Chapter VIII. The Problem of Communism

12.Making heavy loans or gifts to European nations is not the most effective way to fight world communism.

There is one argument for our policy of making huge loans and gifts abroad that appeals especially to American conservatives. It is that this policy is the only way to “halt the spread of communism” and that, if we allow Europe simply to stew in its own juice, it will surely go communistic. This is usually accompanied by the argument that if our loans, however large, succeed in stopping communism, or in reversing the trend to ít, they will have proved very cheap.

When one tries to analyze this simple argument one finds that it begs all the real questions. In its usual form, it simply takes it for granted that loans to Europe will stop communism. The assumption is that wherever you have a country in which there is a powerful communist party and in which the government in power is non-communist, financial help to that government will stop communism. Just how it will stop it is not made clear. The mere intention on our part that the loans should be used to combat communism is commonly taken as an assurance that they must actually have that effect. The loans, it is apparently assumed, will make the recipient governments friendly and grateful to us; and by supporting them, by keeping them on their feet, by preventing starvation, we will make the communist ideology in those countries wane or die. Sometimes the loans, like those to Greece and Turkey, are deliberately intended to combat Russian aggression by adding to the military strength of the countries threatened by it.

It is obvious that we have more than one question to deal with here. We have on the one hand the question of what is the most effective means to combat the communist ideology. We have on the other hand the question of what is the most effective means of curbing further Russian aggression which rests on Russian military power. The two questions are connected, but they are certainly not identical. The two ends require different means, though to the extent that we succeed in one it will of course help us with the other.

Clearly the burden of proof ought to rest on those who contend that making loans or gifts to Europe is the most effective means of combatting the communist ideology. At most, as many have already come to recognize, loans could be only a limited and temporary means for combatting the spread of revolutionary ideas. It would certainly seem at first glance much more effective, and incomparably cheaper, for our government to combat revolutionary ideas directly. It could do it directly by answering systematically the lies that are published in Moscow and in the communist press in this country and abroad about American intentions and about the “failures” of the capitalist system. It could take the aggressive in the propaganda war that Russia has launched against us, and bring before the United Nations (to cite but a single example) the horrors of “Gulag”—the Soviet Slave Labor Trust—with its more than 14,000,000 slave workers scattered in concentration camps through the length and breadth of Russia,¹ toiling twelve hours a day under conditions of unspeakable wretchedness, starvation and disease. Certainly, instead of weakening ourselves by turning resources over to highly unstable and unreliable European governments, it would seem better to expound directly the merits of our free enterprise system and to contrast them with the hunger, terror and slavery under communism.

The common argument that capitalism must provide even more goods than it already does, in order to prove its “superiority” over communism, is complete nonsense. The comparison is already so enormously in capitalism’s favor that no further demonstration of this superiority is needed. What is needed is to point out how great this superiority already is.

It may unfortunately he doubted whether our government, or any government, is the best instrument for this counter-propaganda in favor of capitalism. It is obvious that most of those in our government do not know what the arguments for capitalism, and against communism, really are. Their so-called defense of capitalism is usually apologetic. They are nearly always defending some other kind of capitalism than the kind we actually have. They are defending their own version of a capitalism “reformed” in accordance with their particular interventionist ideas.

But if the American government cannot be counted upon as the ideal defender of capitalism or the ideal critic of communism, much less, certainly, can most European governments to which our loans are being and would be made. Practically all these governments consist of “economic planners,” that is, people who believe in a dictated economy, and who in a hundred ways are making it impossible for a free, competitive capitalism to function within their borders. Some of these governments consist of outright socialists, who do not believe in capitalism at all.

“FIGHTING” COMMUNISM WITH SOCIALISM

AND THERE could hardly be a more perverse and mistaken idea than the idea that you can fight communism with socialism. So-called “gradual” socialism is at best a halfway step toward communism. The economic ideals of socialism and communism are identical. Both believe in government ownership and operation of the means of production. Once this ownership and operation become sufficiently extensive, the government has economic life-and-death powers over the individual. It can say where he must take his job, what job he must take, or whether he can take a job at all. And once the government has this power, the liberty of the individual has in fact, if not in form, disappeared. As Alexander Hamilton pointed out in the Federalist Papers a century and a half ago, “A power over a man’s subsistence amounts to a power over his will.”

