The making of an Atlantic ruling class - Kees van der Pijl

Kees van der Pijl traces the formation of a transatlantic ruling class from the early 20th century through to the Cold War era.

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In this era, the specific form and content of the internationalization of capital allowed the bourgeoisie in the North Atlantic area to regroup and develop a series of comprehensive concepts of control by which it could reinforce its hegemonial position both nationally and internationally.
Kees van der Pijl

Introduction

This study investigates the process of capitalist class formation in the North Atlantic area in the period between the launch of Woodrow Wilson's 'Crusade for Democracy' in 1917 and the world economic crisis of 1974-75. The crisis, from which capitalism so far has found no way out, and which in the absence of a clear revolutionary dynamic has only raised the level of violence in the international system to a point where the threat of nuclear annihilation seems all too real, terminated an era of American hegemony and Atlantic integration. In this era, the specific form and content of the internationalization of capital allowed the bourgeoisie in the North Atlantic area to regroup and develop a series of comprehensive concepts of control by which it could reinforce its hegemonial position both nationally and, in the confrontation with extra-Atlantic challenges, internationally. From either perspective, the dominant feature of the era of Atlantic integration was the supranational framework in which bourgeois class rule was organized and legitimized: Atlantic, European, or various combinations of the two.

Class formation in the North Atlantic area, understood as a continuous process of redefining the coordinates of bourgeois rule in response and anticipation to the dynamic of the internationalization of capital, passed through several stages, reaching well back into the nineteenth century. Beginning with the post-Civil War American railway boom, an Atlantic circuit of money capital developed, the epicentre of which at the time of World War One shifted from London to New York. Interrupted and partially disorganized in the 1930s and 1940s, when national productive capital reasserted its pre-eminence at the expense of internationally circulating capital, the Atlantic circuit was restructured after the war in the context of the Pax Americana. As international finance capital, in which the circuits of money capital and productive capital were tendentially integrated at the Atlantic level, the spread of American multinational firms and banks opened a third, synthetic stage of the internationalization of capital.

In each stage, specific trans-Atlantic configurations of interests crystallized, which were acted upon by a segment of the ruling class formulating its concept of control in terms of the requirements of the capital fraction specifically engaged in the internationalization process. Thus, the liberal-internationalist bourgeoisie associated with the development of an Atlantic circuit of money capital at the turn of the century developed its specifically Atlantic cohesion around a concept of control reflecting the vantage-point of the money capitalist. On the other hand, the bourgeoisie protecting industry in a national (or, at most, regional) context in the interwar years carved out sphere-of-interest arrangements with its trans-Atlantic counterparts primarily from a productive-capital standpoint. At the outset of the actual era of Atlantic integration - coincident with Lend-Lease and Roosevelt's Atlantic Charter - this fraction of the bourgeoisie, which I term the state-monopoly tendency, was counter- posed in most West European nations to the liberal-internationalist fraction as contending poles of bourgeois hegemony.

The synthetic ruling-class class strategy which transcended and subsumed this antinomy was corporate liberalism. Shaped in the specific conditions of the New Deal, it became the hegemonial ideological expression of the US-led internationalization of finance capital in the Atlantic area. As a heuristic concept, 'corporate liberalism' was widely used by American New Left historians in the 1960s to characterize the dominant ideology both in the narrow sense of the structural bias towards corporate power, and, in the broader sense, of the co-prosperity alliance between big business and organized labour in the modem practice of American 'liberalism'. In the present study, the term more particularly denotes the synthesis between the original laissez-faire liberalism of the liberal-internationalist fraction (the definition of liberalism still current in Europe) and the state intervention elicited by the requirements of large-scale industry and organized labour, which in the period between the wars accompanied various forms of class conciliation generally referred to as corporatism. (The reader, should therefore, be forewarned that 'liberalism' is not used in the common North American sense as the opposite of conservative!)

The American bourgeoisie during the New Deal, and its subsequent Atlantic extrapolation through several US politico-economic offensives, was able to develop corporate liberalism into the guiding concept for shaping a specifically Atlantic cohesion of class relations. The class fraction leading the way in this process could draw on two major experiments in American social and political history which had hitherto remained disparate, although they had been recognized separately for their potential contribution to meet the challenge of socialism. The first of these was Fordism, a productivist class compromise based on the synchronization of relative surplus-value extraction with the expansion of effective demand, especially for consumer durables. Fordism, with its implications for the macro-economic determination of wage levels and the standardization and regimentation of working-class life, was resorted to by the Roosevelt forces when deflation, carried over from the Hoover administration and dictated by the orthodox money-capital concept, threatened to jeopardize the very structure of capitalist society in the United States.

The second heritage which the New Deal eventually mobilized was the democratic universalism pioneered by Woodrow Wilson. Wilson's universalism, which presumed an integration of domestic and foreign policy, had been shaped even more directly in response to the challenge of socialism. The Crusade for Democracy, by which Wilson led the United States into World War One at the side of the Allies, was meant to outflank the Bolshevik Revolution by co-opting those demands that could be digested by the capitalist system, such as national self-determination, and by aiming to moderate rather than suppress socialism. At the same time, the American intervention was intended to shore up the regimes of bourgeois Europe in which American bankers had invested a large part of the savings entrusted to them by the propertied classes of their country.

When in the context of World War Two, a comparable conjuncture again presented itself to the American ruling class, the Roosevelt forces seized the opportunity to reorient the New Deal from its national-corporatist format to a more liberal-internationalist strategy of expansion, in which domestic working-class demands could be in part evaded, in part compromised, while American economic power was brought to bear on both the British Empire and the Soviet Union in order to force them into compliance with US preferences for an open world.

The Lend-Lease policy, then, inaugurated an era in which the two elements in combination - the generalization of Fordism and an offensive diplomacy of Wilsonian inspiration - materialized as a process of class formation on the North Atlantic level, guided by successive formulations of Atlantic unity. Through recurrent offensives of the United States, and concomitant accelerations of the internationalization of finance capital, a restructuration of Atlantic class relations was brought about which ultimately eliminated the lag hitherto separating the pattern of capital accumulation and internationalization in Europe from that of the United States.

In the era of Atlantic integration, three offensives of this type were launched: the Roosevelt offensive, in FDR's third term; the Marshall offensive, coincidental with the initial four years of the Marshall Plan; and the Kennedy offensive spanning the first half of the 1960s. As far as the global structure of imperialism was concerned, the offensives (alternating with periods of relative American defensiveness in international affairs) represented concerted efforts of the United States to break into the colonial empires or peripheral domains of the European powers while keeping the Soviet Union at bay. Atlantic unity, the American nuclear posture, and its militancy in the underdeveloped periphery itself, were all aimed to prevent socialist forces from interfering with the delicate process of transition from colonialism to neo-colonialism, and more particularly, to prevent the linkage of Soviet power and local insurgency. Paradoxically, Atlantic integration therefore represented a process of redistribution of spheres-of-influence at the expense of Western Europe, facilitated by American control of the international monetary system and its virtual monopoly, on the capitalist side, of the means of nuclear destruction.

In this process of confrontation and redistribution, Atlantic unity was cemented by the support the American offensives could draw upon in Western Europe. As indicated above, the traditional trans- Atlantic ties of capital were augmented after 1917 by the attraction of European social democracy towards a Wilsonian universalism which seemed to crystallize Kautsky's projections of a peaceful, ultimate stage of capitalist development.

Along these two principal vectors - European liberalism and reformist socialism - the process of the transformation of Western European class relations into a corporate-liberal mould was accelerated in the periods of an offensive US foreign policy. However in the intermediate periods associated with Republican presidencies, the corporate-liberal synthesis, deprived of a dynamic American stimulus, tended to disintegrate back into the polarized ideologies of laissez-faire liberalism and state monopolism. Until the ultimate crisis of Atlantic integration in the 1970s, this alternation of offensive and defensive moments in the coherence of the corporate-liberal unification of capitalist class interests testified to the existence of an 'over-determining' Atlantic constraint, related in the last instance to the balance of power within the American ruling class itself as well as to the share of productive capital in the overall profit-distribution process.

From this perspective, the history of Atlanticism, as both ideology and an actual process of class formation, must be related to the three successive strategies of Atlantic unity which corresponded to the different offensive periods of American capitalism. The first was Roosevelt's concept of Atlantic Universalism, which derived its specific Atlantic dimension from the European focus of World War Two and the key position of the British Empire in the world America wanted to expand into. The second version of Atlantic unity was the Atlantic Union idea which surfaced at the time of the Marshall Plan and combined a status-quo approach to control of the periphery with a high-pitched Cold War unity against the Soviet Union. The third Atlanticist strategy was the Atlantic Partnership scheme promulgated by President Kennedy in an attempt to restore unity of purpose to an Atlantic world in which the establishment of a restrictive EEC demonstrated the degree to which Western European capital had emancipated itself from American tutelage and was intent on carving out a sphere-of-interest of its own.

Liberalization and state intervention, the two pillars of corporate liberalism, developed hand-in-hand in the period of Atlantic integration, their relative emphasis deriving from the stubbornness of either the original liberalism (as manifested, for instance, in the pre-Suez political economy of Britain) or of state monopolism (as in the case of Gaullism). The American offensives were instrumental in setting free the forces for this transformation, and in activating the fractions of the bourgeoisie involved in its evolution. The short-term cyclical developments, notably in the profit-distribution process, which will allow US to explain the modalities of actual class formation and politics in the central period under review, however, should not obscure the fact that as a whole, the era of Atlantic integration was characterized by a (Fordist) class compromise between capital and labour on the basis of a 'Keynesian' sub-ordination of petty money interests to overall levels of productive investment, and a profit-distribution structure skewed towards productive capital. The New Deal in this respect, too, marked the beginning of an era and set the standard for Europe.

In the course of the 1960s accumulation conditions in the Atlantic area were more or less equalized, blocking the trans-Atlantic escape routes for American productive capital by eliminating the gap between US and European production conditions. As part of the same development, the profit share of bank capital climbed drastically in all countries involved, and rentier incomes revived as well. By the time Richard Nixon cut the dollar from gold in August, 1971 and thus set free an exponential growth of the mass of international liquidity, banks in practically all countries in the area had already been liberated from the Keynesian shackles imposed on them in the 1930s, or were soon to do so. The unimpeded international circulation of capital which had been the aim of the architects of Atlantic integration was finally realized - at the price of the system itself. Thrown into the rapidly widening channels of international credit, the mass of savings centralized by Atlantic bank capital served to facilitate the transfer of key segments of the productive apparatus of the North Atlantic heartland to new zones of implantation in the periphery.

This wave of internationalization, which widened the scope of the present crisis, also destroyed the very structure of Atlantic integration. By breaking the territorial coincidence of mass production and mass consumption, it undermined the capital-labour compromise and the complementarity of circulation relations; by allowing untrammeled competition in the search for new outlets for capital, and in the mobilization of peripheral elites, it destroyed the fundamental unity of purpose which had hitherto constituted the cornerstone of the hegemonial strategy of the Atlantic bourgeoisie.

Class formation on an Atlantic scale

1. Determinants of class formation

The concrete process of class formation in the North Atlantic area can be broken down into several separate dynamics of class conflict, each of which may be situated on a distinct level of analysis. In terms of the method offered by Marx in Capital, the industrial bourgeoisie primarily constitutes itself as a class in struggle with the working class and landed interests, but the actual process of its formation must be adduced at successive levels of decreasing abstraction.

(1) In the labour process, industrial capital faces the task of subordinating living labour-power to the requirements of the valorization of capital. Here, different modalities of the exploitation relation yield corresponding varieties of the capital-labour relationship in class terms: Absolute surplus-value production, in which the rate of exploitation varies with the length of the working day and the flat speed of work, tends to produce a rigid polarization of the employed and the employers. Relative surplus-value production, on the other hand, which is obtained by reducing the reproduction costs of labour-power in relation to aggregate capital outlay, fosters flexibility in the relations between capitalists and workers on account of an apparently common interest in rising productivity. This illusion of an identity of interests is part of the shift from the formal to the real subordination of labour to capital.

The absolute (in the sense of general and abstract) unity of the bourgeoisie vis-à-vis the working class therefore dissolves into concrete differentiations as soon as the real relation with the workers is taken into consideration. Lenin referred to this differentiation in his 1910 pamphlet, Differences in the European Labour Movement. On the side of the bourgeoisie, he distinguished between the method of 'liberalism' (in the sense of flexibility) and the method of force; on the side of the working class these are matched by reformism and anarcho-syndicalism, respectively.

These different modes of reproduction of the basic class antagonism, based on absolute or relative surplus-value production, were pertinent at various points in the overall process of Atlantic class formation. In continental Europe, the low living standards at the turn of the century helped to preordain the incapacity of the European bourgeoisie to maintain a flexible format of labour relations in the 1930s. Since in the Old World the prospect of mass consumption of durable manufactures did not exist, 'Fordism' in all its aspects (productivity, social wage, further subordination of labour) was not feasible and the rate of exploitation could only be sustained by gearing to absolute surplus-value production. Hence, whereas the crisis of the 1930s in the United States saw 'liberalism' (in Lenin's sense) survive through the generalization of Fordism in the New Deal and its insertion into a strategy of internationalization, in continental Europe authoritarianism and Fascism prevailed. The distinctions between absolute and relative surplus-value production, and between fractions of the bourgeoisie grouped around a concept of force and those advocating concessions, are crucial to understanding what happened in Europe at this juncture, and in fact have been chosen as a point of departure by several influential Marxist analyses of the nature of bourgeois class support for Hitler's rise to power in Germany.

These determinants of bourgeois class formation on the level of the labour process, however fundamental, are not sufficient to analyse the various ideological tendencies within the bourgeoisie. Although labour-process differentiations may help to elucidate the broad differences between, for example, the New Deal and German National Socialism, they fail to account for such trajectories as the French Popular Front, where a united working-class movement, partly of Fordist inspiration, was able to ward off the threat of Fascism but failed to realize a positive programme comparable to the New Deal.

(2) To arrive at a more complete picture, we have to proceed to the next level of abstraction: that of circulation relations between various categories of capitalists, or fractions of social capital. Such fractions are bank, commercial, or industrial capital. In France at the time of the Popular Front, the working class joined forces with the liberal wing of the bourgeoisie, but within the capitalist class, this 'productive' alliance did not succeed in subordinating the interests of the financial world. Since it could not move forward to full-fledged Fordism, which would have included the partial expropriation (or as Keynes called it, 'euthanasia') of the rentier segment in the capitalist class, Leon Blum's Lilliput New Deal was doomed to be rolled back as a consequence of the dynamics of circulation relations.

(3) A further dimension of the concrete fractionation of the bourgeoisie resides in the profit-distribution process, which, in the spirit of Volume Three of Capital, should be theorized as the third level of the determination of class formation. In the overall distribution of metamorphosed surplus-value between capitals, fractions of capital, landed interests and even a segment of the working class (those paid out of the mass of surplus-value without contributing to it directly), specific class fractions crystallize, enter into alliances, and press their particular strategic concepts. Moreover, the hegemony of particular fractions in this profit-distribution pattern may help to explain a specific political climate: e.g. the prevalence of laissez- faire concepts in the United States during the late 1950s when the profit- distribution process was temporarily skewed towards the financial and rentier sphere; or the Keynesian activism of the Kennedy Administration during a subsequent period as the resurgence of industrial capital.

Of course the three levels of abstraction on which class formation may be theorized as taking place, i.e., the labour process, circulation relations, and the profit-distribution process, are in reality only moments of a dynamic totality. This totality also encompasses sedimented layers of older social relations, forms of ethnic and sexual oppression, as well as the survival of elements of pre-capitalist modes of production. And although it is the accumulation of capital which primarily articulates and incessantly revolutionizes it, the concrete social formation derives its external appearance in large part from these autochtonous characteristics. Thus the internationalization of capital, and concomitantly of class formation, in the North Atlantic area included the mobilization of the legacies of anti-semitism, Anglo-Saxon chauvinism and national messianism. At the same time the actual structures of absolute and relative surplus-value production tended to be built upon pre-existing racial, sexual and national differentiations amongst the workers. In this fashion the modern world struggles between the imperialist states, and their subsequent alliances against socialism, have absorbed the 'dead weight' of the past.

Yet despite the multi-layered complexity of the political alliances involved, a characteristic inner logic can be observed in the class strategies evolved by the Atlantic bourgeoisies. Time and again, an offensive, 'liberal-flexible' way of dealing with the working class or other challenges has alternated with a defensive 'method of force'. These strategic options have loosely corresponded with, respectively, relative and absolute surplus-value extraction, and have been linked up internationally (in the sense of functioning as determinants of class formation) through specific patterns of circulation relations in which particular fractions of capital and their ideal-typical concepts were prominent. The money-capital and the productive-capital concepts constitute such functional ideal-types, and we shall therefore briefly review the distinctions from which they may be theoretically reconstructed.

Capital fractions in Marxist theory

The notion of fractions of total capital (i.e., units other than individual capitals related to particular functions in the reproduction of capital) provides an important clue to differentiations within the bourgeoisie which are ideologically pertinent. The concept was developed by Marx in Volumes Two and Three of Capital. The basic functional differentiation of capital is presented in Volume Two. Discussing the forms that capital assumes in the course of its reproduction cycle, Marx distinguishes between productive capital and the two forms belonging to the stage of circulation, money capital and commodity capital, in the sense of capital in money and commodity form respectively.

Apart from the three functional forms, we therefore have the distinction between the stage of circulation and the stage of production, a distinction which is equally important for all further specification and concretization. The stage, or sphere, of circulation comprises capital in money and commodity form; the stage or sphere of production, productive capital. The criterion for this bifurcation is the fact that whereas all forms of capital represent modes of appropriation of surplus-value, only the productive form is engaged in its creation through the subsumption of living labour-power. As will be demonstrated below, this distinction is particularly important when it comes to reconstructing the ideological propensities of the functionaries of productive capital.

This also goes for another distinction Marx deploys in Volumes Two and Three the one between capital engaged in the production of means of production and capital engaged in the production of consumer goods: Departments I and II. Since Fordism in the era of Atlantic integration rested on the dynamic articulation of relative surplus-value production in the consumer-durables sector and a concomitant reorientation of key 'Department I’ industries towards supplying this sector with semi-finished products (notably steel), the departmental division is relevant in this light as well. For the moment, however, we shall proceed from the money- commodity-productive triad.

In Volume Three, Marx again considers the basic differentiation into functional forms of capital. This time the level of abstraction has been reached where 'the embodiments of capital. . . stepwise approximate the form in which they operate at the surface of society, in the action of the different capitals upon each other, competition; and in everyday consciousness of the agents of production'.4 Accordingly, the three functions analysed in Volume Two are raised to a more concrete level. Beginning with the functional form of commodity capital, Marx writes that 'to the degree that this function of capital operative in the circulation process is autonomized into a special function of a special capital at all, and crystallizes as a function assigned by the division of labour to a particular kind of capitalist, commodity capital becomes commodity-dealing capital or commercial capital'.

The commodities in which commercial capital deals are use- values or money, but money only to the degree it is used for the exchange of goods. Commercial capital therefore can be sub-divided again into commodity-dealing and money-dealing capital. The crucial element in the definition of both is the separation from the production process. In practical terms, because of its institutional form as bank capital, money-dealing capital may be difficult to isolate from its counterpart, interest-bearing capital (credit), which is also handled by banks. Although different national banking systems sometimes, and to various extents, reflect the functional differentiation (say, in commercial and investment banking), some forms of credit are by themselves hybrid in this respect, like commercial credit. In the distinction between money markets and capital markets, the two functions are separated however.

