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Conférence in Athens on the Marshall planTRANSCRIPT
The Marshall Plan and the Road to Recovery:
Learning from the Past CrisesThe Role of the Strategist State
Prof. Claude Rochet
Athens, Mars 5th 2014
Before the Marshall Plan: The Morgenthau Plan
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Deindustrialization
Weak Political power
= a clear intention of
destroying a country
=> Fostering a negative
synergy among ALL
European countries
The Malthusian consequences
of a Morgenthau plan
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No industry => Malthusian trap
No industry => economic collapse
No industry => Negative synergies,
recession for all
Rediscovering the traditional mercantilist wisdom
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Speech by G. Marshall June 5th 1947
Town and industries
are at the heart of
economic synergies
as engines of
wealth creation
What the Marshall Plan wasNOT?
Only a massive transferof monetary ressource to finance imports fromthe US
Just a political operationto contain communism
The catalyst of European recovery
Monetary orthodoxy
Free market orthodoxy
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What it was:
Strong public intervention: Gov’t failures are always preferable to market failures
Alleviation of war controls on prices and quotas, exchange rate stability, BUT under mixed economies re-distributional systems
Priority to productive investments
Considering the economy as a whole and not specific firms as market mechanisms would do
+ Knowledge transfer => Strong multiplier effect
Political consensus on welfare state
Bretton-woods system: no currency straitjacket
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A key issue neglected by the folk vision of the Marshall plan:
Knowledge transfer accounted for 1,5% of the total cost of the plan (20bnUS$)
4-6 weeks study tours were organized in the US to learn management methods
Productivity solutions suited to local conditions
Workers Unions supported the plan under the condition that productivity benefits will be shared between owners, workers and consumers
This resulted in dramatic productivity increase of 25-50% with no increase in fixed assets, and an historic increase of TFP
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Why it succeeded?: Applying the old recipes
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Searching for synergies between
economic activities
All activities are not alike and growth is an
uneven process
Increase the technological content of
products and labour
Prodty increase in
the absence of a
manufacturing sector
Play it again, Sam!
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As Time Goes by,
the fundamental
things apply… Why did the plan worked:
- Linking agriculture and industry
- Creating free-trade zone, BUT within
symmetrical partners
- Relying on technologies and activity
specific sectors
These are the principles
formulated by F. List in 1841The preconditions for wealth, democracy
and political freedom are all the same:
a diversified manufacturing sector
Troïka policies are akin to Morgenthau plans (1)
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De-industrialization
as a massive
destruction
weapon….
Troïka policies are akin to Morgenthau plans (2)
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… with a
particular
emphasis on
Greece
Morgenthau
plan in action
Troïka policies are akin to Morgenthau plans (2)
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Morgenthau
plan in action
A process of
primitivization:
• Loss of skills and
emigration
• Retrogression to
primitive state
Unemployment (% GDP)
Investment (% GDP)
Lessons from the past:
Development is an uneven process
Activities are not alike
Wealth is not valued by hours of work but with knowledge
Infant activities protection is needed to preserve the first mover advantage
High quality activities spill over all the society => civic humanism
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The issue of Good and strong Gov’t is still
topical as a condition for growthClisthenes’ principles: isotopia, isonomia, isocratia
Allegory of the Good Governement, Sienne Town Hall, by A. Lorenzetti
What is the role of a strategist state?
1. A strategic vision borne by sovereign state
2. Power and plenty are linked
3. Understanding the role of high quality activities
4. Modernization of public administration and political strategy are closely intertwined
5. Promoting the entrepreneurs and fighting the rentiers
6. Keeping a tight rein on finance
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14Since 1720, financial
follies are alike
Thank you!
http://claude-rochet.fr
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