Socialism and communism differ only in their political methods. The socialists, it is true, believe in coming into power by peaceful means, through the ballot. But even communists prefer a “peaceful” means wherever it is open to them. It is only where they cannot get into power by peaceful trickery and intrigue that they resort to open force. The socialists, it is true, talk of preserving the methods of democracy and the liberty of the individual, and most of them are no doubt sincere in their protestations. But they fail to recognize that in fact socialism does not and cannot permit economic liberty, and therefore in fact it must ultimately cease to permit any other important kind of liberty. A man’s opinions must be such that they please the officials in power if he is to gain any promotion or even enjoy any security under socialism.

Under capitalism, in addition to the possibility of going into business for oneself, there are in the United States several million employers competing against each other for labor. Their competition not only raises the wages but protects the liberties of the worker. His situation becomes incomparably worse when he must bow to the will and terms of a single employer, the State. The history of the spread of socialism is in fact a history of the disappearance of peace, representative institutions, limited government, and personal liberty.

Moreover, as post-war experience has already shown, when American funds are turned over to socialist governments or to “planning” governments, recovery does not in fact take place. It is prevented by the very policies that these governments pursue. What the American funds accomplish is to make the dictated economy or socialism appear for a time to work better than it actually does. The loss of these funds by the United States, on the other hand, by promoting inflation and increasing the scarcity of goods here, appears to make our capitalism work worse than it acually does. Nevertheless, in spite of this help to the dictated or socialistic economies, the borrowed funds continue to run out and the borrowing government is soon back for more. Meanwhile the communists have found an additional argument against the government that has failed to bring recovery. It has failed, they say triumphantly, not because it has adopted restrictive regulations and practiced socialism, but because its regulations have not been drastic enough and because its socialism has been partial and half-hearted. And the socialist and collectivist planners who have denounced free enterprise, and have taught the citizen that only government can solve his problems, have deprived themselves of any convincing answer to this assertion.

Once more we return to the conclusion that our loans or grants could bring at best a minor and temporary improvement in the economic conditions of any nation unless they were accompanied by drastic reforms in that nation. As the economist Wilhelm Röpke has put it: “Without a drastic internal reform of the national economy, to put an end to inflation and socialist controls, foreign credits can have no lasting effects, just as a man cannot be kept alive indefinitely by perpetual blood transfusions if the cause of his hemorrhage is not removed.” And if this is what has already happened in the case of England, “whose dollar loan could not keep pace with the constant wastage of a socialist system which destroyed the price mechanism and its incentives,” what are we to expect in the case of countries even more deeply infected by inflation and collectivism?

Moreover, it is not the actual level of economic welfare within a nation, but its dominant ideology, which really decides what course it will take. The belief that Europe will turn in desperation to communism unless it receives heavy financial help from our government rests on one or all of three assumptions. The first is that communism is more efficient than private enterprise in supplying at least the bare means of subsistence. The second is that free enterprise is a luxury that only an already prosperous nation can afford. The third is that, regardless of the truth of the matter, hungry and desperate people always believe communism to be more efficient than free enterprise. The first two assumptions are always false. The third is likely to be true only if communist propaganda is allowed to monopolize the field, or if the case for private enterprise is presented apologetically or stupidly. In Russia today, according to a recent study by the United States Department of Labor, the average worker is about one-tenth as well off as the American worker in terms of what his wages will buy. Compared with a year ago the prices of rationed foodstuffs in Russia have risen about 166 per cent, while the Russian worker’s wages have risen only 25 per cent. Would “hungry and desperate” men be eager to embrace communism if they were made aware of such basic facts?

The argument that Europe will go Communist unless it gets huge loans or gifts from us takes more than one form. On its most naive level it is something like the threat of a poor relation to commit suicide unless he is given a handout. In its most plausible form the argument is that the Communists will capitalize on starvation and economic chaos in Europe by attempts to seize power. But this argument takes it for granted that loans from the United States will actually play the decisive role in averting hunger and restoring Europe’s economy. The really decisive role, however, as we have already seen, will be played not by American aid but by the economic policies pursued in Europe itself. Unless European governments permit the restoration of a working competitive price mechanism, our future aid will be nullified as completely as was our loan to Great Britain.