The notion of fictitious capital transcends the distinction between money- dealing capital and interest-bearing capital. Fictitious capital is considered by Marx as the comprehensive counterpart of all real economic activity under capitalist conditions. As such, it brings a unity to these activities which turns it into the nearest equivalent of total social capital. “To the degree that it appears on the market”, Marx writes, 'money capital is not represented by single capitalists, by the owner of this or that particle of capital present in the market, but it appears as a concentrated, organized mass, which, entirely unlike real production, is subject to the control of bankers representing social capital'.

As an aggregate fraction, therefore, bankers, and their quasi- banker counterparts inside integrated companies, in a sense represent a single collective capitalist due to their joint control of fictitious capital. In capitalist reality, this social dimension remains a form, behind which the competition among private capitals proceeds unabated. Yet, the special position of bank capital in this respect is brought out by its twofold presence in the political economy: as a sector among others, and as part of the overarching economic state apparatus.

Summarizing the main distinctions introduced so far (circulation/ production, real and fictitious capital, as well as the three functional forms of capital and their concrete embodiments), we arrive at the following figure.

FIGURE ONE

Apart from landed property, which represents a relation of distribution rather than one of production, these are the fractions of social capital analysed by Marx in Capital. Hilferding's concept of ' finance capital' was developed to capture the twin phenomena of the institutional interpenetration of bank and industrial capital, and of the relative separation of a distinct oligarchical fraction of finance capitalists from the 'simple' bankers and industrialists. Widely popularized by Lenin's adoption of the concept in Imperialism, the Highest Stage of Capitalism, the reality it conveys about the new empirical structure of capital does not obliterate the need for distinguishing the functional, 'original' fractions. For even in a situation where the financial oligarchy is no longer effectively challenged by a sub- ordinate, 'non-monopolistic' bourgeoisie, certain conflicts within the capitalist class remain traceable to the different fractions persisting in the context of an apparent fusion. 7

The conflicts of interest and allegiance which lead to class formation cannot be reduced to their functional determinants. In order to be effective, fractional interests have to be transcended by a formula of reconciliation or compromise on which a temporary truce may be built allowing the ruling classes to stay in power, or rather, allowing the basic social conditions of the mode of production to be preserved and, if possible, reinforced.

The economic interest associated with a dominant fraction of capital requires a complementary formula of reconciliation of that interest with that of other fractions in order to be an effective vector of class formation. By itself, the political impact of a single fraction remains within the confines of pressure-group politics, or what Domhoff calls the 'special-interest process'. In his study of the fractionation of the Dutch bourgeoisie in the inter-war years, Ries Bode introduces the category of comprehensive concepts of control to capture the transcendent formulation of class interest aggregating such special interests and subordinating others.8 A concept of control represents a bid for hegemony: a project for the conduct of public affairs and social control that aspires to be a legitimate approximation of the general interest in the eyes of the ruling class and, at the same time, the majority of the population, for at least a specific period. It evolves through a series of compromises in which the fractional, 'special' interests are arbitrated and synthesized.

The objectivity, and the potential 'general' relevance of a concept of control, reside in the timeliness of the main elements in its programme, combining momentarily feasible and desired - if hardly ever mutually compatible - strategies of labour relations, competition, and domestic and international politics. The compromises underlying the feasibility of these various strategies are reached (in the sense of a subjective elaboration of an objective process) by concrete compensations for the special interests involved through the profit-distribution process, complemented by symbolic rewards.

Comprehensive concepts of control develop in the course of capital accumulation and class struggle as they evolve over the decades. They can be defined from certain ideal-types related to the functional perspective of specific capital fractions. As indicated above, the process of class formation develops as a concrete totality through pre-existing and simultaneously reproduced cultural and political patterns. Besides representing particular functions in the circuit of capital, concepts of control therefore are also reflections in social consciousness of the circumstances in which these functions passed through a mutation in terms of these contingent, extra-economic patterns.

The historical setting may help to explain why other capitalists, or other classes, subscribe to the concept of control developed from a 'special interest' vantage-point which strictly speaking is not their own. For instance, one need not develop a cosmopolitan outlook from being engaged, as an industrial entrepreneur, in producing textiles. Yet, the fact that this industry's original prominence coincided with the heyday of international free trade makes it plausible that the textile capitalists of the day developed a set of equations in their world outlook which by and large corresponded to the liberal-internationalist ideology espoused by hegemonic commercial capital.

At the same time, the stability of 'textile liberalism' could not be expected to be the same as that of the mainstream liberalism of the commercial capitalists. In the 1930s, for instance, the impact of the world economic crisis undermined the community of interests and outlook between the two fractions, as the textile industrialists adjusted or even led the way to protectionism. In the postwar situation, however, the readiness of the European natural textile producers to accept American tutelage because of the liberal- internationalist arrangements in the economic field which were part of the Pax Americana, showed that, as soon as circumstances allowed it, their original preference for free trade, which had been reproduced through family, company, regional and political traditions, was promptly reactivated.

2. Hegemonic concepts of control

Prior to the actual era of Atlantic integration, the international articulation of bourgeois hegemony in the North Atlantic area in the twentieth century developed essentially in terms of two ideal-typical frames of reference: the money-capital concept and the productive-capital concept. These two concepts capture the common denominators in the antinomous positions from which capitalists, actively or passively, were engaged in the international circulation of capital: either as agents in the process of circulation itself, or as productive capitalists; either as functionaries of fictitious capital or as managers of real capital. As ideal-types, the money-capital and productive- capital concepts constituted the vantage-points from which historically specific, and increasingly synthetic, strategies for adjusting bourgeois rule and international relations to the ongoing process of internationalization were developed.

The money-capital concept underlay the liberal internationalism of the early twentieth century. It rose to prominence with the internationalization of the circuit of money capital, which generalized a rentier ideology among the bourgeoisie, both in Europe and in the United States. The productive-capital concept, on the other hand, provided the frame of reference for ruling-class hegemony when the Atlantic economy subsequently became compartmentalized into spheres-of-influence due to the pressures generated by the introduction of mass production (or large-scale industrial production generally), in a context of acute imperialist rivalry and nationalism.

The challenge to cosmopolitan liberalism posed by the new industrial nationalism was captured by Polanyi in The Great Transformation. In this book, conceived and written between 1940 and 1943 in the United States, Polanyi still saw the countermovement against liberalism in terms of a pervasive reaction of 'society' against the ravages wrought by the stubborn adherence to the liberal concept of a self-regulating market. Against this liberalism, he posed the principle of social protection, 'aiming at the conservation of man and nature as well as productive organization, relying on the varying support of those most immediately affected by the deleterious action of the market - primarily, but not exclusively, the working and landed classes - and using protective legislation, restrictive associations, and other instruments of intervention as its methods.'

The vanguard leading this countermovement, which we shall call the state-monopoly tendency in but the impact of the concept of control they espoused likewise extended far beyond the confines of their actual social implantation. At this juncture (the interwar years and World War Two), these forces notably were to be found in new market-dominating industries like electrical engineering and chemicals, while crisis and war propelled the state into the foreground as organizer of the macro-economy.

Eventually, a synthetic concept, corporate liberalism, would crystallize in the United States in the context of American control of the Atlantic circuit of money capital and the generalization of Fordism as a productivist class compromise. This corporate-liberal synthesis between internationalism, a flexible format of labour relations, and state intervention was eventually extrapolated to Western Europe where it served as the vantage-point from which successive concepts of Atlantic unity were developed, and to which the entire Atlantic ruling class would in due course adhere.

Before considering the rise of corporate liberalism, however, let US look briefly at the ideal-typical money and productive capital concepts which guided the historical fractionation of the Atlantic bourgeoisie and which retain much of their original relevance in explaining bourgeois politics today.

The money-capital concept

The principle of economic liberalism, as Polanyi calls it, aims at 'the establishment of a self-regulating market, relying on the support of the trading classes, and using largely laissez-faire and free trade as its methods.' These 'trading classes' - i.e., capitalists related to surplus-value production only through circulation, like merchants, rentiers, colonial entrepreneurs, and others not directly engaged in exploiting the domestic working class in production - may be considered the natural supporters of a concept of control in which the free flow of their merchandise, dividends, or cash crops is guaranteed by a set of conditions including free trade, unhampered competition, and cosmopolitanism.

Historically, the concept of control subscribed to by capitalists engaged in circulation could not but have a strong international aspect, reflecting the birth-mark of commercial capitalism. The social passivity inherent in regular mercantile activity indeed sometimes seems to have produced a cosmopolitan aloofness from power politics. This was particularly noticeable in Dutch foreign policy traditions since the seventeenth century, highlighted by the international legal tradition established by Grotius. Dutch legalism and pacifism, fed by commercial considerations first of all, were dictated by the balance of power and did not extend to the Dutch colonies, where exploitation retained all the connotations of violence and oppression.

In some respects, British imperialism copied the political tradition of commercial capital established by the Dutch. World-wide commercial interests, a maritime outlook, as well as the physical separation from the continent and from continental power politics, all worked to reproduce this tendency. The absence of a standing army contributed to this complex, explaining the absence from the dominant concept of control of a distinct militarism with a social basis of its own.

Much more than the Dutch, however, the British had to defend industrial interests, which in turn tended to work against a truly passive stand. Accordingly, the elements of laissez faire and aloofness from power politics which British foreign policy inherited from Dutch experience by the end of the nineteenth century gave way to active diplomacy and balance-of-power politics, culminating in the jingoism and imperialist aggression of the Boer War. This shift of emphasis coincided with the new importance of foreign portfolio investment (notably railway construction in the New World), the returns on which by 1870 surpassed those on shipping and foreign trade. From below the surface of the original commercial liberalism, the forces associated with foreign investment and the corollary railway expansion gradually emerged to match the standards of the crudest of chauvinist ideologies operative among the new contestants for imperialist supremacy. For all their free- trade ideology and contempt for the brutalities of German imperialists, E.C. Black concludes, 'the British liberals may have been just as crude, but masked their acquisitive self-interest with sanctimonious avowals of principles of freedom.'

Still, the 'sanctimonious avowals' reflected a balance of forces in the struggle between different tendencies in the British imperialist bourgeoisie which allowed the liberal-internationalist tendency to block the way to a further emulation of the continental pattern of imperialism in 1906. Rejecting the protectionism demanded by the Industrial interests supporting Joseph Chamberlain, and thus blocking the way to the further militarization of British foreign policy it implied, the liberals at the time were able to restore the peaceful and conciliatory image they had traditionally cultivated -- something which would turn out to be of momentous consequence for the further development of the class struggle in Britain.

In a more general sense, the transformation of the free-trade Pax Britannica into a system of rival imperialism in the last quarter of the nineteenth century did not terminate the basic internationalism of the previous era. The bankers (who in this period became the embodiment of cosmopolitanism) did, however, transform the previous liberalism into a comprehensive concept explicitly allowing for an industrial interest as well. As a prototypical concept capable of defining the social reign of finance capital, the money- capital concept rather than a primordial commercial concept exerted its relevance in the context of subsequent developments.

The idea of industry implicit in the money-capital concept reflected the prevailing mode of accumulation of the nineteenth century, when the organic composition of capital tended to be low and its concentration was still in its infancy. With respect to the labour market, liberalism rested on the assumption that labour- power is always available if the market is kept fully competitive. Subordinated by capital only formally, craft workers were able to retain their autonomy as producers to a considerable extent; often controlling the hiring of unskilled hands and effectively deciding the introduction of innovations in the labour process.

Although the rise of money capital at the close of the century contributed to the centralization of capital which eventually would allow the large-scale restructuration of the labour process by which the formal subordination of labour to capital was transformed into real subordination, the money-capital concept of industry retained its original liberal connotation: judging productive investment by essentially rentier criteria rather than viewing it as a social function. Industrial capitalists whose production is characterized by low organic composition and labour-intensity still today tend to reproduce the original liberalism in this sense: highly critical of trade unions and state intervention, and although in fact unable to protect themselves from its impact, staunch advocates of liberal dogma in international trade. In Europe, the small family firm, and in the United States, the industries organized in the National Association of Manufacturers, may be considered the proponents of the money concept in industry.

In functional terms, the money-capital concept of course first of all serves as a frame of reference for bank capital. 'In my travels', Anthony Sampson has recorded, 'I have found bankers the most international profession. . . No profession looks back to the gay old days before the First World War with more evident nostalgia than the bankers: and their style and cosmopolitanism still seem to belong to that age.' The study of Sutton and his associates of the American Business Creed confirms this assessment. Bankers do show a marked tendency to adhere to the classical liberal doctrine of how the capitalist economy should function. If for the small industrialists, the market still may bring disaster (which at times may convert them to economic heretics, as in the case of the textile capitalists during the Depression); to the owners of fictitious capital and holders of monetary assets, who want a sound currency undiluted by uneconomical social expenditure, its beneficial workings are truly dogma. Bank capital, combining these two functions, generally has been its firm defender.

From their various vantage-points, the other fractions of capital engaged in circulation contribute ideological propensities which further ramify the overarching liberal concept. The 'internationalism' of commercial capital, the social passivity of landed property, and the aggressive laissez faire sometimes espoused by small shop- keepers and farmers, but notably by those entrepreneurs whose enrichment proceeds faster than their social ascendancy (the new rich) - all contribute specific accents and nuances to a liberal concept basically reflecting the frame of reference of money capital per se (banks, foreign investors, rentiers).

The pre-capitalist critique

The limits to the legitimacy of a particular concept of control, and to the actual hegemony of its proponents, are not only posed by the competition of alternative universal concepts (as in the 'productive' versus 'money' capital cases), but also may partly arise from the intervention of minor class fractions and their ideologies. Moreover the most 'modem' forms of capitalist interest representation may draw their hegemonic power from the incorporation of seemingly atavistic and retrograde elements. Such was the case in the rise of the 'productive-capital' ideology which charged new-fangled notions of capitalist technocracy with the emotive associations of the pre- capitalist critique of money capital.

Below, we shall discuss the critique of money capital from the vantage-point of industrial capital, as articulated by such diverse tribunes of progress as Ford, Gramsci and Keynes. First, however, it is important to mention the older, agrarian critique of money capital that was such an important precursor of these modem positions, and whose ideological heritage was mobilized as a major factor in the processes of class formation in the industrial era. Indeed the malign popular revival of this pre-capitalist critique during the Depression is a dramatic instance of how apparently fossil forms of human consciousness can suddenly be revivified. Thus for large segments of the German middle classes in 1933, the remote symbols of German antiquity, or folk mythology, were felt to correspond more closely to the dead end of their country's development than any of the modern symbols of Weimar democracy. The anti-Semitism of the Nazi movement portrayed the economic crisis as the result of 'German, creative' capital throttled by a rapacious international finance capital personified by the Jews ('schaffendes' versus 'raffendes Kapital'18) - an imagery that combined ancient prejudices with a distorted sense of Germany's actual subordination in the liberal world economy.

This particular aspect of anti-Semitism, the hatred of money- lenders or anti-chrematism, was, in turn, an extreme variety of the primordial antagonism between sedentary producers and the roving, volatile element represented by usurers, robbers and traders. The Church in the Middle Ages had already encoded aspects of this antagonism in its strictures on usury and interest. At the same time, the heavy involvement of the Church's own magnates in money- lending and borrowing precluded a general prescription of the international system of banking houses which lubricated long- distance trade and dynastic ambitions. It was Luther, in criticizing the church's secular corruption, who revived and impassioned the old attack on usury. With the phase of Calvinist Reformation, however, elements of an emergent bourgeois mode of production acquired ideological representation, and interest for the first time gained an integral and legitimate place in a Christian theology. Calvinism 'set the profits of trade and finance. . . on the same level of respectability as the earnings of the landlord'. 19 Still the critique of usury remained functional in subordinating interest-bearing capital to the conditions and requirements of the capitalist mode of production.

Hence, in Roman Catholic countries and regions, as well as those of Lutheran predominance, a critique of money capital from the standpoint of the rural economy, and tinged with parochialism and anti-Semitism, became part of the secular culture. In the early decades of the nineteenth century the Vatican allowed interest to be raised to the legal level, but still as late as 1950, the Pope felt it necessary to officially declare that bankers 'earn their livelihood honestly'. Meanwhile, the Calvinist position which allowed a functional role to money capital and was critical only of usury properly speaking, had emigrated to North America with the puritans. The Church of England had also early on, in the mid- sixteenth century, adopted a 'Protestant' attitude in this matter when it let the government decide the maximum rate of interest. 22

In the Anglo-Saxon world, liberal interest doctrine merged with rationalism and utilitarian individualism, producing a concept of control highly appropriate to a social fabric from which commercial and small-scale industrial capitalism were removing the feudal shackles tying all men to the land, or to guilded trades. This doctrine, representing the emerging liberalism based on commercial capitalism, was criticized by nineteenth-century German authors as selfish and grasping; below, we shall see how in the German denunciations of the Atlantic creditor states responsible for the Versailles system, the same argument was extrapolated to the international level. Moreover, the same traditional critique of money capital retained a purchase even within the liberal heartlands. In the United States, the anti-Semitism and Anglophobia of the Western Border Populists reflected the farmers' resentment of the deflationary policies of their own East Coast money capitalists.

Passing into the twentieth century, the essentially pre-capitalist critique of money capital remained a potential ideological force to which latter-day productive capital could appeal and from which it could draw additional strength in forging class coalitions of anti- liberal inspiration. Fascism, and in some respects, Gaullism and Christian Democracy as well, for all their differences drew on this source and to the extent they did, deserve their qualification as reactionary. At the same time, these political tendencies included the productive-capital concept properly speaking, as productive capital was the dominant class fraction in the configuration opposing liberal internationalism. Whether industrial capital was able to assert its interests directly, or depended on the mobilization of pre-capitalist populism, hinged on the outcome of class struggles in each concrete situation, especially on the role of the pre-capitalist landed classes. But it is important to emphasize that in no case was the productive -capital concept of control ever completely divested of its pre- capitalist resonance. With this in mind, we now turn to the modem productive-capital concept.
The Productive-Capital Concept

The productive-capital concept of control can be easily derived from the viewpoint of the industrial capitalist. In his subjective perception, entrepreneurial profit appears as the exclusive result of the productive function. The reward accruing to the money capitalist, on the other hand, is seen as a consequence of a legal title only, external to production.25 The volatility of money capital, its propensity to speculate and to shift assets from one form to another, therefore easily excites irritation on the part of the functionary of real capital, who is tied to existing investments of men and machines and accordingly has to develop his concept of control within these limits. From here, the modem critique of money capital has further shaped the concept of control typical of productive capital.

In one of the first comprehensive analyses of imperialism, J .A. Hobson formulated his critique of the phenomenon largely along the lines of the productive-capital concept. Arguing that foreign investment was detrimental to the British economy but yet seemed to completely dominate foreign policy, Hobson warned against 'the financier, the general dealer in investments'. 'In handling large masses of stocks and shares, in floating companies, in manipulating fluctuations of values, the magnates of the Bourse find their gain. These great businesses - banking, broking, bill discounting, loan floating, company promoting - form the central ganglion of international capitalism. United by the strongest bonds of organization, always in closest and quickest touch with one another, situated in the very heart of the business capital of every State, controlled, so far as Europe is concerned, chiefly by men of a single and peculiar race, who have behind them many centuries of financial experience, they are in a unique position to manipulate the policy of nations'.

