American citizen, indicating the USA's arrival on the world stage.
Europe post-1945:
The scholarly published literature on Europe in the English language since 1945 is so numerous that few books attempt to list every title. There are memoirs, reports, and primary sources. Any list is selective. A long and reasonably comprehensive title is: Tony Judt, Postwar: A History of Europe since 1945, Vintage, 2010.
I first became aware of the scale of the collapse, movement of people and deaths throughout Europe after 1945, through publishing: Carl Tighe Gdansk, National Identity in the Polish-German Border Lands, Pluto Books, 1990.
The published post-1945 literature on the USA, USSR, Japan, China and Asia is equally numerous.
An old but excellent book is by Donald MacLean, British Foreign Policy: The Years after Suez, Stein and Day Publishers, 1970. Maclean was head of the American Department of the Foreign Office; one of three very senior British officials, Kim Philby and Guy Burgess in the Foreign Office who had worked in the USA as British representatives who went over to the USSR. This book was written in Moscow; it is well worth reading, as it is free of the nationalism that permeates so many titles on this subject.
Discussions for the Peace during the War:
The Maisky Diaries: Red Ambassador to the Court of St James, 1932 to 1943, edited by Gabriel Gorodetsky, Translated by Tatiana Sorokina and Oliver Read, Yale University Press, 2017. This is important as it provides us with a view of USSR intentions, which have been largely ignored. Leaders in the West have, it seems, always viewed socialism as a threat that had to be confronted.
Key players in the Cold War were brothers John Foster Dulles, Secretary of State, and Allen Dulles, Director of the CIA. See: Stephen Kinzer, The Brothers: John Foster Dulles, Allen Dulles and their Secret World War, St Martin’s Press, 2013.
The CIA
Philip Agee, Inside the Company; the CIA, Stonehill Publishers, 1975. This details the development and purpose of the largest secret agency in the world at the time of publication.
William Blum, America's deadliest Export: Democracy, The Truth About US Foreign Policy, Zed, 2013.
Douglas Valentine, The CIA: As Organised Crime: How Illegal Operations Corrupt America and the World, Clarity Press,1949.
John Whitney, How the CIA Tricked the World's Best Writers, OR Books, 2016.
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The peoples of Western Europe had risen from one world of relative poverty and had learnt how to take the wealth from the Americas and transfer it to their own countries. This was slavery and latterly until 1920, indentureship. A whole set up of banks, shipping companies, and insurance companies had arisen to make these transfers possible. From the 1750s the European invaders turned their attention to Asia and systematically began the colonisation process anew. At the same time, as they attempted to colonise and extract the wealth of Asia, the colonising countries began the process we now recognise as industrialisation alongside the rapid growth of cities. The surplus resources extracted through colonisation were used to finance the growth of new industries.