ANTI-COMMUNIST POLICY

THERE remains to be considered the granting of frankly political loans, like those to Greece and Turkey, in order to support the military establishments of those countries and help them to combat any Russian or Russian-inspired effort at conquest or at a coup d’etat. It is beyond the purpose of this study to analyze in detail these more strictly political aims. But it may be pointed out that, if we are to adopt a policy of preventing or halting any Russian military advance or military coup, we must have the clarity and courage to see and accept all the implications of such a policy.

Political loans can be only a part of it, and moreover only a subordinate part. It is worse than useless to give to countries threatened by Russian domination less than enough to resist the threat. The resources that we have contributed would then soon become part of Russian resources to be used against our interest. If a country to which we have granted such aid subsequently seems in danger nonetheless of being conquered or controlled by Russia, then we must not only pour in further aid, but stand ready even to use our own direct military force if the aid we have already given is not to be turned against us.

We must also keep in mind the fact that the policy of military aid to foreign countries always involves the danger that the very government to which the aid has been granted may use it against us, or that that government may be overthrown either through an internal revolution or a “free” election within that country, after which the new government may proceed to use our aid against us.

When we make frankly political loans for basically military reasons, in short, we must not keep ourselves willfully blind to the dangers of these loans. Above all, our policy must be consistent. It is merely a piece of diplomatic imbecility to make military loans on the one hand to Greece and Turkey in order to enable them to combat the threat of Russia, and then to turn around and beg Russia to come into a plan to accept loans from us for “economic rehabilitation” which would inevitably be used to maintain or increase her military strength. It is insane to strengthen Turkey to fight Russia and then offer to strengthen Russia to fight Turkey.

The Marshall plan was in origin a political retreat from the Truman Doctrine. In it all the military implications of the Truman Doctrine were dropped. Russia herself was invited to share in this new distribution of American dollars. Now that nobody can any longer doubt that Russia is waging a cold war on us, the Marshall plan is being presented in Washington as a logical development and application of the Truman Doctrine. It is presented as the American government’s program for “containing” and combatting world communism. Unfortunately, the comparatively easy decision to give more of the American taxpayer’s money away cannot be regarded as a substitute for the hard political and diplomatic decisions that any serious program of countering Russian Communist aggression must involve. The illuson that all we need to do to halt Russia is to give away money may divert us until too late from the steps we really need to take.

THE SUBSERVIENCE OF CONTRADICTION

THE FACT that Russia has spurned the invitation to participate in the Marshall plan, and that the “new” Communist International has denounced it, has, however, enormously increased the popularity of that plan in the United States. If Communist Russia does not like it, it is thought, it must be good. If Russia fears it, then it must have been a very shrewd political move, and we should drive ahead with it.

Before we too hastily make this crucial decision, however, it will be well to try to analyze with the utmost care the reasons why Russia opposed the plan. She could, after all, have embarrassed us tremendously by hailing the plan, putting in a request for $25,000,000,000 or so as her own share of America’s largess, proposed that Europe adopt communism to insure recovery under the plan, or at the very least insisted that there must be no interference on our part with her communistic policies in exchange for our loan. Such tactics would have put Secretary Marshall in the dilemma either of having to offer Europe and Russia fantastic sums without even getting in return policies that might help recovery and world peace, or of turning down the plan and opening himself to the Russian accusation of having made a fraudulent offer and welshed on it.

If the noisy Russian opposition to the Marshall plan is not simulated but sincere, then the Russians may have made a grave error which has needlessly alienated them from the Western countries that look to us for help. One possible reason for this error is that the Russian economists sincerely hold the nonsensical doctrine which was reflected in Pravda of June 25 (and which has its roots in fact in the preachments of Marx and his disciple Lenin) that a capitalist country desperately needs to “conquer” foreign markets for its “surplus products”; and that the Marshall proposal to give Europe money will help us get rid of these “surplus” goods and so prolong the American boom and postpone, perhaps indefinitely, the “ripening economic crisis” here. As we have already seen this view to be grossly fallacious, it would be the worst of all reasons for driving ahead with an inflationary loan policy.