As early as 1889, Hobson with A.F. Mummery had published a more general statement of an industry-oriented analysis of capitalism as prone to over-saving and underconsumption entitled The Physiology of Industry. Proto-Keynesian in its analysis and prescriptions, the book was praised by Keynes himself as epoch- making and recognized as an early statement of his own theses. 27

Lacking the democratic impulse of Hobson, Keynes in the interwar years worked out a theoretical argument incorporating the same central tenet. Keynes's experience as an insurance director and investor, as well as a government economic adviser, made him, keenly aware of the requirements of the specific capitalist form of production, his critique of pure ownership and the rentier class notwithstanding. 'The class war will find me on the side of the educated bourgeoisie', he declared in a 1925 address.

In his attempt to educate the bourgeoisie in turn, Keynes however was ready to discard with some of its cherished tenets, which contributed greatly to the penetration of his ideas into the Social Democratic movement. A few illustrations will serve to show how he criticized the classical money-capital concept by adopting viewpoints reflecting the requirements of the large industrial firm and, subsequently, of an economy organized around it.

In his book The End of Laissez-Faire (1926), Keynes did not yet focus on the state as the key agency for capitalist reform. Instead, he acknowledged the increased socialization of productive forces and capital by contrasting the large corporation with 'individualistic private enterprise'. Qualifying big firms as 'bodies whose criterion of action within their own field is solely the public good as they understand it', Keynes abandoned the 'micro-economic' identification of the owner and the enterprise that was so characteristic of the money-capital concept. Instead, he defined capitalist enterprise in terms of the economy as a whole. In this macro-economic frame of reference, owners and stockholders were to be seen as only one of several client groups, 'served' by the corporations as autonomous bodies.

From this vantage-point, Keynes next developed a definition of capital as a social relation, which although confined to circulation phenomena, lent his theory a cogency extending beyond the capitalist class. 'Capital', he wrote, 'is not a self-subsistent entity existing apart from consumption. On the contrary, every weak- ening in the propensity to consume regarded as a permanent habit must weaken the demand for capital as well as the demand for consumption' . 30 The General Theory (1936) systematically developed the implications of this definition, leaving little room for petty capitalist interests if they ran counter to the 'public good'. Since the rate of profit depends on turnover in the real sphere, Keynes argued that the traditional financial conservatism dictated by the money-capital concept must be replaced by a strategy of capacity utilization. Prudence and a reliance on rapid depreciation only lead to over-saving and prejudice effective demand. Deficit financing (termed 'loan expenditure', but seen to include government borrowing on the capital market), on the other hand, may. . . enrich the community on balance. 31 In this respect, a new awareness of the level of socialization of the productive forces was combined with the more traditional desire of industrial capital to secure easy access to money capital.

Although this was a logically powerful elucidation of industrial capital's real interest, it was nonetheless prejudiced in bourgeois eyes, by its explicit reliance on the national state, and, even more, by its; implicit assumption of a class compromise with the national labour movement. In particular, it was feared that the logic of the '"socialization of the productive forces might spill over to the relations i of production if, after the recommended 'euthanasia of the rentier', only the managerial element was left to maintain the rate of exploitation. As Kalecki argued in a well-known article of 1943, a democratic full-employment policy would always entail unacceptable consequences for the capitalist class. Keynes, too, was aware that the full realization of his programme risked endangering the capitalist form it intended to save and could only be attempted under emergency or wartime conditions. In a 1940 article, he conceded that 'it seems politically impossible for a capitalist democracy to organize expenditure on the scale necessary to make" the grand experiment which would prove my case - except in war conditions'.

By this time, the class struggles underlying the ascendancy of the productive-capital concept over the previous liberalism had produced highly divergent outcomes in the United States and Europe. In Europe, Fascism, drawing more on the pre-capitalist critique of money capital than on actual Keynesianism, had triumphed. In the United States, on the other hand, the Roosevelt administration was engaged in extrapolating Keynesianism into a strategy of global liberal hegemony. The democratic compromise with the working class basic to the state-supported mass-consumption economy here was narrowed to a corporatist concordat with organized labour. At the same time it was inserted into an Atlantic economy in which American finance capital could shift between different national class configurations rather than becoming bogged down in one. In this sense, Keynesianism was first applied in war conditions and subsequently liberalized, thus sharing the fate of the productive-capital concept as such.

The capacity of the American bourgeoisie to forge a synthesis between the productive-capital concept and the money-capital concept, between state intervention and liberalism, owed much to the influence of that proto-typical ideologue from the real world of American industry: Henry Ford. Categorizing Hobson and Keynes as representatives of the productive-capital concept of control indeed seems justified if we take Ford's statements into account. In his attitude towards the cause of war and foreign involvement, Ford seems to echo Hobson in the denunciation of the role of the speculative financier. 'Sound thinking', he let it be known, 'insists that war will not be abolished until its roots are cut; and one of its main roots is a false money system and the high priests thereof'.

At a time when Keynes was still an adherent of domestic [mancial conservatism Ford spelled out the 'Keynesian' argument for inflationary financing by the state. Instead of raising a sum through government bonds and having to pay interest on them to a generation of rentiers, the state should advance the necessary additional Investment funds by punting more currency. The sum thus advanced, he argued, could be recovered from the profits eventually made on the investment, and the extra liquidity could be withdrawn again. Towards the rentiers the automaker was hardly more charitable than Keynes. Upon acquiring the remainder of outstanding Ford Motor Company shares in 1919, he declared that 'stockholders ought to be only those who are active in the business'.

But 'Fordism' involved far more than the industrialist's scorn for outside owners alone. Ford's contribution to the development of the productive-capital concept had a strong 'systemic' element from the start, as he showed a keen awareness not just of the requirements of automobile production, but of the implications of the socialization of the productive forces under mass- production conditions for class relations in general. (He believed, for instance, that household activities like cooking would in due course be socialized.)

Fordism as a comprehensive conception of advanced capitalism entailed three principal elements. First, it assumed the dominance within the technical labour-process of the assembly line and mass production. As compared to the original time-measurement doctrines of F.W. Taylor, Ford proposed the more radical step of eliminating the skilled worker who still was the object of scientific management and replacing him by a semi-skilled operative. The second aspect of Ford ism was the recognition of wages not only as an incentive, but as a demand component as well. Ford anticipated Keynesian demand-side economic policy by approaching the standardization of the automobile as an example of the integral relationship of mass production and mass consumption.

Thirdly, Fordism extended industrial management to the sphere of reproduction. Ford's company welfare department intervened directly into the household budgets, savings patterns, drinking habits, even sexual mores of his workforce. As Gramsci pointed out, Ford was not content to merely standardize the labour-process, but to standardize the labourer as well. Eventually Ford embraced Prohibition, not just as moral revanchism, but partly as a global strategy for the reproduction of a reliable semi-skilled labour-power capable of withstanding the nervous and physical exhaustion of the assembly-line.

At the same time, Ford's visionary ideas were tinged with elements of considerably older parentage as well. From 1920 his newspaper, the Dearborn Independent, crusaded against the 'international Jewish conspiracy'. A compilation entitled The International Jew was translated into sixteen languages, with Ford's name on the title page. In Germany alone, between 1920 and 1933 twenty-nine editions were printed under the title The Eternal Jew, also with Ford's name on the title page.

3. Strategies of internationalization

The importance of Ford's productive-capital concept for the subsequent development, not just of capitalist economy, but also of American relations with Europe, was first recognized by Gramsci in his essay' Americanism and Fordism' in the Prison Notebooks. In these notes, Gramsci gives a vivid description of Ford's practices and their implications for capitalist relations. He also summarizes and comments upon the writings (dated 1928 and 1929) of the Italian Fascist theoretician, Fovel. Gramsci's conclusions, however, are not confined to presenting the latter's proto-Keynesian argument. Shifting the savings function to the 'productive bloc' of workers and managers, he writes, would result in 'a more rapid rhythm of capital accumulation within the enterprise rather than through the intermediary of the "producers of savings" who are really nothing other than predators of surplus-value.' Still reconstructing Fovel's argument, Gramsci continues that 'within the industrial-productive bloc, the technical element, management and workers, should be more important than the "capitalistic" element in the petty sense of the word. The alliance of the captains of industry and petit- bourgeois savers should be replaced by a bloc consisting of all the elements which are directly operative in producing and which are the only ones capable of combining in a union and thus constituting the productive corporation'. In Italy, 'the disappearance of the semi- feudal type of rentier is . . . one of the major conditions of an industrial revolution (and in part, the revolution itself)'.37

From the notes, it would appear that Gramsci approved of such a course of development. Indeed, 'if the State were proposing to impose an economic direction by which the production ceased to be a "function" of a parasitic class and became a function of tlle productive organism itself, such a hypothetical development would be progressive, and could have its part in a vast design of integral rationalization. . . One could thus reduce all income to the status of technico-industrial functional necessities and no longer keep them as the juridical consequences of pure property rights'.

Although rejecting the Fascist exaltation of the state, Gramsci by his appreciative comments on progressive corporatism indicated the common ground shared by the productive-capital concept and contemporary working-class ideology, both arising out of the real subordination of labour to capital characteristic of the Fordist mode of accumulation. The increasing bureaucratic complexity of large- scale industrial production, as well as its scientific management according to the supposedly 'objective laws' of optimal productivity prescribed by Taylor, Ford, and others, tended to obscure or displace consciousness of exploitative relations on the shop floor. Perceiving their situation in terms of a maldistribution of income blocking access to a consumer-durable standard of mass consumption, industrial workers became increasingly receptive to a strategy of supporting the growth of productivity in return for higher wages.39 Subjectively, class struggle thus was transformed from a struggle between independent workers and 'integral' capitalists into a united front of the managers of functioning capital and the organized working class confronting the 'predators of surplus-value': the petty money interest represented by the rentier class. The need to intervene in the self-regulating market dictated by large-scale production, reflected in the shift from 'micro' to 'macro' economics, further enhanced the apparently anti-capitalist, 'socialist' quality of the transformation.

The state in this process became the executor of the euthanasia of the rentier prescribed by Keynes. The subordination of the reformist working class to the state thus amounted to a subordination of the independent working-class interest to capital, since the positive programme of the state remained closely attuned to the requirements of accumulation. Unlike most reformist labour leaders, Gramsci certainly was not blinded by this. Rejecting any democratic pretensions of the Fascist or corporatist state, he wrote that 'the result of these phenomena is that in theory the State appears to have its socio-political base among the ordinary folk and the intellectuals, while in reality its structure remains plutocratic and it is impossible for it to break its links with big finance capital. ' Therefore, we shall speak of a state-monopoly tendency to denote the class form of the hegemony of productive capital in its antinomy with money capital, in order to avoid the suggestion that capitalism actually has over come its liberal basis: a full state monopoly would be equivalent to a planned economy of the Russian type.

In the interwar years, the hegemony of the productive-capital concept over liberalism coincided with the rise of a state-monopoly tendency in the bourgeoisie and the subordination of the working class to a corporatist class compromise. However, the democratic potential of this convergence of interests (consummated only in the United States and, fleetingly, in France) represented a critical challenge to capitalist relations of production which could not be digested within the national framework. In Europe, this challenge was met by Fascism, in which the pre-capitalist critique of money capital was dominant over the modem productive-capital concept, bringing a political reaction which destroyed the organized working class, Social Democrat and Communist alike. In the United States, however, the stalemate between capital and labour which resulted from the course of class struggle in the early New Deal was overcome by inserting state monopolism into a new internationalism which transcended the national constraints. In the resulting corporate-liberal synthesis, the labour movement renewed its allegiance to the productive-capital concept and thus developed into a major agent of Atlantic class formation as Fordism, through the channels of American hegemony, spread to Western Europe in the context of Atlantic integration.

European regionalism

The typical international outlook associated with the productive-capital concept as it developed in the interwar years was the sphere-of- interest concept. In its original phase of prominence, the state- monopoly tendency reflected the propensity to curb the excesses of the self-regulating market by carving out exclusive spheres-of-interest; hence the ideal-typical European regionalism of 1920-1940 vintage.

German conservative nationalists after Versailles and British proponents of the productive-capital concept after VE Day faced the similar problem of extricating themselves from the consequences of American hegemony in the international circuits of money and finance capital. By proposing alternative arrangements of a political nature, these forces sought to construct barriers to American economic superiority and protect their national economies from the full impact of competition.

In Germany, a critique of the international circuit of money capital was developed which carried strong connotations of the pre- capitalist critique of money capital. The basis for the adoption of this specific strand in the productive-capital ideology was provided by the presence of a relatively large agricultural sector and landed class bloc in Germany, and .by the late entry of German industry into international competition. Indeed, concern for shielding German industry from foreign competition went back to the mid-nineteenth century, when Friedrich List expounded his ideas on a continental customs union from this vantage-point. Imperialist rivalry in the early twentieth century added new elements to the body of ideas developed by List. In a book published in 1910, Gerhard Hildebrand, for instance, argued the need for a continental European class truce allowing the adjustment of industrial development to the requirements of agrarian autarky. Ideas on European unity were widespread in German Social Democracy and, at this juncture, still were reciprocated by comparable projects put forward by French authors. 42

In their diatribes against cosmopolitan liberalism, the most aggressive elements in German imperialism increasingly mobilized traditional prejudice against trade and money-dealing, to which they opposed honest virtues like industriousness and military prowess. Militarism in a sense reflected the desire to bring German productive capacity into the field directly, as pure power, instead of having it grope its way through the intricate web of international commodity and money circulation, controlled by the perfidious British and, as the more heated fantasies had it, by Jewish financiers plotting secretly with Bolshevism. Here lay the meaning of World War One in the eyes of contemporary German ideologues. As the historian Werner Sombart put it in 1915, the war was nothing less than 'the struggle between the commercial and the heroic world outlooks'.43

Following the draconian terms imposed at Versailles, the consequences of Germany's indebtedness to the Anglo-Saxon empire of high finance could only enhance the contemporary relevance of the pre-capitalist critique of money capital in the eyes of the German population. Faced with the reality of the Bolshevik Revolution and shaped in the conditions of near civil war in Germany itself, German nationalism assumed a markedly reactionary quality. The typical anti-capitalism of German nationalism in this era, subsumed in National-Socialist ideology, was expressed forcefully by Ferdinand Fried in his influential book, Das Ende des Kapitalismus (1931).

In Fried's view the West was dominated by three notorious financial and commercial centres: New York, London and Paris. Decadent and weakened, this rentier/creditor cartel coldly insisted on debt service, despite the consequences. 'It can maintain itself only as long as it keeps the rest of the world chained in a complicated, subtle system, inextricable to the eye, called world economy; in reality, the world, by way of this "world economy", is chained to the interest-collecting West'. The indebted part of the world, including the Soviet Union, was in a state of revolt, however, and pushed the creditor states onto the defensive. 'Behind the tariff walls, national autarkies develop; enormous spaces completely extricate themselves from the world economy, possibly associate themselves with other spaces; state planning and state intervention turn into state capitalism or state socialism, to state economy as such. '

Lumping together Soviet Russia and capitalist Germany was not a slip of the pen. Soviet socialism was seen as the ultimate consequence of the emancipation of productive capital as a labour process from its capitalist form. Those who favoured a development in the same direction in capitalist countries were momentarily willing to play down the political differences. As G. Wirsing explained in another well-known tract of the period, Germany and the Soviet Union were both revolting against international capitalism. Moreover, since in his opinion the national-Russian tendency in Moscow already had triumphed over the 'red-Comintern' one, the idea of a crusade against the Soviet Union was naive, fostered only by the Vatican and the oil kings. 45

The notions developed by these authors were elaborated into a pseudo-science (and eventually, adopted by the Nazi leadership) by the Geopolitical School of ex-general Haushofer. Already in the 1920s, Haushofer and his editor, Vowinckel, had secured the support of the principal German employers' organization. Their Zeitschrift fiir Geopolitik carried articles on the need to expand Germany's 'living space', on economic autarky which German capitalists had come to value during the Allied blockade, and on European unity. Haushofer and his school welcomed the rise of Hitler and the Nazi movement with which they had established an intimate relationship through Haushofer's friendship with Rudolf Hess. 46

The central element linking all these various propositions was the productive-capital concept, the critique of money capital from the vantage-point of real production, whether agrarian or industrial. The pertinence of the productive-capital concept for international relations survived Nazism, however, since it also fitted the requirements of European state monopolism in the face of US financial supremacy. Concepts of regional European unity were discussed widely throughout the war, and Keynes even adopted some of the central concepts of the German Right to devise a plan of his own for international economic relations in the postwar period. Indeed, when asked by a relation in the British Ministry of Information to launch a counterattack against German propaganda about a postwar New Order, Keynes replied that he shared a great deal of the German critique of the gold standard and international financial practices. 'About three quarters of the German broadcasts would be quite excellent if the name of Great Britain were substituted for Germany or the Axis'.

Keynes's proposal for an International Clearing Union was advanced by Whitehall in their discussions with the Treasury Department, where Secretary Morgenthau's adviser, Harry Dexter White, developed a counterpart project in which the liberal element was considerably more pronounced. The British wanted the postwar international monetary order to allow domestic inflationary growth by shifting the burden of monetary adjustment to countries with chronic trade surpluses. The American plan, which eventually was adopted in essence, on the other hand proceeded from a more traditional application of the money-capital concept and required financial conservatism on the part of states applying for credits. It based voting power in the eventual International Monetary Fund on gold holdings, rather than on trade volume, as the Keynes plan had urged. Given the predominance and global aspirations of American capital, there was no need for the US negotiators to create an international structure which by its dispositions went beyond the requirements of American expansion, and these in turn neatly fell within the liberal rules of the game. Keynes, on the other hand, started from a 'strong desire to make world currency arrangements serve the purposes of high domestic demand and employment rather than the other way around'.

The war encouraged a proliferation of new schemes for European regional organization. De Gaulle, for instance, repeatedly voiced the Idea that European unity might be a bulwark against both the Soviet Union and the United States, and comparable arguments were heard in various segments of the German, Italian and Dutch bourgeois Resistances. After the war, separate concepts of European unity emerged which, by and large, corresponded with the liberal-internationalist, state-monopolistic (sphere-of-interest) and corporate-liberal positions, as we have adumbrated them.

Churchill's proposal for a Council of Europe provides probably the best example of the liberal-internationalist concept of European unity. Its inter-governmentalism, respectful of national sovereignty and coupled to Britain's desire to maintain its special links with the Commonwealth and the United States, reflects the original liberal inspiration. The state-monopolistic variety of European integration, on the other hand, was represented by Spinelli's and Brugmans's European Federalism, as well as de Gaulle's confederal 'Europe des patries'. Lerner and Gorden have suggested the comprehensive term 'Euronational' to denote this strategic outlook.49 The Euronational concept combined a number of state-monopolistic attributes like a strong emphasis on a 'European' economic policy with a distinct rejection of Atlantic unity.

Only later, when European capitalism had sufficiently caught up with American patterns of capital accumulation and forms of bourgeois hegemony, did the restricted regionalism inherent in these concepts of European integration yield to a more far-reaching corporate-liberal vision. Thus in the early sixties, 'functionalists' so on both sides of the Atlantic embraced the concept of 'Atlantic Partnership' as a framework for the full-scale synchronization of American and European interests.

