Economists Propose a Global Marshall Plan For Lasting Peace Through the 21st Century

As the Second World War wound down, the United States was tasked with writing the first chapters of European recovery. The continent was in ruins, economies were ravaged, and many different ideas were floated as to the best direction moving forward. One initial proposal, known as the Morgenthau Plan, called for the transition of Germany into a “pastoral state.” Industry would simply cease to be. Factories would be dismantled and the economy allowed to plummet. The plan’s chief aim was to prevent Germany from ever again becoming a war power. In the event of a new world war, the plan’s authors wanted Germany on the sidelines — permanently.

Unfortunately for Morgenthau (and fortunately for pretty much everyone else), multiple experts found the plan untenable. They accurately explained that its implementation would lead to widespread death and displacement. This was the last thing the world needed on the heels of a six-year conflict that claimed 60 million lives.

Long story short: The Morgenthau Plan was eventually rejected because it was rooted in specious socio-economics, specifically that freedom and peace could be achieved via the elimination of the working economy. This is the conclusion reached by two prominent development economists — Erik S. Reinert and Jomo Kwame Sundaram — in an article recently published at the World Economic Forum. The history lesson serves as a backdrop as the economists propose their own monumental economic-development plan, inspired in large part by the Morgenthau Plan’s eventual successor.

The European Recovery Program, commonly called the Marshall Plan, was an aid and oversight program which successfully re-industrialized the major Western European economies. The Marshall Plan worked because it was, as its namesake John Marshall decreed, a “comprehensive and strategic” push for economic development. While it ought to be noted the goals of the Marshall Plan weren’t limited to economic development — the U.S. was mainly focused on strengthening its allies against the Soviets — its implementation was a fountain of youth for devastated countries like Germany and France.

It’s from this framework that Reinert and Sundaram submit their plan for a worldwide Marshall Plan:

“The world needs a well-designed and far-reaching strategy to stimulate industrialization, modeled after the European Recovery Program — the American initiative that enabled Europe to rebuild after World War II. The Marshall Plan, as it is better known, entailed a massive infusion of US aid to support national development efforts in Europe, and is still viewed by many Europeans as America’s finest hour…

Marshall’s vision offers important lessons for world leaders seeking to accelerate development today, beginning with the need to reverse the effects of the Washington Consensus on developing and transition[ing] economies — effects that resemble those of the Morgenthau Plan…

It is time to increase poor economies’ productive capacity and purchasing power, as occurred in Europe in the decade after Marshall’s speech. Marshall’s insight that such shared economic development is the only way to create a lasting peace remains as true as ever.”

I know what many of you are thinking: Context is key. 2015 is not 1945. But I don’t think Reinert and Sundaram are trying to argue that our current situation is analogous to the end of World War II. On the contrary, one of their many main points is that it shouldn’t take an unprecedented tragedy to spark a Marshall Plan. Reinert and Sundaram are concerned that international economic policy has drifted away from the Marshall tradition, that our current way of thinking is far too regressive and therefore ineffective at fostering lasting prosperity. Only through a firm commitment to bolstering the economic development of poor countries could lasting peace and prosperity ever be attained. Allow developing countries to wallow in the mud too long without assistance and you’ll be facing bigger troubles down the line.

It’s a fascinating proposal, even if it doesn’t have much shot at ever being enacted. I’ve linked their piece again below, and would love to hear what readers think of it.