25 January 2013

The Europeans Before and After the Cold War

Sometimes I am asked: why history? In so many places, history is a sort of primary-school nationalist propaganda, and serious people do something else. One of the best lines in Robert Skidelsky’s life of John Maynard Keynes is a remark made to Lytton Strachey in Florence, when he was writing one of those doctoral theses that make sense to historians and nobody else. Keynes said, he supposed that it needed to be done, but not by him. Faced with this problem in south-western Germany Max Weber said that a new subject altogether needed to be invented, and he came up with Politikwissenschaft, political science. In due course, history had its revenge: political science utterly failed to do what any science should do, predict. In this case, predicting the fall of Communism. Right to the end, the political scientists, or Sovietologists, simply did not see what was happening under their noses. The splendid Susan Sontag remarked, beating her chest, that if you had wanted to know what Communism was about, your best guide was The Reader’s Digest, a periodical that goes back to the days of Joe McCarthy.

And so in truth does Europe. For all the talk of the continent as some sort of third force, the fact is that European unity is an American idea. It was the deputy director of the Marshall Plan, even, who first suggested that the Europeans should have a commoncurrency–the Americans could never understand why Europe resisted a single market, and they brought that wonderful New-Deal quality to deal with the problem. It took time: when the war in Europe ended, the Americans did not really expect to stay, and they thought that the British could take on the responsibility. The British did in fact take over the industrial regions of Germany and did not put them together with the American zone based at Frankfurt until 1 January 1947; and the French, who resisted any idea of German recovery for a long time, did not add their own zone until 1949, when the Federal Republic was formally set up. For a brief moment in 1945, the British supposed that their strength sufficed, but then the money ran out. It must have been a nightmare to be British Foreign Secretary at that time – problems all over the place, whether Palestine, India, Greece. In 1946 the British worked out what the answer was: if the Americans threatened to let them collapse, then they would collapse. That was probably what they should have done in 1920 – it is still a very interesting question, why the first post-war turned out to be a disaster and the second post-war an enormous success. At any rate, in 1946 there was a dollar loan, and then in June 1947 came the announcement of the Marshall Plan, $13,000 million – a gigantic sum. The Americans did not want their money to be kept idle in national banks, protected by tariff walls, and they encouraged intra- European trade. There was a European Payments Union to balance the accounts in separate paper money, and in 1950 it even saved, of all things, the German Mark – Germany, re-stocking with raw materials, had a balance of payments deficit, which was only sorted out in 1951, by which date its exports were set to take over British ones. It is in this context that the Europeans agreed to discuss economic and political unification. The Marshall Plan’s Paris office even had German representatives (some in American uniform) before West Germany was formally set up. In that sense, NATO and Common-Market Europe are twins.

They were also extremely successful. I once had to write a book about Europe between 1870 and 1919, and it is a fascinating period – Budapest is one of its greatest monuments. I first came here fifty years ago. I had become interested in the Habsburg Monarchy – the reasons are rather odd, I have no family connections – and asked the British Council if they had scholarships to Austria. They said, no, but the Hungarians have just asked us whether we have scholars who would go and learn Hungarian in Debrecen, so I went. It was exceedingly interesting, and in Budapest this must have been part of some détente scheme, connected with Khrushchev’s gambit against Stalinism. We all know the sequel. Hungary was to take a leading role in the rise of the Iron Curtain, presenting a piece of barbed wire to George Bush Senior, accepting a large loan from Bonn, and allowing the East Germans to escape through Sopron to Austria. It was a very satisfactory moment for those of us who had argued all along that Communism did not work. Later on,through young Zsolt Németh – now the Hungarian State Secretary for Foreign Affairs – whom I had known at Oxford, I went to Transylvania as Ceauşescu fell, and even then I guessed that that apparent revolution was not what it purported to be. There is one great line of Imre Nagy’s, if I remember correctly. He said, as they led him out to be executed, I do not fear death. I only fear that my killers will overthrow the entire system in my name. We have needed the better part of twenty years to see that he was right: these decades have not been entirely happy. Communism had a sort of isotopic half-life, and part of the story was western Europe’s inability to understand what it had been about.

It is of course true that “capitalism” – we have to call it that, unfortunately – could be criticised. The Seventies were not a happy time, and the expression “stagflation” came up to describe an unhappy business, when stagnation went together with inflation. It was, so to speak, the death of Keynes. He had been the presiding deity of the Sixties, a period when even someone as intelligent as A. J. P. Taylor could say that we had solved all economic problems. The great disaster of the interwar period was of course the Slump, with millions of unemployed in the industrial countries and misery also in the agricultural ones. We still do not seem to have reached agreement as to what caused it: my own opinion, for what it is worth, is that it was a function of the First World War. Europe was set up, in part, to avoid that. It is a remarkable tribute to the British and Americans in 1942 that they gave serious thought to the post-war world, and came up with Bretton Woods. True, that system did not really operate until 1958, when the Europeans made their currencies convertible, but the insistence on free trade and the willingness of the Americans to finance it were very important. This launched Germany on her present course, as the most successful of European countries.

This is another aspect of Europe which deserves stress. The makers of modern Germany seem to have got the formula right. They had learned from the awful example of the Weimar Constitution how not to do it. The Weimar people had taken a very literal- minded view of democracy, and they had proportional representation in the umpteenth degree, with referenda and local elections. The Reichstag that resulted from this was so useless that the trick in politics was to persuade the largest party, the Social Democrats, to abstain so that the Reichstag would not sit at all. There were more days of elections than of Reichstag sessions in 1932 and the only piece of legislation that passed was an act to deprive married women of tenure in the civil service, an act supported by every party except the Communists. The Germans who met in that Bonn school-room in 1948 came up with a shorter document, one that provided for sensible de-centralisation, the federal system. The Bank of German Lands, as it was originally called, provided for monetary stability, such that devastating inflation was avoided. In 1948 came the Deutsche Mark – and, after an uncomfortable interval, Germany started booming.

Since I now live for a good part of the year in Turkey I might say that the effect of German migration has been quite positive. As an economic ally, Turkey now weighs more than the whole of the Middle East, including oil. In the initial phase, the problem was to get the French to accept the return of Germany. In a sense this had happened in 1943, when technocrats, Bichelonne on the French side, Speer on the German, had seen that German steel and French iron ore could profitably be put together. Something of the kind had even surfaced in the 1920s. In 1950, Jean Monnet produced his ECSC (European Coal and Steel Community), the blueprint for Europe. Its flag, blue for steel, black for coal, with six yellow stars for the member states including Benelux, is now the European flag. According to Alan Milward, the foremost historian on this subject, it did not really work as intended, because the Korean War caused huge demand for such exports, and the ECSC was swamped. But it led to thinking in terms of a common market, and to a huge increase in trade between European countries.

If in 1990 the Germans just automatically thought that the answer to the problems of post-Communism was for Hungary and the others to join Europe, it is understandable. The one thing that one might add is that Europe should not attempt too much. And perhaps that is the problem now.

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