The concept of Atlantic unity

The historic antinomy between liberal internationalism and the state-monopoly tendency was first overcome within the wartime American administration, which increasingly adopted a 'synthetic' perspective that aligned elements of the domestic New Deal with a world-wide 'Open Door' for US exports and investment. In particular, through the re-liberalization of American state monopolism and the projection of 'progressive' economic reforms in Europe, US capital hoped to avoid the spectre of a postwar Depression. American economic statesmen aimed to reconstruct world trade around a more dynamic interdependency between the Atlantic centres; the goal, as Under-Secretary of State and magnate cotton exporter Will Clayton put it in 1947, was 'the continual creation of disequilibrium in comparative costs of production'. 51

This 1940s offensive of American capitalism had, of course, been partly prefigured by Woodrow Wilson's earlier attempt to export the American model of bourgeois democracy, idealized in the famous 'Fourteen Points' of 1917. But Wilson's universalism, explicitly conceived as a bourgeois-reformist alternative to the call of the October Revolution, soon lost its relevance in the interwar years as US economic foreign policy was shaped, first, by Wall Street rentier interests, then, by the state-monopolist pursuit of an American sphere-of-interest. Even at the beginning of US involvement in World War Two, as Roosevelt began his epic wheeling-dealing to pry the economic assets of the British Empire from Churchill, US geopolitical goals continued to be framed within a basically sphere-of-interest concept that took the division of the world market for granted. Thus the Council on Foreign Relations commissioned research to determine the minimal size of the informal empire necessary for the survival of US private capitalism in terms of raw material supplies, domestic employment and export outlets. This informal empire, called the 'Grand Area', was accepted as the sphere-of-interest reserved for liberal capitalism in the event of necessary accommodation with German and Soviet power. The Grand Area was envisioned as including the Western Hemisphere, the British Isles, the Commonwealth and Empire, the Dutch East Indies, China and Japan. 52 (As we shall see, this concept dovetailed neatly with the' Atlantic Union' idea propagated in the same period by Clarence Streit on behalf of the British imperialists organized in the Round Table Society.)

After the invasion of the Soviet Union and the full mobilization of the American war economy, however, US ambitions soared to a hegemonic plane, as in 1917-18. The prospect of the unconditional defeat of the Axis was coupled with the fear of a postwar Depression arising from the doubling of the productive capacity of the US economy. Atlantic unity was now subordinated to Roosevelt's and Truman's version of a new American universalism as announced in the United Nations Declaration and the Bretton Woods Agreements (which at this time still included the plan for an International Trade Organization). The' Atlantic' predicate of Roosevelt's global design, first articulated in the 1941 Atlantic Charter, foresaw the incorporation of both the British Empire and the Soviet Union in an overarching Pax Americana.

It was not until the Chinese Revolution that a more realistic awareness of the limits of American power led to a revision of this strategy. By default, the Grand Area once again became the dominant concept, with the Atlantic region, in particular, becoming the essential axis along which the internationalization of US capital, the generalization of its most advanced mode of accumulation, as well as the restructuration of class relations it presumed, took shape. The Marshall Plan gave the United States unprecedented credit and confidence among reformist elements in the bourgeoisie as well as in the working class in Europe. In the face of the Communist challenge, the Americans once again seemed to represent their last resort. Had the United States pushed for formal Atlantic unity, rather than settling for a relatively loose military bond in NATO, European liberals and socialists probably would have accepted it. As the American ambassador to the EEC remarked in retrospect in 1966, 'Whatever chance there was for Atlantic Union existed during the dark postwar years'. 53

Atlantic Union according to Clarence Streit's original 1938 blueprint, or the 'Euratlantic' scenario as Lerner and Gorden call it, accordingly represents the most extensive variety of Atlantic integration in the sense of structural US hegemony over Europe. Covering all Atlantic states and open-ended with respect to the white or white-ruled British Commonwealth member states and Japan, and possibly the underdeveloped countries as well, Atlantic Union was essentially based on an Anglo-Saxon union. Moreover it assumed Britain's role as a broker between the old imperialism of Europe and the new imperialism of America, and hence, the continued world role of a (liberalized) British Commonwealth. Seen from the United States, however, the primary interest lay in the long-term prospects for the new capitalism held out by Atlantic Union: its sheer size as a market, Fortune estimated, would enable 'lower automobile prices than even Mr Ford has dreamed of .55

In continental Western Europe a finance capital of the degree of concentration and internationalization as in the United States did not exist. Yet, as the concrete equivalent of the previous Pax Britannica, Atlantic Union was a logical concept for European liberal internationalists to subscribe to as long as they were dependent both on American protection and on overseas international ventures, notably in the former colonies they had been forced to abandon as exclusive preserves at the insistence of the Americans. The representatives of the state-monopoly fraction in the European bourgeoisie, on the other hand, could not allow their delicate strategy of national corporatism and class compromise to be undermined by the uncontrolled influx of foreign finance capital nor did they want key vestiges of their legitimacy and national independence displaced by outright American supremacy. They believed Europe needed to develop a sphere-of-interest relation with the United States rather than subordinating its interests to a supposedly Atlantic one under effective American control. This applied both to European federalism and to the Euronational concept already referred to.

Through alternate phases of Atlantic unity, mobilizing the liberals in Europe, and Atlantic rivalry, leaving the terrain to the state monopolists, the growth of Atlantic integration worked both to enhance American expansion and break down classical European imperialism. As Lerner and Gorden emphasize, Atlantic integration for the United States had a universalist aspect from the outset, whereas for Europe, on the contrary, it meant a liquidation of earlier global aspirations. 'On the American side, the regionalist trend coexists with partial and incomplete trends toward globalism in the sense of World Commonwealth. On the European side, globalism in the sense of national empires around the world has diminished to the vanishing point symbolized. . . by Britain's abandonment of their traditional role "East of Suez".56

Unavoidably, the Anglo-Saxon 'special relationship' underlying the Atlantic Union concept was the eventual victim of this development. The Suez affair in 1956 and the establishment of the EEC a year later may be seen as the watersheds in the tendential shift in economic power from the traditional colonialist configuration of the European imperialism under Franco-British leadership to the Fordist, corporate-liberal configuration centering on West Germany and the Common Market. As a result, Atlantic unity lost its pseudo- racial' Anglo-Saxon' connotation and was defined predominantly in terms of economic growth and anti-communism.

The concept of Atlantic Partnership proposed by Kennedy in 1961, and anticipated by Jean Monnet (the 'Euramerican' scenario in Lerner and Gorden's terms), registered the adjustment of the Ideology of Atlantic unity to the growing economic power of the EEC. This vision of supposedly harmonious partnership between potentially equal regional power-centres was supported by the reaction in the European bourgeoisie that from an early date had identified the future of European capitalism with the kind of corporate-liberal synthesis exemplified by the internationalized New Deal.

In Figure 2 overleaf, the Atlantic concepts are located in a flow chart depicting the main concepts of control operative in class formation in the Atlantic bourgeoisie.

In this chart, the ideal-typical money-capital and productive-capital concepts are presented as a permanent framework for a tendential synthesis between the extensive mode of accumulation, typified by the early textile industry and metal-workshop production, and subject to the liberal internationalism engendered by the hegemony of cosmopolitan money capital; and the intensive mode, in which a state-monopoly tendency in the bourgeoisie crystallized parallel to the rise of large-scale industry (steel and the new industries of the 1920s). The outcome of this synthesis, which also coincided with the rise of finance capital (without obliterating the money/productive bifurcation as an ideological frame of reference), is the progressive mode of accumulation, typified by the American automobile industry and combining relative surplus-value production with an intra-company international division of labour. The corresponding concept of control is corporate liberalism: essentially a synthesis between internationalism and state intervention.

In the shaded area, the international concepts corresponding with liberal internationalism, the state-monopoly tendency, and corporate liberalism are printed in capitals. The Atlantic unity concepts are located such as to indicate their nature as Free World alternatives to the One World envisaged in universalism: (1) the Atlantic Union (Euratlantic) concept striking a compromise with the unreconstructed liberal internationalism, now reactionary liberalism, persisting in the context of backward modes of accumulation and/or specific commercial and financial activities and indicated by the shaded arrow on the left; (2) the Atlantic Partnership (Euramerican) concept representing the compromise with the persisting state-monopoly tendency expressing itself in postwar Europe in the Euronational scenario espoused by the Gaullists.

Conclusions

In terms of our ladder of abstraction, class strategies on the part of the bourgeoisie are determined, first, by the relation to the working class in the labour process, and secondly, by functional positions in the process of circulation of capital. A concept of control, serving as the rallying point for a fraction of the ruling class and capable of attracting a mass following, is potentially hegemonic if it combines mutually compatible blueprints for both the conduct of labour relations and for the handling of relations between the various fractions of capital. These blueprints in turn are reflections of trends in the development of real relations in either sphere, which may be reconstructed in terms of primordial ideal-types. Of these, the liberal money-capital concept and the productive-capital concept are the major alternatives, from which more concrete concepts are derived.

Historically, the predominance of a particular outlook emanating from a particular capital fraction also tended to imbue the other fractions, without obliterating the inter-fraction lines of division. Hence, a concept of control, as far as the intra-bourgeois divisions are concerned, may be related to the predominance of a money- capital or a productive-capital class configuration in two ways: functionally, because it is held by a banker or an industrialist, and reflects an objective position in the reproduction of capital; or, historically, because it was held by capitalists in the context of a stage of internationalization in which, irrespective of their own activity, either a money-capital or a productive-capital concept was dominant. 5

At the same time, the adoption of either concept entailed a recognition of the basic tenets of the other. The money-capital concept cannot restrict itself to applying deflation; the productive- capital concept cannot neglect the rate of profit. The fact that the totality of the capitalist production process, comprising both the labour process and the valorization of capital, remains the frame of reference from which neither concept can escape 'guarantees' that the inherent contradictoriness and instability of capital accumulation is reflected in the application of either the money-capital or the productive-capital concept.

Given their contradictory combination in reality, no sustained, exclusive application of the recipes inherent in the money-capital or productive: 'capital concepts of control is possible, even disregarding the fact that interests of subordinate fractions in each concrete case dilute the ideal-type already. In reality, there is a typical 'political business cycle' implying a recurrent process of short-term mobilization and countermobilization of interests from either vantage-point (and within the limits posed by the long-term exhaustion of the reserve army of labour under a given mode of accumulation). Accordingly, the success of a particular class strategy depends on the degree to which it succeeds in realigning the existing configuration of forces on the basis of a keen assessment of the objective trends in the sphere of capital accumulation. Of course, a thorough realignment of forces will involve the disorganization of some classes or class-fractions. This may be temporary, as with the rentier class following the Keynesian 'revolution', or definitively, as with the bourgeoisie in the wake of a socialist revolution, although Mao Tse-tung was not so sure of that.

The two ideal-typical concepts of control analysed in this chapter each represent an ideological synthesis grasping social capital from the vantage-point of one of its basic aspects. As organized expressions of class consciousness, the ideal-types analysed here, like all other forms of social consciousness, necessarily relate to current practical activity and derive their degree of apparently neutral, technical 'realism' from that connection. This in fact is the crux of Marxist theory of class consciousness. The Althusserian image of ideology being reproduced by way of its own 'apparatuses' - an approach which has stimulated the investigation of the self- organization of distinct social spheres (the juridical, the psychological, the educational, etc.) - in its search for essences .- other than that of concrete totality obscures the actual process of class formation. Class relations crystallize because the contradiction between the development of the productive forces and the relations of production makes itself felt, and is responded to, in specific 'local' forms, which again become part of a whole in a sequence and a pattern dictated by the concrete configuration of these 'local' contexts. Some of these, for all their apparent particularity, are closer to the overall, 'systemic' requirements of the mode of production, and thus are propelled into the foreground as microcosmic prototypes of the configuration towards which the entire mode of production should move.

Taking the money-capital concept as an example, we would argue that this concept, reflecting and in turn cementing the objective money-capital configuration already making itself felt in the crisis of its opposite number, 'presents itself as the obvious, rational solution. Directly congruent with their immediate interests, it would be most eagerly responded to by bankers and the owners of the non-bank mass of fictitious capital. Subsequently, they are supported in their enthusiasm by increasingly diverse elements from other comers of society. Not because all capitalists and other classes are that impressed by the arguments from the financial world - although they very well may be, since these now are propounded with particular conviction and with new pride in their 'orthodoxy' - but because of a more or less general awareness that society is in a particular condition, and that it is in need of a 'bankers' solution', because the situation elicits 'bankers' arguments'.

It is this correspondence between the objective state of capitalist society and the particular solution proposed by a single class-fraction (in this case, the bankers and owners), which allows the rest of capitalist society a view of the whole which under other circumstances only bankers have; hence, which makes for bankers’ class consciousness to crystallize and gain the upper hand.

In this sense, social consciousness in the North Atlantic area in the course of the early twentieth century was transformed from the set of concepts centring on the money-capital concept to a complex revolving around the productive-capital concept. In the United States, the successive stages of the New Deal produced a synthesis between the two, which in important respect was pioneered already by Woodrow Wilson in 1917-19.

The Atlantic economy in the liberal era

The era of classical imperialism, characterized by the internationalization of the circuit of money capital from rival centres, was also the high age of the North Atlantic rentier bourgeoisie. Whereas hither- to, the internationalization of capital had developed mainly through the extension of the circuit of commodity capital (and transport) into the colonial and semi-colonial periphery, the internationalization of money capital in the 1870-1929 era more neatly developed along an Atlantic and trans-European axis. This reorientation of international capital was reflected in the shift from laissez faire to a more activist liberalism revolving around the money-capital concept of control.

When the century-long Pax Britannica finally exploded into inter- imperial war in 1914, the control panel of this Atlantic circuit of money capital was transferred from London to New York. Three years later Woodrow Wilson attempted to integrate democratic reform at home and expansion abroad into a consistent foreign policy offensive, intended to galvanize the Atlantic world behind a reformist internationalism capable of withstanding the challenge of revolutionary socialism. Of this attempt to establish imperialist unity, only the financial aspect survived the emergency created by the October Revolution, and it fell to international bankers to attempt the restoration of the pre-war Atlantic circuit of money capital in the 1920s. Yet the Wilson offensive towards Europe prefigured the Atlantic unity initiatives launched in the 1941-1966 era by the Roosevelt, Truman, and Kennedy administrations. Likewise Wilsonism shaped the receptivity of European liberalism and Social Democracy to later American assertions of hegemony. Roosevelt's Atlantic universalism, as well as the Atlantic Union concept dominant during the Marshall Plan period, were directly traceable to Wilson's liberal ultra-imperialism-against-socialism and drew particular support from the fractions of the bourgeoisie whose original ascendancy coincided with the growth of the Atlantic circuit of money capital.

1. The Pax Britannica and the Atlantic economy

After several centuries of mercantile and colonial prelude, the modem world market emerged in the mid nineteenth century (1848 to 1870) as a result of a mighty surge of British investment and trade. Although the cotton industry may have been the paradigm of Victorian manufacturing, it was, in fact, shipping which proved to be the most profitable and politically powerful sector of free-trade imperialism. I Swelling the fortunes and shaping the world-views of the fraction of the bourgeoisie associated or otherwise identifying with it, 'the British merchant marine of the steam age was a product, not merely spiritually but physically, of the British "Free Trade" era and has always borne some relationship to the volume of our own overseas trade and that of our Empire'. 2

Britain's virtual world monopoly of the nineteenth-century carrying trade (controlling from one-third to one-half of total international tonnage) was the result of the privatization of the Royal Navy's hegemony. The great private maritime companies developed as direct ancillaries of the Navy, whose mail services from the 1830s on were awarded to private bidders. Along these original mail routes, new monopolies were quickly attached: the P & O line added extensive tea, coal, and jute interests in India to its route monopoly taken over from the East India Company in 1840; Cunard, operating the North Atlantic circuit, formed a base of the financial group to which the eventually foremost British insurance group in the United States, Royal Insurance, also belonged.3 British supremacy in shipping was absolute until the First World War, when the Wilson Administration embarked upon a crash shipbuilding programme that gave it approximate equality with the British merchant marine by 1921.

The historical interconnection between British shipping, trade routes, and naval strategy, explains the paradoxical presence of both militant laissez-faire liberalism and intransigent colonialism (especially in regard to India) in the outlook of what we may accordingly call the maritime-colonial fraction of the liberal- internationalist bourgeoisie. With India, British capital possessed an invaluable market for textile manufactures, in part also for steel; a source of cash crop supplies like tea and jute; and a profitable bridgehead for the China trade, most of which consisted of opium. The addiction of millions of Chinese was the profitable foundation t for important new fortunes in commerce and banking, notably the Jardine Matheson group with the Hong Kong and Shanghai Banking Corporation (still the second most important British financial group in the late 1950s).4 When World War One ended the Pax Britannica, India became even more crucial to British capital, as the metropolis's artificial surplus with the sub-continent was used to balance the trade deficit with the rest of the world. Moreover, the stability of the British Raj became the pivot for highly interconnected colonial interests. Malayan tin, rubber and oil ventures, Anglo-Persian (today's British Petroleum), and Burmah Oil, formed an integral spectrum of interest tied to the colonial and India lobbies.

Winston Churchill, the Liberal First Sea Lord of 1914, and in 1925 the Conservative Chancellor who brought Britain back on to the" gold standard, was the single most important standard bearer, if not incarnation, of this maritime-liberal fraction in politics. Clashing with Tory protectionists in 1904 (whereupon he left the Conservative Party in protest); defending the integrity of British rule in India as a dissident Conservative again in 1931; and reserving Britain's right to fulfil 'existing obligations' with respect to its empire in confrontation with Roosevelt over the Atlantic Charter in 1941 - Churchill favoured Atlantic unity but rejected American hegemony and the surrender of the Empire. Others prominent in this most prestigious fraction included the press magnate, himself of colonial background, Max Beaverbrook, and W. Runciman, of the P & O group, who was President of the Board of Trade in 1914-16 and again during most of the 1930s.

The second most important fraction of pre-war British capital had the powerful merchant banks as its core. By the 1870s, dividends and interests on investments abroad surpassed international commerce as the second source of British foreign income after shipping profits. Moreover, as already mentioned, international money capital exhibited a distinct Atlantic orientation. Of new British portfolio foreign investment between 1865 and 1914, 51% went to the Western Hemisphere, and two-thirds of that sum to North America. 21% of the total went to the United States alone, mostly invested in the burgeoning railway system: the largest department of the London Stock Exchange was American Railroads.6 Financing the American railways also created a vast market for the British iron and steel industry: in 1882, with a total UK steel production of 2,110,000 tons, British exports of rails to the United States amounted to 1,200,000 tons.

Of the British merchant banks active in the Atlantic circuit of money capital, Barings was originally the most important. In the 1840s, their experience with state loans and bank credit allowed. them to become the prime foreign financier of the fast-growing US railroad networks. Later, Barings's control of the Atlantic circuit of money capital was taken over by J.P. Morgan, the American investment bank which we will discuss below. The single most important force in American railroad finance, Morgan's London subsidiary not unexpectedly had a major interest in the British steel company, Vickers, as well as participating in Indian and East Asian ventures run by the maritime-liberal fraction. However, its audacious attempt to buy the Cunard Line and form a Morgan- controlled Atlantic shipping monopoly was defeated by competitors. 9

The financiers and related steel magnates, as well as their political kinsmen like Edward Grey, differed from the maritime colonialists by their greater readiness to seek an understanding with the United States. Their 'Atlanticism' crystallized when British imperialism, pushing beyond its original colonial empire in competition with France and Germany, became bogged down in the Boer War and was forced to seek American loans. Recognizing that Britain could not simultaneously contend with continental rivals and the United States, they were led by concrete economic interests to seek an alliance with the latter. The vanguard of this quest for 'Anglo- Saxon' unity was a secret society, The Round Table. It had been founded in 1891 by Cecil Rhodes, the conquistador of the mineral riches of Southern Africa, and the journalist, William T. Stead. Both had been pupils of the Oxford professor John Ruskin and shared the latter's phantasies about the 'English-speaking idea'. Prominent in this body were Alfred Milner, High Commissioner in South Africa during the Boer War; Lord Rothschild, who had acquired the majority of the Suez Canal Company's shares for Britain in 1875 and was Rhodes's backer in Africa; and other financiers of African and American ventures like Harry Johnston and Abe Bailey. At Rhodes's death in 1902, this group acquired access to his legacy, the Rhodes Trust. The Rhodes-Milner group (the influence of which on British imperial policies according to Quigley 'can hardly be exaggerated') 10 through the Rhodes Trust and the Round Table continued to work for association with the United States from a vantage-point of safeguarding their foreign interests against non-English speaking imperialist rivals.