Another possible explanation of such a Russian error would lie in the propensity of the Kremlin to ascribe to us the same kind of motives and tactics that inspire its own policies. It is Russian policy, for example, to give as little help as possible for as great control as possible. When the Kremlin gives “economic help” to a neighboring country, it consists usually of 1 per cent help and 99 per cent propaganda glorifying that help. If Russia had offered an equivalent of the Marshall plan, the dominating purpose of the offer would certainly have been an extension of Russian political control and influence. The Kremlin leaders therefore may have taken the Marshall plan to be essentially a plan for increasing American dominance, prestige and military power and alienating the satellite States from Russia. They attached so much importance to this danger that they threw away the opportunity of exploiting the Marshall plan for their own purposes as they might have done. But as the Marshall plan is in fact what it professes to be—an offer of large American resources in return for no controls whatever, and only for the conditions suggested by the borrowing nations themselves—Russian suspicions would hardly seem sufficiently warranted to justify unqualified endorsement of the Marshall plan by Americans.

The foregoing assumption regarding the Kremlin’s interpretation of the Marshall plan may be correct. There is some ground for it in the language of the manifesto issued on October 5 by the revived Communist International. This explicitly denounces, not the Marshall plan, but something that it calls “the Truman-Marshall plan”—which implies that in the Russian view the Truman Doctrine and the Marshall plan are identical.

But these assumptions regarding the Russian government’s real beliefs could be mistaken. If we have learned anything in the last thirty years about Communist methods, we are safe in assuming that the Vishinsky United Nations speech, the open revival of the Comintern, and all other recent Russian steps, are the outcome of plans long worked out—probably before either the Truman Doctrine or the Marshall plan was even thought of. Any policy we had contemplated or decided upon would have been denounced. The purpose of this Russian Communist campaign is simple. It is to discredit America; and therefore everything we do or think of doing must be discredited. Totalitarian propaganda is total: it makes no distinctions. Nothing would suit the Russian book better than a withdrawal of all American troops from Europe tomorrow; and yet if we did this, the Russian propaganda machine would doubtless tell Europe, after our action had been taken, that once more the United States, interested only in holding on to its own dollars, had left Europe in the lurch, as the result of a secret deal made with the Hitlerites and German militarists.

It would be a profound mistake, therefore, for the United States to drive ahead with the Marshall plan simply because the Communists have denounced it. This would be merely “the subservience of contradiction.” If we followed such a course consistently, the Communists could make us adopt any policy they pleased merely by advocating its opposite.

Is the Kremlin so stupid as not to know the effect of its opposition? Is it so stupid that it does not realize that the best way to assure American persistence in the Marshall plan is to have the Communists everywhere denounce the plan precisely as they are doing? This would be a dangerous assumption for us to make: like that of a chess player who smugly assumes that an astute opponent has made a very stupid move, and then makes the “obvious” reply—which turns out to be precisely the reply that his opponent hoped for, and the reply that may cost him the game. A good chess player, when his opponent has made what appears on the surface to be a merely stupid move, gives far more thought than otherwise to the purpose of that move and the possible consequences of his own reply.

We should do the things that really counter the Russian menace, and not merely the things that the Russians publicly say they don’t like.

Certainly we should not overlook the fact that the Communists have politically a very strong issue here. This, as reflected in the text of the October 5 manifesto, is the call upon all Communists in Europe to “grasp in their hands the banner of national independence and sovereignty in their own countries,” and “to fight against attempts at the economic and political subjugation of their countries.” Can we afford to feed the Communists the ammunition they want for this propaganda?

Once more we are brought back to a central dilemma of the Marshall plan: if our loans are made without economic reforms in the borrowing countries, the funds will be dissipated without bringing any revival; but if we insist on reforms as a condition for our loans, the Communists will exploit the powerful issue of “dollar imperialism” and “economic subjugation.”

The Communists, finally, may be able to counter the Marshall plan not merely with propaganda, but with direct action. As James Reston has pointed out: “It is not difficult to see what the Communists, with their power over the labor unions in France and Italy, could do to the Paris reconstruction program, even if the United States Congress voted the full $22,440,000,000 requested by the sixteen-nation conference.”¹

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¹ See the documented map published by Plain Talk (240 Madison Ave., New York).

¹New York Times, October 7, 1947.