At an early stage, this 'liberal-Atlantic' fraction came to recognize the fact that the British world position no longer primarily derived from the Empire, but from its capacity to create a broader world order of which the English-speaking nations, notably North America and Britain, were to form the core. This recognition reflected a basic uncertainty about the future prospects of British capitalism, which in the mid-1890s had led to a split in the Liberal Party. At that time, the aristocrats and the financiers of the City seceded to the Conservatives, thus signalling their option for imperial retrenchment rather than sustained laissez faire. 11 Upon this basis an alliance emerged with protectionist segments of national industry. In fact, it was the Birmingham arms manufacturer and Colonial Secretary during the Boer War, Joseph Chamberlain, who in 1899 made the famous proposal for an alliance between the Anglo- Saxon and the Teutonic races. Although rejected by the Germans, it evoked a favourable response in America, and in the same year an Anglo-American League was set up simultaneously in London and New York.2 (The tendentially anti-French and pro-German element in this Atlantic-liberal fraction in the interwar years would be eventually transformed into a state-monopoly tendency and would assume an increasingly reactionary quality in the appeasement policy conducted by Chamberlain's son, Neville.)

Still in the liberal era, J. P. Morgan also was involved with the Rhodes-Milner group. Morgan, who backed the South African ventures of Harry Oppenheimer, actually offered Milner the partnership in his London branch in 1901. When Milner turned it down, the position was then taken up by E.C. Grenfell.13 In international affairs, however, Morgan, like the Jewish financiers and their mineral ventures (Shell and Rio Tinto), did not betray the liberal-internationalist outlook and generally remained wary of German imperialist ambitions. On this basis, Morgan and the Rothschild/Samuel/Oppenheimer group at several critical junctures acted as a single fraction with the maritime liberals, opposing the pro-German policies of the Chamberlain tendency backed by industrial capital.

At the end of World War One, the Anglo-American connection was symbolically reinforced by the creation of the Institute of International Affairs by American and British delegates at Versailles. The driving force behind this scheme was Lionel Curtis, a colonial official in South Africa who previously had been engaged in setting up a network of Round Table groups in the British dominions and the United States. The Royal Institute of International Affairs, the British branch, was financed by Abe Bailey and the Astor family, immigrants from the United States and owners of The Times. Their country estate, Clivedon, became the famous meeting-place of the Round Table notables. Curtis was made secretary.

2. Wall Street in the Atlantic circuit

The Atlantic circuit of money capital linking the United States and Britain served to channel investment funds across the Atlantic whenever the real expansion of the American economy exceeded the performance of the domestic British one. Actually, the notion of an 'Atlantic economy' was developed to denote the existence of an integrated economy 'dividing a common fund of incremental energies between its regions in varying proportions from time to time'. IS As indicated, foreign portfolio investment in the United States was directed particularly to railway construction. The doubling of American railway mileage in the 1866-1873 period was largely financed by foreign funds, mainly from Britain, the Netherlands, and Germany. 16

The Boer War, which forced British imperialists to rely for a short period on American finance and sharpened their awareness of its potential power, only briefly reversed the direction of the flow of investment capital. No sooner had the British relieved Kitchener, than the export of capital to America was resumed with new vigour. Taken together, foreign investment in the United States doubled between 1899 and 1908 from $3,145,000,000 to $6,000,000,000. In 1906 alone, more than half a billion dollars poured in from Europe, fuelling the rampant speculation that contributed to the stock market crisis of 1907. On the eve of World War One, British investors, owning $4,250,000,000 in assets, were still the leading foreign investors (and creditors) in the United States. Germans came second, with $950 million, followed by the Dutch ($635 million) and the French ($410 million). Foreign investment in the United States accordingly came almost entirely from Europe (the fifth main investor was Canada), with about half of the total in railroads.

At the time, this flow of funds from Europe was not reciprocated by American capital in Europe. In 1914, US investments (direct and portfolio) amounted to $691.8 million, only one-fifth of total American investment abroad. In fact, American capital exports were still mainly concentrated in the Western Hemisphere: Canada, Mexico, and the West Indies. Although World War One brought a substantial rise of American capital exports to Europe, it did not fundamentally change the overall European predominance.

American investment bankers, led by J.P. Morgan, from an early date developed an awareness of the value of the Atlantic economy reciprocating, and soon transcending, the 'Atlanticism' of the Rhodes-Milner group in Britain. As one observer has written, 'It was Wall Street. . . which first discerned the potential of a widening Atlantic Community'.

Supported by his father, who was a partner in a London-based American investment firm, and the Drexel family of Philadelphia, J.P. Morgan in 1871 engaged in the sales of US government bonds in Europe. The bankruptcy of Jay Cooke, who along with German- Jewish bond dealers in Frankfurt had hitherto monopolized this 'circuit, allowed Drexel & Morgan to capture a substantial share of “the market and to restore the confidence of foreign investors, shaken by Cooke's default. After his initial successes in the international bond market, Morgan turned to the fraud-ridden railroad investment scene. The reorganization of Vanderbilt's New York Central Railroad brought him a directorship of that important line 'as the holder of proxies for English purchasers who trusted his c judgment'.2o A lasting connection with France was established as early as 1871, when Morgan successfully floated a French loan of250 million francs, meant to prop up bourgeois class rule against the Paris Commune. Since the opening of the Suez Canal a few years before, Morgan had also been the US agent of the Canal Company.21

During World War One, the accumulated interests and resources of the Morgan Bank made it the critical element in the constellation of interests supporting Wilson's policy of intervention on the side of the Allies. In a sense, the period of Morgan hegemony was terminated by the creation of the Federal Reserve System in 1913, the year also when J.P. Morgan died and was succeeded by J.P. Morgan Jr. and Thomas Lamont. American international money capital, however, was bolstered dramatically when at the outbreak of the war Wall Street bankers were successful in maintaining American gold convertibility notwithstanding the belligerents' suspension of debt payments and the alarming outflow of gold from the United" States. Fully aware of the importance of convertibility if their ambition to capture the commanding heights of the Atlantic economy was to be realized, their determination decisively contributed to making New York the world's banking centre. 22 The impoverishment of the belligerent European countries in the course of the war further consolidated this development. The liquidation of about $3 billion worth of investments in the United States, as well as the American loans made by Morgan and others to the Allies, turned the United States from the world's leading debtor to the world's leading creditor state. Although its function as a quasi-central bank had been taken away, and even its pre-eminence on Wall Street challenged by newcomers, the Morgan Bank remained the bulwark of activist involvement in European affairs and, until 1929, the lender of last resort to Atlantic capitalism.

Morgan had led wartime lending to the Allies: $1.4 billion out of a total of$1. 7 billion of US loans to Britain and France. It also handled the liquidation of European holdings of American securities to a combined value of$3 billion for Britain and $51 million for France. Postwar reconstruction loans to France and Britain again involved $450 million dollars, also floated by Morgan. All these loans were solidly guaranteed and repaid with preference, so that Fortune in 1933 could write that of all Morgan deals with Europe, 'none were in default'. 23

Following its assumption of control over the inflow of foreign investment funds in the 1890s, the House of Morgan used its international financial resources to organize an unprecedented empire of industrial and utility trusts. Each of the major trusts formed by Morgan attracted substantial European capital and became important vectors of a liberal Atlantic capitalism. Thus, in 1892, the General Electric Company was formed in order to oust Henry Villard, the agent of the Deutsche Bank and Siemens, from one of the constituent companies, the Edison (in 1907, this development was complemented by a trans-Atlantic cartel between General Electric and its German counterpart, AEG).24 In 1901, United States Steel was formed, which almost alone absorbed the Dutch portfolio capital liquidated as a consequence of the Boer War. Between 1900 and 1906, Morgan saved the ailing Bell System from the narrow profit-greed of its original Boston financiers and sold massive numbers of new American Telephone and Telegraph shares to European investors.25 Until the breakthrough of a state- monopoly tendency in the American bourgeoisie in the 1930s, the House of Morgan's hold on the American economy remained paramount.

Kuhn, Loeb & Co. has generally been seen as Morgan's principal rival amongst the pre-war American investment banks, backing Morgan's great opponent in the railway field, E.H. Harriman. The bank, as well as the principal owners, the Schiff and Warburg families, belonged to a common generation in the American capitalist class, and, as Brooks notes in his study on the subject, gradually arrived at 'an armed truce (with Morgan) that amounted at times to an alliance to repel new invaders'. 26

In the Atlantic context, however, an important difference remained, traceable to the Jewish-German origins of Kuhn, Loeb. The Warburgs, in particular, were an Atlantic rather than an American banking family, and their investment bank in Hamburg made for a lasting interest in German affairs setting them apart from Morgan. Significantly, European loans during the period around the turn of the century, when the United States already briefly served as Europe's banker, were handled by Morgan in the case of Britain (to an amount of $223 million, one-fifth of the total cost of the Boer War), and by Kuhn, Loeb in the case of the 1899 German loan of$20 million. 27

In a subsequent context, this German connection acquired additional relevance when it became part of the emerging Rockefeller group, crystallizing around the Chase National Bank, which in 1912 was still controlled by Kuhn, Loeb, and Standard Oil of New Jersey. The Bank of Manhattan, with which the Chase National bank was to merge in 1955, also had a strong Kuhn, Loeb influence; J.P. Warburg for a time served as its chairman of the board. 28

As long as Atlantic unity was primarily conceived as union with the British Commonwealth, Morgan men were prominent among its American supporters. However as the centre of economic power in Europe shifted to the continent and the Atlantic Union concept lost weight, the Atlantic Partnership concept subscribed to by the Rockefeller group, and expressive of the state-monopolistic tendency, came to the fore instead. Below, we shall see that Morgan allegiance to liberal Atlanticism derived not only from its economic interests but also from the Anglo-Saxon chauvinism the group had espoused during the Progressive Era. First, however, we shall briefly review the role in the Atlantic economy of the remaining, continental European countries.

3. Continental European capital

On the European continent, industrial capitalism lagged behind the Anglo-Saxon countries in escaping the tutelage of landed aristocracy, and where this was not the case, as in the Netherlands, capitalism was an appendage of the British Empire and tended to be confined to the sphere of circulation. International bankers were part of the class configurations of all countries involved, but not only were the classes on which they were primarily dependent for their operations different (ranging from the mass of small farmers and entrepreneurs in France to large-scale industry in Germany), but the orientation of their internationalization also varied. For most international bankers in continental Europe, the Eastern European orbit of international money capital was more important than the Atlantic circuit. Therefore, if there was a definite segment of the bourgeoisie in these countries which was the typical product of the era of the internationalization of money capital, its liberal internationalism was neither hegemonial at the time, nor did it necessarily imply a maritime, Atlantic orientation. In fact, the Atlantic orientation of most of the continental Western European bourgeoisies would only arise in the actual period of Atlantic integration, when relations with Eastern Europe were severed by socialist expropriations and the subsequent economic blockade imposed by the United States. Yet to the extent that a segment of the bourgeoisie proved receptive to this change of orientation, as well as to the liberalization policies which accompanied it, its antecedents reached back to the liberal era.

With this in mind, let US look at the capitals engaged in the Atlantic economy. First, Germany. German money capital was much less engaged than its counterparts in the older colonial empires in the international circuit of money capital as a separate fraction. To the extent it did, the Jewish brokers in Frankfurt dealing in American government bonds represented the oldest financial ties between the United States and Germany. Prominent among the Frankfurt money merchants were Speyer (which in 1839 also was established in New York and in the first decade of the twentieth century even developed into the temporary centre of a group of Chicago banks and Western railroad lines), Stern, and Sulzbach, Hallgarten & CO.29 The trade in precious metals, originally part of banking, gradually developed into a branch in its own right, incorporating trade in non-ferrous metals in the process. Its main centre was also the liberal Jewish merchant community of Frankfurt, and the Metalgesellschaft of the Merton family, which, with its sister firm DEGUSSA, before the First World War commanded a network of interests covering the entire North Atlantic area. On several occasions, notably following the German defeats in the two world wars, the Mertons would testify to their liberal antecedents. So, too, would (after 1945) Hermann J. Abs, a banker of Delbruck, Schickler, one of the private banks in the orbit of the Metalgesellschaft. In 1937, on account of his expertise in international money transactions, Abs was coopted into the board of directors of the Deutsche Bank.3O

A second investment bank centre with important Atlantic connections was Hamburg. Apart from the Warburg bank, mentioned already as a partner of Kuhn, Loeb, J.H. Schr\9der & Co. (like Warburg, owning an important London branch) was prominent in this respect. 31 The characteristic form of German internationalization, however, was the interlocking expansion of bank capital and technologically advanced industry. The great electricity holdings ageBosch, and Siemens - together with the Deutsche, and Dresdner Banks formed the core of this faction, which also loosely included the light chemical industry (BASE and the once-famous Scheidemandel concern). As far as the banks were "concerned, the Dresdner Bank in 1905 concluded a business agreement with Morgan. The Atlantic bond here was embodied by the Zinsser family, directors in both banks and eventually commanding, through the marriages of Zinsser daughters with Konrad Adenauer, Lewis Douglas, and John McCloy, a formidable Atlantic kin-system of its own. On the whole, however, 'German capitalist relations with Morgan, who as before remained the proven trustee of British capital in the United States. . ., remained limited and transitory'. 32

The Deutsche Bank, which from an early date was involved in oil, notably in Rumania, developed its Atlantic links mainly from a sphere-of-interest point of view. In 1913 it concluded an oil market agreement with Rockefeller. Relations with Rockefeller, if not always very successful, dated back before the turn of the century to Henry Villard, Deutsche Bank's US agent, who challenged Morgan on several occasions. 33 The sphere-of-interest relation with Rockefeller would acquire new pertinence in the state-monopoly era, when the chemical and oil trusts in their respective orbits entered into extensive cartel agreements lasting well into World War Two. Again, the thrust of German bank capital in this era was not primarily to the other side of the Atlantic; on the contrary, the biggest German private bank of the era, Meldelssohn & Co. was the chiefforeign banker of the Russian Czar, while Bleichroder, another key Berlin bank, was strong in Austria and Italy. The Cologne banks, meanwhile, were intertwined with French interests.

It was from the vantage-point of a general ideological liberalism and an awareness that confrontation with the United States and Britain would irreparably damage the global opportunities of expansion of German capital, rather than on account of any ‘special relationship', that the German-American Economic Board formed in 1914. Represented in this body were the shipping Hamburg-Amerika and Norddeutsche Lloyd, the Deutsch (Dresdner Banks, DEGUSSA, Bosch, one steelmaker (Becker), mining representative.35 By this time, the liberal-international fraction of the bourgeoisie, led by Walter Rathenau of AEG an head of the liberal employers' organization, Gustav Stresemann already been defeated by the conservative alliance between heavy industry and the big landed interests. 36

After Britain and Germany, the Netherlands was the third major investor in the United States on the eve of World War One. Dutch capital exports on balance were made possible by capital income from the Dutch East Indies, particularly after 1900.37 Investors in America, therefore, often had a colonial background, which at a later stage would make for a relatively easy adjustment to the neo-colonialism championed by the Americans. The fact that the position in Indonesia had been dependent on British goodwill since Napoleonic times (reinforced in 1871 by the Sumatra Treaty allowing an Open Door policy for British capital in the East Indies) further facilitated the post-1945 transition from the colonial Pax Britannica to the wider American empire. 38

Amsterdam was the pivot of the capital circuits between Indies, Britain, and, subsequently, the United States. Between 1864 and 1912, the import from Indonesia of tin, petroleum, tea tobacco developed spectacularly under the auspices of Nederlandsche Handel-maatschappij (NHM), the government-sponsored merchant company. Colonial shipping likewise, expanded, but the Atlantic route was left to the Rotterdam based Holland-Amerika Line. Money capital in the Netherlands kept aloof from domestic industrial investment, concentrating on foreign securities instead. In 1900, there were 366 money and bond-deal firms in Amsterdam alone. One of the oldest was Hope & Co., a major dealer in American securities. When in 1902, a group financiers formed the Hollandse Beleggingscompagnie to develop investment in the United States, its directors included the top men of Hope, NHM, and the Amsterdam Chamber of Commerce. The biggest Dutch bank at the time, the Twentse Bank, associated w the textile and machinery industry, operated a London subsidiary together with the NHM (the latter in the twentieth century became a bank and in 1964 merged with the Twentse Bank into the present ABN).

Royal Dutch Shell developed as a colonial venture with close ties to the NHM before linking with the British Samuels and assuming its double name and nationality. In 1908-09, the Kessler family, one of the founders of Shell, ventured into American oil exploration. They were soon followed by Shell itself, which in 1911 acquired the Roxana Petroleum Corp, then in 1915 established Shell Oil of California.40 H. Colijn, the most prominent spokesman of the liberal-internationalist fraction in Dutch politics, was linked to Royal Dutch in Indonesia. In the Protestant Anti-Revolutionary Party, Colijn represented the upper-class, pro-British orientation against the petty-bourgeois membership led by Abraham Kuyper. In 1911 Colijn as Secretary of War reversed the pro-German policy Kuyper had introduced at the time of the Boer War, and in the 1930s, as Prime Minister, Colijn would come to embody the determination of Dutch money capital to maintain the gold parity of the guilder up to the last.

The other major West European powers—France, Belgium and Italy—were oriented mainly to Middle and Eastern Europe, the Mediterranean area, as well as Africa and East Asia. Participation in the Atlantic circuit of money capital was almost negligible as a factor in the crystallization of a liberal-internationalist fraction.

For France, a country in which even industrial firms injected their savings into the international circulation of money capital and where bank capital reigned supreme until after World War Two, capital exports were primarily directed from the late 1880s towards the Russian Empire. The acceleration of French capital exports at the close of the century was only marginally related to the new profit opportunities in North America. The Rothschilds, it is true, had been operating in New York since 1837, but 'Frenchmen were either too cautious or insufficiently informed about their opportunities in the American capital market'. 41 Of the two international investment banks formed at this juncture, one sponsored by Rothschild (the Banque de Paris et des Pays-Bas or Paribas), the other, (the Banque del'Union parisienne or BUP), established in 1904 by Protestant high finance and the steel barons, Schneider and De Wendel- only the latter, notably throug1:i one of the constituent bank houses, Hottinguer, was active in the Atlantic circuit of money capital. In 1905, a special Société financière franco-américaine was formed to centralize Atlantic investment. 42 Yet when after World War One this group made itself the spokesman of the expectation that French imperialism might be allowed a free hand in the formerly German sphere-of-influence, it met with unexpected Anglo-American resistance. At the International Trade Conference of 1919, Eugene Schneider, speaking as head of the French delegation and president of the French steel association, declared that “France does not want to compete with her allies in the foreign markets, but she wants to supersede Germany in the countries where German industry had the lead before the war.”43

As we shall see below, the American and British bankers controlling the Atlantic circuit of money capital, and intent on its post-war restoration, considered the annexationist designs of the French (and Belgian) liberal bourgeoisie as an obstacle to their strategy of bolstering Germany as a bulwark of counterrevolution. To the extent that contemporary French politics allowed an Atlantic-liberal orientation, it was represented by the Protestant banking aristocracy, Schneider and De Wendel, as well as the colonial capital in their orbit (the Banque de l'Indochine from which the Giscard family later emerged) and the Suez Canal Company (which eventually, as a bank would engulf them all in the 1960s).

The majority of Belgian capital exports, like the French, went to Russia, but Belgian high finance developed a more cosmopolitan outlook based on extensive investments in international tramway construction and electrification. Especially prominent was the Empain group, whose head, Baron Empain, was described by Liefmann as 'the most significant financier of Beligum',44 and was closely linked to the Schneider group, after World War Two taking over its heavy industry interests.

In 1908, a Belgian holding of electricity interests was established with ties to AEG and General Electric, Sofina. Its president, Dannie Heineman, an American of German origin, was vice-president of Hoover's Relief Commission for Belgium, and also was a close friend of Wilson's adviser, Colonel House. Heineman's role in propagating Wilson's universalism was paralleled in the context of Atlantic integration by the activities of Paul van Zeeland, Belgian Prime Minister and one of the architects of Atlantic unity, who joined the Sofina board while in Washington during World War Two.45

In Italy, a Schneider connection was again a tell-tale sign of a common liberal-internationalist perspective. It developed when the Credito Italiano of Genoa, linked to Pirelli and Agnelli (FIAT), made an attempt to challenge the powerful Banca Commerciale of Milan and sought Schneider's support. The Commerciale, backed by Rothschild and Bleichroder, had built a heavy industry group with state support. The rival interests combining against it tended to rely more heavily on international capital markets, and thus became orientated to the Allied side in World War One. 'The steel trust depended on legislative and executive favor to stay in business', Webster writes, 'but Pirelli and Agnelli did not. They built up Italian industrial systems linked to foreign markets and collaborators without any state favor at all. Only later did these systems come to have political weight as part of a set of national interests pulling Italy towards the Entente.'46

A prominent liberal-internationalist critic of the entanglement of state and private interests in the steel and armaments trusts (exemplified by the profit-bloated Ansaldo and Ilva groups) was L. Einaudi, the eventual Minister of Finance at the time of the Marshall Plan.

On the eve of World War One, 'Atlanticism' provided a basic frame of reference for the bourgeoisie engaged in the operation of the international circuit of money headquartered in the City of London, Wall Street and Amsterdam. Despite its epic scale, however, this Atlantic rentier economy was only one of several primary capital- circuits. For example, the continental European countries were first of all oriented toward trade and investment in Eastern Europe and colonial spheres.

It was, above all, the Bolshevik Revolution, by taking Russia out of the imperialist system and ruining the Czar's Western investors,that ensured that the Atlantic circuit of money capital, and the superstructure which had grown up with it, would become the privileged pivot of international capitalism. The loss of Eastern Europe and the crisis of colonialism after World War Two, further consolidating the systemic confrontation along the American-Soviet axis, only reinforced this process.

Wilson's response to the Russian Revolution mobilized the liberal-internationalist fraction, above all the 'Atlanticist' segment discussed in this section. The revival and extension of Wilson's policies by his successors, in the context of Atlantic integration, continued to bear the marks of liberal antecedents in both content and class support. Therefore we now turn to the specific concept of control developed by the Anglo-American protagonists of Atlantic unity and to Woodrow Wilson's foreign policy through which it was first applied to actual Atlantic relations.

The Wilson offensive

For the bourgeoisie of the liberal age, the circulation sphere still largely served as the context in which they defined and legitimized their hegemony, but the money-capital concept differed from a merely mercantile perspective by its comprehensiveness in regard to the totality of capitalist production. This implied the incorporation (albeit on a still subordinate level) of an industrial point of view, as well as. a concern over working-class and popular support for expansion abroad. Indeed, the internationalization of the circuit of money capital depended on the conscious construction of a mass political consensus to support it. This was the contribution of the great architects of social imperialism like Cecil Rhodes and Chamberlain in Britain or Rathenau in Germany. 1

In Europe, intense national rivalries tended to subsume the 'social' dimension of imperialism into traditional national chauvinism, climaxing in the rallying of the Social Democrat majorities to their respective bourgeoisies in 1914. In the context of the Atlantic economy, however, a social imperialism crystallized which tended to assume a more universalist, 'ultra-imperialist' quality (as Kautsky typed it in a famous 1914 article).2 Eventually, through the Wilson intervention and with the shift of the centre of gravity of capitalism to the North Atlantic basin, this brand of social imperialism laid the foundations for working-class support for Atlantic integration at a later stage and made it swallow the 'passive revolution' Atlantic capitalism had in store for it.

1. Capitalist universalism and Anglo-Saxon chauvinism

The dream of the Rhodes trustees and Joseph Chamberlain to make British imperialism part of a wider Anglo-Saxon union was reciprocated from the other side of the Atlantic. Here, Anglo-Saxon chauvinism developed in the context of Progressivism, a disparate social and ideological movement through which the American bourgeoisie and middle classes responded to the rise of the trusts and mass immigration after the turn of the century. Idealizing the past for its gentlemanly democracy and individualism, the descendants of the first generations of colonists, mostly of British descent, felt particularly threatened by the hordes of immigrants from Southern and Eastern Europe crowding the rapidly expanding cities and subscribing to alien ideologies like Anarchism and Marxism. Progressivism, for all its exaltation of good government and municipal reform, scarcely concealed its quest for ethnic purity.

The anti-trust and petty-bourgeois orientation of the Progressive Movement did not prevent important segments of the American ruling class from subscribing to its goals. The foreign expansion of US capital, then coming of age, and the threat posed by urban mass politics to WASP civic hegemony, provided a framework for working out a new concept of control along the lines of social imperialism. The task was taken up notably by the National Civic Federation, constituted in 1900. In the NCF, forward-looking elements in the American bourgeoisie with an interest in the internationalization of capital worked out a new flexible attitude towards the working class.

In politics, Theodore Roosevelt and Woodrow Wilson were the most prominent representatives, not of the original Progressivism, but of the synthesis resulting from its adoption by the ruling class. As Woodrow Wilson put it, circumstances forced him to become a Progressive 'because we have not kept up with our changes of conditions, either in the economic field or in the political field'.4 Reform and regulation, demanded by Populists and Progressives, and undertaken by 'responsible' government, therefore adjusted social aspirations to the new forms of capitalism rather than the other way around. 5

Anglo-Saxon chauvinism as it developed in Progressive America had many affinities with European social imperialism. In Bukharin's opinion, Anglo-Saxon 'love of liberty' was only “a less vulgar but no less untenable attempt to advance a territorial-psychological theory. The place of "race" is here taken by its substitute, the "middle European", "American" or some other humanity.”6 In the American working class, it fostered various forms of ethnic and racial prejudice—the latter exemplified by the segregation practices of the American Federation of Labor (AFL). The AFL, organizing skilled craftsmen of Anglo-Saxon or old-immigrant descent, became under the leadership of Samuel Gompers a crucial support of American expansion abroad. As the American black leader, W.E.B. DuBois wrote in 1915, 'It is no longer simply the merchant prince, or the aristocratic monopoly, or even the employing class, that is exploiting the world. It is the nation, a new democratic nation composed of united capital and labor'. 7

However, the position from which the United States embarked upon a course of foreign expansion differed fundamentally from the trajectory of British imperialism. Whereas in Britain, social imperialism had to be subordinated to the defence of existing imperial interests and hence acquired the narrowly national, and even reactionary quality referred to already; in the United States, Anglo-Saxon chauvinism could be inserted in a much more positive doctrine, since American capitalism expanded abroad by establishing an informal empire cutting across the existing division of the world into formal colonial empires. Democracy at home, made visible by reforms, thus was complemented by international democracy, proclaiming national self-determination and the 'Open Door'. The combination, giving expansion abroad the aura of a civilizing mission, is captured by the notion of universalism, defined by Schlesinger as a view of the world by which 'all nations share a common interest in all the affairs of the world' and as such distinguished from the sphere-of-interest view by which 'each great power would be assured by the other great powers of an acknowledged predominance in its own area of special interest'. 8

Significantly, the 'Open Door Notes' in which the principles of American expansion abroad were laid down, and the already mentioned Chamberlain proposal for an Anglo-American union, were products of the same episode. In 1898, the British, who because of their preponderant position in the China trade had traditionally defended a policy of free access in that country, solicited American support against interlopers seeking exclusive railway and mining concessions from the Chinese government. The Americans at first did not respond at all, much to the dismay of the US ambassador in London, John Hay. Hay, according to a Rhodes Trust propagandist writing in the 1930s, was the 'chief advocate of English-speaking solidarity (among American statesmen)',9 And when he later in 1898 became Secretary of State, he elevated the idea of the Open Door to a general principle. The British in the meantime had taken a major step towards securing a sphere-of-influence of their own by the lease of Kowloon in June, which exposed the opportunist quality of their appeal to free trade and of Anglo-Saxon solidarity. On the other land, the Open Door henceforward remained associated with Anglo-American understanding, reinforcing the democratic connotation of Anglo-Saxon chauvinism as it functioned in the context of American expansion.

At this juncture, the looming conflict between British imperial interests and American universalism could still be reconciled on account of specific complementarities suggesting common interests. This applied notably to both countries' dependence on naval power. The United States has certainty after a very high order', the advocate if American sea-power, Captain Mahan, wrote to Theodore Roosevelt in 1904, 'that the British Empire will stand substantially in the same lines of world privileges as ourselves; that its strength "will be our strength, and its weakening an injury to US'. 11 The Washington Naval Conference of 1921-22 in this respect was the last episode of mutual agreement; in World War Two, Churchill's attempt to formulate Atlantic unity in these traditional terms was overruled by Roosevelt's universalism.

The famous journalist, Walter Lippmann, eventually became, as a result of his role in World War One, the most prominent spokesman both for universalism and for the Atlantic dimension which it would assume later in the Roosevelt offensive. Lippmann's writings drew heavily on Anglo-Saxon chauvinism, and like Morgan partner Thomas Lamont and scholar Whitney Shepardson, Lippmann was a member of the American Round Table group, a branch of the British Round Table. In the New Republic, a liberal publication sponsored by the Whitney family (utility magnates) and Morgan partner Willard Straight, Lippmann on 9 December 1916 wrote that the American feeling for France 'is the free friendship men give to those 'Ihom they meet only in their leisure', whereas with the British, 'we have to-day the discordant intimacy of business partners and family ties'.12

As American entry into the war became a more urgent requirement to the British and to the US (especially Morgan) interests supporting them, Lippmann's arguments became more explicit in pointing out their community of interests and he coined the notion of a wider Atlantic community. Discussing the threat to the routes posed by German submarine warfare, Lippmann in a February 1917 article entitled 'The Defence of the Atlantic World' 'wrote that 'the safety of the Atlantic highway is something for which America should fight. On the shores of the Atlantic Ocean there has grown up a profound web of interests which joins together the Western World. Britain, France, Italy, even Spain, Belgium, Holland, the Scandinavian nations, and Pan-America are in the main one community in their deepest needs and their deepest purposes. They have a common interest in the ocean which unites them, they are today more inextricably bound together than most even as yet realize.'

Lippmann's objective, in line with the general thrust of American universalism, was not to preserve the existing state of imperialism, but, rather, to restructure if into a more dynamic configuration capable of dealing with new challenges like nationalism and socialism. He saw German imperialism in particular as the embodiment of reactionary system of international relations, incapable of withstanding the impact of socialism. US involvement was necessary to imbue European capitalism with new confidence (as well as to shore up the Western Front). American association with an Atlantic community, according to Lippmann in another New Republic article, 'would weight it immeasurably in favor of liberalism, and make the organization of a league for the peace an immediate practical object of statesmanship. By showing that we are ready now, as well as in the theoretical future, to defend the western world, the cornerstone of federation would be laid.' In such a federation, a democratic Germany eventually could be included as well.

At the same time, Lippmann took care to emphasize the Open Door tenets central to Wilsonian universalism, which put him apart from the British imperialists he was associated with in the Round Table group. Arguing that national sovereignty as a concept no longer 'governed the facts', he put his pleas for internationalism in the perspective of 'cooperative control of those vital supplies on which human life depends'. 15 Obviously, this was a position that conservative imperialism could not possibly subscribe to, although bank capital represented a cosmopolitan interest in Europe as well. 16 Only where the industrial point of view had been integrally incorporated into liberal internationalism, could a position like Lippmann's acquire a resonance. In this respect it is significant that Walter Rathenau of AEG in 1913 argued the objective necessity of arriving at a global system of shared control of raw materials in almost identical terms. 'No territory of the earth should be definitively and autonomously sequestrated by a power incapable of making the riches of its soil and surface useful to the general welfare. The earth is not big and rich enough to allow the luxury of autonomous semi-civilizations to exist to the detriment of world production.'17 This apparently disinterested universalism, which Rathenau attempted to insert into a social-imperialist consensus in order to stave off socialist revolution after World War One, was, however, unacceptable to the conservative German bourgeoisie and cost him his life in 1922 at the hands of an ultra-nationalist assassin. At this juncture only American capitalist ideologues were in a position where they could afford to propose transcendent schemes of bourgeois universalism.

Lippmann on account of his excellent credentials with the Atlanticist fraction in both countries was selected to explain Wilson's Fourteen Points to the British government in 1918. From Europe, he continued to urge Wilson to intervene in European affairs and thus save European capitalism from collapse. 'Utterances from the United States. . . will show the way to the Liberals in Great Britain and in France, and therefore will restore national unity in purpose', Lippmann wrote in a co-authored memorandum to the President dated January, 1918. 'These liberals will rapidly accept the leadership of the President if he undertakes a liberal diplomatic offensive, because they will find in that offensive an invaluable support for their internal domestic troubles'. IS Hitherto, the European liberal bourgeoisie had been able both to contain domestic working-class pressures and to maintain a degree of autonomy vis-a-vis the United States, 19 but the Russian Revolution threw them into the arms of Wilson and the universalist policy he had been cultivating for several years.

The crusade for democracy

The revolution would not have been confined to Russia had it not been for the entry of the United States in the crucial final stage of the war and the tremendous power thus thrown into battle on the side of liberal capitalism by the internationalist fraction of the American bourgeoisie led by Wilson. By his handling of the crisis of European imperialism and the revolutionary challenge that arose from it, Wilson set a historical example of how to bring unity of purpose to the liberal capitalist world and isolate its opponents.

The World War had been largely ignited by rivalries arising from intersecting circuits of money capital and related railway and armaments programmes in Eastern Europe. These rivalries drew France to the side of Russian expansion towards the Mediterranean, while allying Germany with the Austrian-Hungarian attempt to block it or deflect it upon the disintegrating Turkish Empire.20 Britain sided with the enemies of Germany for a host of reasons and commitments, but its rivalry with Germany centred on the challenge posed to British supremacy in world commerce and finance.21 However, as we have seen, the thrust of British capital exports into the Atlantic circuit was increasingly bringing about a geopolitical rapprochement between the United States and Britain. When the defeat of the Central Powers cut down German imperialism to size, and the Russian Revolution struck two decades of capital investment from the books of French and Belgian capitalists, the Atlantic circuit, with Britain now a debtor of America, 22 could serve as a viable launching ground for an experiment in ultra-imperialism.

Universalism combined the Open Door and national self- determination with reformism at home. 'If you want to oust socialism you have to propose something better', Wilson told a New York audience in 1912.23 Faced with the real revolution, Wilson by his League of Nations project and his bold encouragement of national self-determination succeeded to a considerable extent in recapturing historical initiative from socialism. 'Instead of allowing the gigantic scale and complexity of recent developments to frighten him into status-quo thinking', Mayer writes, Wilson 'courageously formulated both his thought and action with a view to steering the onrushing historical forces into orderly channels'.

The Wilson policy was a perceptive anticipation of the underlying social capacities of capitalism which would take the New Deal and World War Two to fully materialize in the corporate-liberal synthesis. The universalist concept of world order went beyond the deflationary liberalism of the financiers and already represented an attempt to combine a growing domestic industrial economy with commercial and financial expansion abroad. Lacking a firm basis in the contemporary class structure, Wilson's strategy of progressive counter-revolution was supported by a bourgeoisie frightened by the spectre of Bolshevism - and was discarded as soon as that threat had subsided.

By the time of the First World War, American public opinion had become considerably more cautious in its attitude towards military adventures, especially when compared to the jingoism which had applauded the exploits of Theodore Roosevelt's 'Rough Riders' during the Spanish-American War. Widespread pacifism and isolationism were accompanied by the demands for reforms at home. This time, Roosevelt and other East Coast internationalists found no audience among the population for their appeals that America enter the war at the side of the Allies. This task was left to Wilson.

Participation on the side of the Entente was, in one sense, a predetermined fact. As Britain and the United States, traditional foes, grew considerably closer in the decades before 1914, American relations with Germany were deteriorating in the face of commercial rivalry in Latin America, and as a result of popular US revulsion to German militarism. Morgan's and other bankers' loans had been overwhelmingly to the Allies, and American war industries were in dire need of a replacement market when the US administration in late 1916 refused to accept British and French treasury notes as payment for arms purchases after gold and dollar stocks had been exhausted. Wilson's policy capitalized on the new primacy of Wall Street in the Atlantic circuit, but the democratic label which Wilson wanted to attach to his interventionist policy required that he first succeed in adjusting and redirecting popular aspirations for social reform to the international aspirations of American capital. 26

Wilson's universalist application of American political and economic traditions, and the comprehensive peace design which he proposed, transcended the narrow, warlike sphere-of-interest policies of the European powers. Meanwhile popular indignation was aroused by German submarine warfare, and the pro-British Secretary of State Lansing pressed for a break with the Germans. But during the summer and autumn of 1916, there was a backlash of anti-British sentiment after the ruthless suppression of the Irish uprising. The Administration, therefore, was forced to reserve the election year 1916 for the long overdue enactment of key Progressive reform projects. In Link's words, Wilson in this year 'became almost a new political creature, and under his leadership a Democratic Congress enacted the most sweeping and significant progressive legislation in the history of the co\.mtry up to that time'.27 Before the actual election campaign started, rural credits regulation and labour protection were enacted, and the Presidential support for an eight- hour day was secured. Business interests were compensated by a degree of protectionism, modifying the earlier trade liberalism.

Having manoeuvred himself into a strong position by asking for a popular mandate for peace and cementing approval with progressive legislation, Wilson proceeded to translate the results into freedom of manoeuvre in foreign affairs by publicly stressing the 'popular' nature of his international proposals. In December, 1916, the President asked the belligerents to define the objectives for which they were fighting. In January, he repeated this request before the Senate. The President justified this gesture by reference to the need for clarity about the details and the nature of the peace guarantee which the American people were about to underwrite. Since the Germans at about the same time announced unrestricted submarine warfare, the die was cast, although Wilson was still concerned about the future of 'white civilization' if the United States intervened. Final Congressional approval for American entry into the war still required a brief episode of outright manipulation of public opinion, for which a fake German diplomatic note (the 'Zimmermann telegram'), made public when Congress refused to grant war powers to the President, served as the instrument.

As Sumner Welles would write, between 1914 and 1917 the American people were gradually prepared 'to heed the inspired phrases of Woodrow Wilson when in 1917 he summoned them to assume their obligations as citizens of the world and to recognize their own responsibility for preserving the free institutions which had made this country great.' In this process, the Americans 'also seemed to see clearly that the triumph of the policies Wilson urged on them was indispensable if they were to safeguard their own future welfare'.29 Facilitating the integration of popular aspirations and expansionist designs, Anglo-American chauvinism came strongly to the surface once the war was on. This was expressed by outright feelings of self-righteousness putting the Americans and British on a moral plane superior to that of the Germans, but also more subtly in the assumptions underlying the League of Nations project. It also developed in dialectical interplay with the new prominence of the South in the Wilson offensive.

Like the East Coast financiers, the big Southern cotton and tobacco merchants imbued their home regions with their pervasive internationalism. With cotton prices rising until World War One, the basic rationale of Southern internationalism - the region's dependence on the world market for the sale of its cotton and tobacco - acquired a fresh relevance and a specific Atlantic dimension at that. 'The South had an immediate and continuing need for access to overseas markets', Lerche writes. 'Exporting cotton and tobacco to Europe and importing European manufactures freed Southerners to some extent from the dominance of Northern industry and gave them a sense of being participants in a broader economic system'.31 In addition to the economic determinants, there was also a strong ethno-cultural aspect fostering identification with Britain. In the American South, a contemporary British advocate of Atlantic unity could observe, 'racial integrity is held inviolate and the torch of Anglo-Saxon ideals high aloft'. 32 Still it was the experience of the world war which mobilized Southern internationalism into a major support for at least the first two of the US offensives in the context of Atlantic integration.

Wilson was the first Southern President since the Civil War. 'Influenced as he was by such sons of the South as Colonel Edward House and Ambassador to Great Britain Walter Hines Page, Wilson approached his major crises completely in harmony with Southern predispositions. When the showdown finally came in the aftermath of the war, the South was prepared to go all the way with Wilson'. 33 When the Northern financiers and industrialists were still divided over the value of Wilson's League of Nations project, the South provided domestic support almost irrespective of the precise implications of the project. On the other hand, the social-imperialist element was lacking in Southern support for Wilson. The structural connection with Atlantic liberalism resided mainly in the free-trade aspect.

Gompers and European reformism

The role of the AFL in the Wilson offensive also prefigured its future participation in American offensives in the period of Atlantic integration. The AFL had associated itself closely with the pro-war drive of the Wilson administration, and the reforms of 1916 included a lumber of gestures to organized labour. In October, the AFL leader, Samuel Gompers, was appointed to the Advisory Commission of the Council of National Defence, and in 1917, Wilson addressed the national convention of the AFL, inviting its leaders to serve on the National Labor Conference and later on the National War Labor Board. The war, with it stimulus to full employment, 34 reinforced he hold of imperialist ideology not just over the trade-union bureaucracy, but also over much of the native skilled working class.35 Their contribution to the war effort notwithstanding, however, workers' standards of living declined; only after Armistice did wages begin to catch up with prices that by 1919 had doubled over their 1915 level. By that time, a wave of strikes, involving one out of five American workers, broke the truce with the labour leaders. 36

Although Gompers failed to consolidate an effective Atlantic trade-union alliance (despite a mission to England), Wilson's crusade against the Bolshevik Revolution contributed much to the split in the European labour movement. Discredited by their complicity in the imperialist war, the leaders of European Social Democracy found inspiration in the radical democratic formulas of the American president and by adopting them, sought to renew and invigorate their own constituencies among the workers.

At the International Labour and Socialist Conference in Berne, February 1919, reformist socialists from 26 countries, several of them openly attacking the Bolsheviks, concurred in the opinion that the United States would be instrumental in establishing a stable world order. In a memorandum to Wilson's confidant, Colonel House, an American observer wrote that 'the entire conference showed an almost pathetic confidence in President Wilson. Speaker after speaker praised the President and insisted that the masses of Europe must stand behind him in his fight for the League of Nations'.37 The positive attitude of European socialists towards an enlightened capitalism holding out the promise of developing the productive forces would prove to be a recurrent phenomenon of the era of Atlantic integration as well.

Meanwhile, as wartime national unity in the United States began to crack up, the American ruling class again sought to maintain its hold over society by making use of ethnic divisions, reserving the carrot for the Anglo-Saxon, and the stick for the immigrant, working class. While many leading native socialists, like William English Walling, left the Socialist Party to support Wilson and the war (through the short-lived Social Democratic Federation), militant immigrant workers flocked to the Party's anti-war platform. At the same time, government repression, invoking an 'alien- subversive' scare, mounted implacably. Persecution radicalized the socialist foreign language federations towards Bolshevism and broke up the Socialist Party - a split 'almost entirely along the lines of national origin'. 38

In the climate of sharp class conflict and 'interiorized' Anglo- Saxon chauvinism, capitalists purposely stimulated racism by using black strike-breakers against organized white workers. Race riots erupted in St. Louis, Chicago and Tulsa, while attempts by class- conscious blacks to appeal to the AFL were rebuffed by the segregationist leadership. At a meeting of the AFL Executive Council in 1917, Gompers reprimanded a Negro delegation for 'somehow conveying the idea that they are to be petted or coddled and given special consideration and special privilege. Of course that can't be done'. 39

Confronted by an upsurge of class struggle and reaction at home, the AFL's new-found internationalism collapsed with even greater speed than Wilson's attempt to create a new world order. Yet the Wilson offensive, absorbing social pressures generated by near-full employment and redirecting them (partly through an appeal to Anglo-Saxon chauvinism and partly through reform) towards support for expansion into the European sphere-of-influence, served as the paradigmatic precedent for the later Roosevelt, Marshall and Kennedy offensives. Atlantic unity, whether positive (for democracy) or negative (against socialism) in its explicit programme, derived its basic structural characteristics from this episode.

2. The resurrection of Atlantic capitalism?

Within the American ruling class no unanimity existed as to the appropriateness of American involvement along the lines of the Wilson policy. Republican internationalists like Stimson thought the League of Nations a too legalistic construction and disapproved of the binding clauses of the project.40 For many of the investment bankers, to whom Stimson was closely related, private reconstruction of the war-torn Atlantic circuit of money capital was preferable to the burdens associated with subscribing to collective security arrangements, which moreover were part of a costly social- imperialist consensus at home. The financial stake in Europe in the meantime had become crucial for American bank capital. Hence, when the United States rejected membership in the League of Nations in the context of an apparent retreat into hemispheric isolation, 'it fell to private bankers on Wall Street to exert financial leadership'.41

Intent on rehabilitating an Atlantic circuit of money capital in which American capital this time occupied the commanding heights, Wall Street bankers were able to gear American policy to a short-sighted rentier concept calculating on counter-revolution at the lowest possible cost and on whatever short-term profits the international financial circuit might yield both of which implied a revival of German imperialism. Having discarded the policy of compromise inherent in social imperialism as well as the emphasis on the productive aspects of international capitalism, the liberal- internationalist fraction associated with Atlantic money capital unwittingly fostered the rise of a constellation of interests which between 1929 and 1933 replaced the liberal order of Atlantic capitalism by a system of protectionism and autarky, cartels and reactionary nationalism.

The most eloquent voice calling for the restoration of a liberal international order was the International Chamber of Commerce (ICC) in Paris. The ICC, reconstructed after the war to provide a forum of business opinion commensurate with the newly established League of Nations, single-mindedly worked towards the dismantling of wartime state intervention supported by national industry, agriculture, and labour rather than accommodating these forces in the context of a new compromise. Their opponents, notably the industrial capitalists dependent on state support, on the contrary wanted political arrangements and cartels rather than a return to the unfettered workings of the market mechanism in international economic relations. In the crucial case of Germany reparations, the two positions were sharply juxtaposed. Either German capital would be an integral part of a liberal international economy, which supposed some form of commercialization of the reparations burden (or even its cancellation); or it would remain locked in a political custody imposed by the victorious powers and serve as a reservoir of cheap raw materials and cash subsidies for the latter's expansion.

'In this sense', Ridgeway writes, 'the entire reparations controversy became merged in the great post-war struggle in the economic field between the industrialists and the international bankers: The one demanded economic nationalism, tariffs, and so forth, the other international cooperation and the maintenance of the gold standard. The one represented powerful interlocking groups within states, the other more nearly represented an international interest'.42 As we shall see, however, the opponents in this controversy cannot be defined in strictly functional terms alone, as the bankers' position was supported by liberal industrialists just as, at a later stage, industrial capital was joined by a segment of bank capital subscribing to international strategies developed from the productive-capital point of view.

Since the different capital fractions were represented unevenly in each state, the antagonism assumed the form of a struggle along national lines as well. In France and Belgium, which had both lost enormous portfolios because of the Russian Revolution, money capital perforce moved closer to the positions of industry. We have already mentioned Schneider's comprehensive strategy for replacing Germany's industrial primacy in Europe. Moreover, as French and Belgian finances ran into rampant inflation, German reparations became the hoped-for miracle solution to their problems. But no sooner had the final sum of reparations been fixed, and the rights and privileges of the claimants been secured (a French share of 52%, preference of reparation payments over other debts, the right to occupy the Ruhr in case of German default), than the German mark, too, exploded.

By late 1919, bankers from the United States, Britain, the Netherlands, and Sweden had started a petition movement to convene an international financial conference with the aim of reducing the reparation-burdens of Germany and Austria to the limits of practicable taxation. The organizers of the petition came from the front row of pre-war liberal internationalism, including, on the American side, J.P. Morgan, Paul Warburg and Herbert Hoover.44 Similar initiatives, for which the ICC provided organizational backing, were the 'organization of trade conferences, as well as the formation of an International Finance Comittee to work out proposals to make Europe once again 'a paying concern'. The Committee, which included Owen Young of GE as well as Pirelli and Olivetti from Italy, favoured close cooperation between the United States and Europe, but it was clear that such a goal would not by itself excite much enthusiasm in Belgium and France, which had been outsiders in the pre-war Atlantic circuit and were single-mindedly concentrated on German reparations. Yet in the period until 1922, liberal- internationalist capitalists from these countries tried to exert a moderating influence on the reparations issue, championing European cooperation rather than revenge pure and simple.

The Dawes Plan

The massive flow of American credit to Europe during the war had been accompanied by a diversification of power-centres on Wall Street: of the thirteen most prominent investment banks operating in the late 1920s, eight had been started during World War One. They formed a cartel of their own, with Morgan at their head, albeit no longer as the undisputed leader.46 In the Coolidge administration which succeeded the brief interregnum of Harding, the interests of this cartel were taken care of by Vice-President Charles Dawes, a banker himself, Secretary of State Hughes, and Herbert Hoover, the Secretary of Commerce who championed a concept of capital exports as a means to subsidize American farm exports. In line with the prevailing rentier outlook sponsored by the bankers, all three of them agreed on the need to refrain from active political involvement along Wilsonian lines. In a speech on 19 December 1922, Hughes had proposed that the reparations matter be delegated to 'men of the highest authority in finance' rather than be left to the politicians. In such a body, Hughes estimated, 'distinguished Americans would be willing to serve'.47

One month before, a German government of marked Atlantic outlook, with Cuno as Prime Minister and another member of the German-American Economic Board, Becker, as Minister of Economic Affairs, had taken power. Switching to a collision course with France following the abortive attempt by Wirth and Rathenau to work out a conciliatory, democratic arrangement, they expected that the United States and Britain would help them to throw off the French yoke. However, as Gossweiler has noted, the German liberals, who so far had resisted penetration of American capital, did not realize that the Anglo-Saxon powers would try to extract economic concessions before allowing Germany to get on its feet. Accordingly, when the French rejected the Hughes proposal and joined by a few Belgian troops and a handful of Italian engineers sent by Mussolini) marched into the Ruhr, neither the Americans nor the British came to the aid of the Cuno government.48

This did not mean, however, that American bankers had in general forsaken Germany. Hoover, in particular, criticized the support Morgan and the State Department gave to France and Belgium. By 1924, he openly declared that 'the time had come. . . to take a "very strong stand" not only against France but against Belgium and Italy as well', since the 'financing operations of these governments were merely covert schemes of finding money for unproductive purposes'. 49 For bankers in the Morgan orbit, too, it became increasingly clear that economic criteria should be decisive. At the second congress of the ICC in Rome in 1923, F. Kent, of the Bankers' Trust, candidly observed that 'the American interest (in European economic reconstruction) was that of an investor'.50 From the investors' perspective, cash returns in this situation had to have preference over long-term stability.

The work of the Rome ICC Conference bankers' committee was a major factor in paving the way for the adoption of the eventual Dawes Plan. The immediate cause, however, was the collapse of European finances and the position of strength from which American investment bankers could intervene to their benefit. One after another, the countries occupying the Ruhr were put under the tutelage of the American bankers. When the crisis of the French franc entered a stage of outright financial panic, the government turned to Morgan for help. The deflationary policy, applied at Morgan's prescription and backed by his prestige, contributed to a recovery of the French currency in the spring of 1924.51 On the French side, Lazard Freres was entrusted by the Bank of France to handle the ensuing international payments. Lazard rose to prominence in this period and would remain close to the state-monopoly tendency discussed in the next chapter (as well as, incidentally, remaining a rival of Morgan).

With their indiscriminate appetite for profits, American invest- ment banks participated in the expansion of the French sphere-of- influence in Eastern Europe. In one of these ventures, the French subsidiary of the Chicago investment bank, Blair & Co., headed by Jean Monnet, undertook to rehabilitate Polish finances in 1927. From New York, legal counsel to the operation was given by J.F. Dulles. Accompanied by a young assistant named Rene Pleven, Monnet went to Warsaw to inspect the books. The Polish loan floated by Blair eventually reinforced French and American influence in Poland at the expense of Great Britain.53 Belgium, too, in 1924 sought American financial support. Prime Minister Theunis, a banker of the Empain group and prominent member of the ICC, in that year appealed to the Guaranty Trust, the established agent of Belgian finances in the United States, and to Morgan.54 With France and Belgium thus made dependent upon the goodwill of American bankers, they moved to settle the German reparations question in a liberal sense. The German bourgeoisie, still smarting from the humiliation of the Ruhr occupation, likewise was at the mercy of the American banks and could not but accept the recommendations of the experts' committee headed by General Dawes, which did away with the right to enforce reparation and debt claims by Allied coercion. Instead, the Dawes Report stressed the need to rebuild German industrial capacity, placing it in the wider context of the reconstruction of Europe.

The Dawes Plan, endorsed by the London Conference of June 1924, cleared the way for a massive flow of American money capital into Germany. Although the amount of reparations was not changed, the original priority of reparations payments over service on other debt was reversed. Combined with the termination of penalties and coercive means to enforce payment of reparations, this in fact replaced the international antagonisms carried over from the war by the liberal internationalism championed by the bankers. At a dinner with American bankers and members of the German government, Hjalmar Schacht, who had been appointed a director of the Oresdner Bank briefly after the agreement with Morgan and who now as President of the Reichsbank was in charge of the policy of deflation dictated by the Americans, characterized the Dawes Plan as the replacement of the old methods of diplomacy and war by a new method of international and social justice – in brief, by universalism. This judgement, however, mistook the speculative inflow of American (as well as British and Dutch) money capital for the direct investment capable of supporting a real transformation of the European economy after the American mass-production model, something that would have to wait for the period of Atlantic integration.

The huge flow of capital involved in the American financial offensive, not unlike the earlier waves of European investment in the US bond and railway markets, was primarily speculative in character. Between 1924 and 1930, $1.239 billion worth of German bonds were sold to American investors; German industry in the same period floated bonds to an amount of $214.4 million of the American capital market. The amount of capital sunk in German ventures in the first few months of 1925 alone made the American commercial attaché wonder how long American bankers would keep fighting over ‘the privilege of floating doubtful municipal loans’. In German heavy industry, financial injections were given irrespective of technical level of market prospects ‘until’, to quote a contemporary British observer, ‘it towered over Europe like a volcano which must one day erupt and fling far and wide its rivers of molten metal.

Although the drafting of the Dawes Report had been the work of Owen Young of GE, this company’s affiliations with the Morgan group did not imply direct involvement of the Morgan bank. Young had avoided direct consultation with Morgan specifically because he did not want the report to be branded a Morgan report. As late as the autumn of 1924, Morgan was still hesitant about extending loans to Germany. ‘As wartime bankers for the allies, the partners did not relish the notion of raising money for Germany’.

Eventually, the single most important broker in the flow of American money capital to German was Dillion, Read & Co., one the new Wall Street investment banks challenging Morgan in the 1920s. In Germany, the two banks were rivals as well, fighting over whole would become the American agent for reparations payments created under the Dawes Plan. In his own approach, the candidate for Dillon, Read, J.A. Logan, on this occasion showed that the newer investment banks were far less scrupulous when the risk of financing German right-wing nationalism became apparent, something that the Morgan men was still concerned about. After World War Two, Dillon, Read men again would play a role in American policy towards Germany which accommodated German ambitions beyond the point considered acceptable by the liberal bankers.

Morgan's qualms in regard to German revanchism hardly owed much to a democratic conscience, but, rather, reflected long- standing geopolitical and Atlantic ties, as brought out by the bank's willingness to finance Fascist Italy. In 1925, following the meeting of Morgan partner Thomas Lamont with Mussolini, the bank floated n Italian loan of $l00,000,000, extending stabilization credits to an amount of another $50 million. As in Germany, the stabilization loan paved the way for a new influx of American money capital. In 926, Morgan sold $10 million FIAT debentures to American investors; a year later, a consortium organized by the Guaranty Trust floated a like amount in Montecatini bonds in New York. 62

The Paneuropa Union

If the resurgence of liberal internationalism in the 1924-28 period promoted hopes of a new prosperity in Europe, it was only because of the artificial injection of American capital. Trotsky, writing in 1926, attributed 'the hope of consolidation, of a relative economic equilibrium and in particular, the hope of the stabilization of money and wages' entirely to the role of ' the master of capitalist humanity, the United States'.63

Yet as American involvement remained overwhelmingly concentrated in the financial sphere, the political aloofness inherent in the money-capital concept, combined with the absence of domestic labour and industrial export pressures, worked against a formalization of American hegemony. In these circumstances, the liberal- internationalist bourgeoisie in Europe attempted to create a regionally defined ultra-imperialist order. The modalities of this attempt again are relevant for the era of Atlantic integration, when European unity likewise tended to progress notably during the stages of relative US aloofness between Atlantic offensives.

The Dawes Plan was soon followed by the Locarno Treaties of 1925, which included a mutual guarantee of Germany's Western borders by Britain, France, Belgium and Italy. (In regard to Germany's Eastern borders, the arrangements were considerably less solid, consisting of arbitration agreements and a French pact with Poland and Czechoslavakia meant to deter German aggression.) By any standard Germany had again achieved a position of power, mainly at the expense of France, and thanks to the benevolence of the Anglo-Saxon creditor states.

French policy, heralding the strategy of European integration it would follow in the 1950s, consisted of enveloping German ambitions as much as possible in a legal framework requiring constant consultation between the European powers, and securing American support for it. Following the Locarno agreements, French foreign minister Briand tried to draw the United States into the European settlement through the Kellog-Briand pact, a 'gesture of moral and psychological solidarity' as his chef de cabinet called it, and not more.64 A year before, Briand had become Honorary President of the Paneuropa Union, the organization of Count Coudenhove- Kalergi, and in 1929, he would make a belated proposal to start discussions on the realization of a United States of Europe.

Coudenhove-Kalergi was an exemplary case of a pre-war liberal converted with religious fervour to Wilsonian Universalism. In his memoirs, Coudenhove recalled how the American intervention in the war had made him aware of the fact that 'two prophets' were engaged in a struggle over the 'soul of Europe': the American President and Lenin. 65 After the publication of his book Paneuropa in 1923, in which he proposed European unity as a means to prevent war and raise the standard of living in Europe by introducing American mass production and consumption, Coudenhove was approached by Louis Rothschild and Max Warburg. Warburg offered him 60,000 gold marks to start a movement, of which the Oresdner Bank and Rothschild's Kreditanstalt of Vienna became the trustees. 66

The organization's prominent supporters and officials were, for the greater part, bankers and their friends except for France, where liberal leaders like Herriot and cartel protagonists like Loucheur were both prominent. In the Belgian national committee of the Paneuropa Union, Heinemanr of SOFINA was the treasurer; in Germany, von Gwinner, of the Deutsche Bank, and subsequently, H. Pitstenberg of the Berliner Handelsgesellschaft, a bank linked to AEG; Colijn was the leading figure in the Netherlands; and in Luxemburg, A. Mayrisch, of the ARBED steel trust was prominent. In Britain, finally, it was the Colonial Secretary, L.S. Amery, linked to the Vickers group, who promoted Coudenhove and eventually secured Churchill's support as well.

One of Coudenhove's main concerns (shared by his banker supporters), however, was American support. In 1925, Max Warburg arranged for his brothers in the United States, Felix and Paul, to invite Coudenhove for an American tour. In America, the count discussed European unity with Hoover, Kellogg, Young and Lippmann, but also found out that American support for the unity of Europe rested on mutually incompatible foundations: isolationists were in favour because it would diminish the chances for American involvement in an eventual European war; internationalists saw in European unity a favourable condition for US participation in the League of Nations. 67

Massive American loans and war debts involved the United States more closely than ever before in European affairs, but its essential rentier position vis-â-vis Europe put clear limits to this involvement, As Under-Secretary of State Grew noted at the time, 'our policy is less and less of isolation and we are going as far as we can in every matter without entering into European entanglements'. 68 Inevitably, the liberal vision of European unity, despite American patronage, was to prove a chimera. The free-trade offensive of1927, which had opened with the Franco-German commercial treaty, subsided within a year, while Briand's belated 1929 proposal came to nothing (and according to Coudenhove, amounted to nothing in the first place). As Schacht told Coudenhove, it was Hitler who would bring unity to Europe; soon after his taking power, the Paneuropa Union was outlawed in Germany and the Atlanticist industrialist, Robert Bosch, who had taken over its finances (and deposited them in Zurich), was forced to step down.69

3. Germany and the crisis of liberal internationalism

The weakness of German capital in the international economy and the domestic strength of the working class prevented a resolution of intra-bourgeois conflict until the crisis of 1931-33 destroyed the basis of parliamentary politics altogether and replaced it by Fascist dictatorship. The failure of the bourgeoisie in the West to adopt a long-term approach of the Wilsonian type, highlighted by the annexationist actions of the French and Belgian ruling classes and the resurgence of a rentier concept in the United States, destroyed whatever potential existed in Germany for the hegemony of an enlightened, forward-looking configuration of the bourgeoisie.

As indicated already, Walter Rathenau was the foremost representative of a social-imperialist, universalist tendency in the German bourgeoisie, anticipating the corporate-liberal synthesis between internationalism and state intervention. His strategy aimed at simultaneously conciliating the working class, the French, and, in order to recapture the initiative from socialism, the Soviet Union too. In 1921-22, Rathenau, with the backing of AEG and the German banks, had sponsored the idea of an international consortium of banks and industry - the 'Europa Consortium' - to develop Russian resources and satisfy Western claimants' demands for compensation.

As with the Franco-German discussions of the same juncture, however, the Rathenau option was rejected by the nationalist industrialists led by Hugo Stinnes. The latter, supported by Krupp and Otto Wolff, instead favoured direct negotiations with the Russians - a position shared at this point by Gustave Stresemann in the German Reichstag. As support from the Western creditor states for Rathenau, or the Europa Consortium for that matter, failed to materialize at the 1922 Genoa conference on European economic reconstruction, the Rapallo treaty between Germany and the USSR, drafted by pro-Russian elements in the Ministry of Foreign Affairs, was concluded over the hesitations of Rat hen au and President Ebert and his majority socialists. 70

Rathenau's assassination in effect decapitated the corporate-liberal fraction and marked the defeat of the attempt to work out a progressive synthesis between the liberals and the nationalist industrialists. The 'unreconstructed' liberals and sphere-of-interest industrialists henceforward were reproduced as separate fractions (cf. Diagram 2 in Chapter 1), taking turns as the temporary dominant group without being able to consolidate stable power-bases in the face of working-class strength and the weight of landed interests.

In the 1922-24 period, industrial capital achieved a fragile superiority based on acquisitions made possible by rampant inflation. Giant industrial combines were built, and Stinnes gained his reputation in this period by combining his heavy-industry Rhein-Elbe trust with Siemens into a super-trust. Stinnes rejected Rathenau's joint Franco-German reconstruction proposals because of their projected trade-union dimension and instead secretly conferred with Marquis de Lubersac, the president of the French reconstruction companies. In 1922, they concluded an agreement to form a Franco- German heavy-industry trust that would have brought together the Ruhr's coal and the iron ore of Lorraine, and allow the Germans to take part 'again in the exploitation of territories lost in the war. 71

Although the Stinnes/Lubersac agreement came to nothing, the episode was a crucial formative experience for the state-monopoly tendency in the German bourgeoisie, and the resemblance with the Schuman Plan, almost thirty years later, was significant in the sense that the assumptions underlying both projects were typical of the ‘Euronational’ sphere-of-interest concept discussed in Chapter 1. Stinnes's desire for an agreement with France was motivated by fear f the revolutionary working class; and as long as the fate of capitalist Germany still hung in the balance, he supported the idea of a secession of the Catholic parts of Germany (Rhineland and Bavaria) in case of a socialist revolution. The main political protagonist of Rhineland separatism, whose background would predispose him to is eventual role in a separate Federal Germany, was Konrad Adenauer. The separatist plans, of which Louis Hagen of the Cologne Oppenheim Bank was a key architect, at one point even envisaged the creation of a separate Rhineland republic, for which Hagen secured a private American loan and of which Adenauer was) have been the president. 72

The rehabilitation of German finances and the defeat of the Left in 924 diminished the relevance of the separatist designs and reinforced the liberal-internationalist fraction at the expense of the reactionary sphere-of-interest bloc disintegrating under the impact of inflation. The liberal leaders, Schacht and Stresemann, had attacked the plans for separatism (while Britain had put pressure on France to :op supporting them), 73 but the conditions of the restoration of German financial order prevented the liberal fraction from regaining German economic sovereignty. The breakdown of the financially self-supporting industrial combines, of which the Stinnes empire ad been the most spectacular example, instead cleared the way for the influx of foreign money-capital, degrading a segment of the liberal fraction to an ancillary of foreign interests.

The economic orbit of the liberal fraction regrouping under the impact of the influx of American capital centered on the DANAT bank, the result of the 1922 merger between the Darmstadter Bank and the Nationalbank. The DANAT bank according to Gossweiler served as the German trust for American creditors. Its chairman, Fritz Thyssen, was the owner of the biggest steel firm in the Vereigte Stahlwerke, a giant-heavy industry combine into which, upon its formation in 1926, the Stinnes heritage, too, was reintegrated, but in which bank capital and foreign interests (the latter owning 21.3% .1 1930) now held the reins.74 Stock in the German and Luxemburg mining companies formerly in the Stinnes group had been sold to J. Henry Schroder bank in London and to Dillon, Bead by Albert Vogler, the trustee after Stinnes's bankruptcy. Vogler now was made the general manager of the Vereinigte Stahlwerke. Thyssen himself had obtained a big loan from Dillon, Read, and his role reinforced the substantial American influence in the Vereinigte Stahlwerke. (The DANAT bank had headed the bank consortium for the new steel combine.) In the Dresdner Bank, meanwhile, several tendencies were present, with Zinsser, related to Morgan, representing the' American' fraction of Schacht and Thyssen75 To the extent that this fraction merely performed the function of a commercial intermediary for foreign capital, incapable of developing a hegemonic concept beyond social reaction in the service of foreign owners, it fitted Mao's concept of a comprador bourgeoisie.76 Its protagonists were Schacht, Thyssen, and the DANAT bank.

As capital accumulation in Germany resumed on the basis of the Dawes Plan, the industrial bourgeoisie which was associated with the strongest German capitals and had retained its independence reasserted itself. This fraction, regrouping the remnant of Rathenau's backers in industry and some of tbe better-off Stinnes allies, included Otto Wolff, Gutehoffnungshtte, Blohm & Voss shipyards, the DEMAG and MAN heavy equipment firms, AEG and Siemens. Their strategy, of which the Stresemann policy of the second half of the 1920s became the political expression, sought to re-establish a German sphere-of-interest first by economically sub- scribing to the Locarno strategy of compromise in the West and expansion into the East and, eventually, by a 'Middle-European' policy of pre-war vintage. After 1925, this group aimed to gain control of the natural resources of the Soviet Union by developing trade in the context of the New Economic Policy; from 1927-28, this strategy was redirected towards South-Eastern Europe. 77 Although at the level of banks and industry many overlaps existed, the different thrusts of the strategies pursued by the comprador financiers, the reactionary nationalists associated with the backward part of heavy industry like Emil Kirdorf, and the dynamic industrial interest backing Stresemann's 'Ostpolitik', were unmistakeable. Politically, however, they were only varieties of a pervasive movement to the Right.

The Balkan thrust was inserted into a positive program of Middle European unity when in 1929, the Middle European Economic Conference (MWT) was organized anew. Rejecting the conciliatory implications of liberal European unity, the MWT, headed by Krupp director Wilmowsky, struck a balance with German nationalism and the geopolitical concept developed from the viewpoint of the pre- capitalist critique of money capital. Projecting a union with Austria, to be followed by extensions along the South-Eastern axis, the MWT was able to enlist the support of the powerful IG Farben chemical trust and eventually came to regroup the entire range of German industry, trade, and agriculture, embittered after the Young Plan of 1929 reaffirmed the German obligation to pay reparations.

The Balkan strategy of the MWT inevitably brought it into conflict with French imperialism, which at the close of World War One had explicitly selected Eastern Europe and the Eastern Mediterranean as its privileged sphere-of-influence. Hence, when in March 1931 Germany announced the establishment of a German-Austrian customs union, 'the old chasm of Franco-German industrial hate opened wide'. 79

The French retaliated by withdrawing credit from Rothschild's Kreditanstalt in Vienna, which promptly collapsed. Mocking the Briand proposal in retrospect, Max Hahn, the general manager of the MWT, in October 1931 declared that France in fact had stuck to a policy of parcellization and atomization of Europe all along.8O The United States, however, did not want to subscribe to the French position. In order to save the Austro-German bank system and the Atlantic circuit of money capital from collapse, Hoover in June made public his proposal to ask for a moratorium on all intergovernmental debt service. Within a month, the moratorium was accepted by the creditor states, and Hoover's Secretary of State, Stimson, declared, that if France was unwilling to cooperate in solving the reparations problem, the problem would be solved without it.81

In the prevailing circumstances, it was still left to bankers to execute this threat, since French short-term credits abroad gave it a power to strike anywhere as it had done in the case of the Kreditanstalt. Indeed after the failure of the DANA T bank on 13 July, the entire German bank system seemed on the brink of collapse. Following the London Conference which opened a week later, and which because of French veto power did not get beyond verbal attacks like Stimson's, a consortium composed of bankers from the two countries most involved in loans to Germany, the United States (represented by Wiggin, of the Chase National Bank), and the Netherlands (represented by Ter Meulen, of Hope & Co.), worked out an agreement to keep Germany afloat financially for the months ahead. 82

Atlantic bank capital thus had become the saviour of German capitalism, a system spiralling hopelessly toward the right. The leaders of this movement did not fail to appreciate the momentous importance of the Hoover moratorium. Alfred Hugenberg at a rally of his National People's Party (DNVP) complimented the American bankers on their new-found realism, from which he singled out, significantly, the House of Morgan , which was held responsible for the contents of the Young Plan.83 Thus reinforced, the reactionary nationalists and the comprador liberals stepped up their campaign against the attempts by the Bruning government to combat the crisis by parliamentary means. In the autumn of the year, assembled at Harzburg, they organized a common front too deal the death blow to this policy. The interests supporting Bruning were essentially composed of the Middle European fraction grouped around Siemens, AEG and the new chemical combine, IG Farben; as well as from among heavy industry, the relative outsiders—Otto Wolff, Silverberg and Krupp. In particular, they supported Bruning's timid combination of liberalism and state intervention. However half- hearted, it was this 'socialist' policy-mix which in the prevailing climate fostered the rapprochement between the comprador financiers and nationalist heavy industry, who each from their own vantage-point felt threatened by it. The nationalist industrialists, supporting Hugenberg and Hitler, were harmed by the deflationary policy of Bruning and feared his anti-cartel measures; the comprador liberals who were dependent upon Atlantic money-capital were allergic to the state-monopolistic measures, like the quasi-nationalization of the banks, and the state participation in the Vereinigte Stahlwerke.84

The severity of the crisis, and the failure of German capital to unify around a common solution, increasingly pushed Hitler forward as the deus ex machina. The dynamics of Nazi mobilization, and the class fractions involved, fall outside the scope of our study, but the heavy industry/comprador bloc explicitly decided to subordinate the Hitler movement to their objectives. The Keppler Circle, a group of capitalists assembled by Schacht in order to influence Hitler's economic programme, included such figures as Reusch of Gutehoffnungshittte; Thyssen and Vogler of the Vereinigte Stahlwerke; Springorum of Hoesch, and Krupp, too; Stauss of the Deutsche Bank; and banker Kurt von Schroder; as well as representatives of merchant capital and landed interests. The electrical and chemical industries, but also small capital, were notably absent and threw in their weight only when other options had been foreclosed.8s

The dynamics of the anti-semitic and 'anti-capitalist' campaign of the Nazi Party, in fact, tended to correspond much more closely to the state-monopolistic structures which emerged in the interwar years than to the requirements of the reactionary liberals who expected Hitler to turn back the clock of history. The cost of the termination of debt and interest payments to foreigners, which was stopped by Schacht as soon as Hitler had taken power, could still be passed on to small savers abroad; the big Atlantic banks were not hurt. Winthrop Aldrich, of the Chase National Bank, and a representative of the National City Bank visited Hitler in Berchtesgaden, expressing their confidence upon their return. 86

To German liberals, on the other hand, the policy of the Nazi regime became increasingly intolerable. In November, 1935, Carl Goerdeler, a doctrinaire liberal and Mayor of Leipzig, a principal centre of international commerce, protested against the inflationary, state-monopolistic course of the economy.87 In November 1937, Schacht resigned as Minister of Economic Affairs, and Goering took over as head of the Four Year Plan. Although he remained President of the Reichsbank and a minister to Hitler, this was a serious loss of competence nonetheless.88 Since Goering's Four Year Plan pro- ceeded on the assumption of a confrontation with Britain and France, the reactionary liberals' support for Nazi foreign policy likewise declined. When the non-aggression pact with the Soviet Union was concluded, Fritz Thyssen left Germany in protest. 89

The most stubbornly reactionary among the liberal internationalists had tried to prevent the tide of capitalist development from moving toward state monopolism, but Hitler's march to power brought to light the limits of their power. Their hope that the smashing of the labour movement would pave the way for a return to economic liberalism proved illusory, while the course of events revealed the structural nature of the crisis of liberal internationalism instead. The concepts of control developed in its heyday likewise lost their effectiveness.

In the decade of the world slump, militant nationalism and the breakdown of the Atlantic circuit of money capital led to the hegemony of those industries most closely attuned to the 'spirit of the times': to the need for state intervention and some form of organic social unity to help capitalism survive the most serious crisis it had experienced so far. All capitals, whatever their initial preferences, were forced to reproduce themselves in this context. Thyssen could leave, but the German steel industry remained in operation, and so did the industries operated by the autonomous internationalist bourgeoisie, who had preferred Bruning to Hitler, but who, apparently in spite of themselves, subsequently became the decisive element in the Nazi economy because of the objective development towards state monopolism.

The New Deal synthesis

1. The rise of the state-monopoly tendency

The notion of state-monopoly capitalism was coined by Lenin in his pamphlet, The Impending Catastrophe and How to Combat It, of October 1917. Criticizing the Kerensky government for tolerating economic chaos instead of introducing state control of the war economy (which he judged necessary for consolidating the bourgeois republic), Lenin went on to attack the Mensheviks and Social Revolutionaries for their failure to see that such state control represented the 'complete material preparation for socialism, the threshold of socialism'.

In other belligerent countries, the imperialist war had turned monopoly capitalism into state-monopoly capitalism. Bukharin even estimated in Imperialism and World Economy that the nationalization of capital into 'state-capitalist trusts' constituted the essential feature of imperialist development. But Lenin only wanted to make the revolutionary-democratic introduction of state-monopoly capitalism in Russia a factor in accelerating the socialist revolution. A progressive state-monopoly capitalism according to Lenin should be brought about by the following measures:

1. Forced centralization of bank capital into a single bank under state auspices;

2. Nationalization of the major syndicates (sellers' cartels);

3. 'Abolition of commercial secrecy';

4. Compulsory syndication of industry and commerce;

5. 'Compulsory organization of the population into consumers' societies'. 2

The codification of Lenin's works in Soviet Marxism, which fossilized their articulation of Marxist method and revolutionary tactics into official doctrine, in due course also elevated the analysis of The Impending Catastrophe to the level of standard theory. At the 1960 Moscow conference of Communist parties, state-monopoly capitalism, hitherto used loosely and as a theoretical category developed mainly in the GDR, was officially adopted as the scientific designation of advanced capitalism as such. The experience of the 1930s, when the main capitalist states resorted to an interventionist and corporatist policy intended to save capitalism from the crisis of its liberal mode of accumulation (but when Comintern Marxists still rejected any comparisons with the programme of The Impending Catastrophe), in hindsight was declared to be the formative period of state-monopoly capitalism. 3

In fact, the state-monopoly phase, linking the World War One experience with the peace-time state intervention of the 1930s and culminating in World War Two, proved transitory itself. The state- monopoly tendency in the bourgeoisie accordingly saw its hegemony evaporate to the degree capitalism succeeded in achieving a synthesis between state intervention and renewed internationalization: a process consummated in the era of Atlantic integration.

As a result, the essentially Bukharinist assumptions of the theory of state-monopoly capitalism condemn it to irrelevance in analysing the postwar period. In present-day France, the fate of the Left government launched on the basis of an (emaciated) programme of nationalizations illustrates better than anything the fundamental dislocation of state monopolism by a new liberalism, and hence, represents a critical moment in the crisis of the theory of state-monopoly capitalism, its reformist assumptions, and the Communist parties clinging to its tenets.

The crystallization of a state-monopoly tendency in the Atlantic bourgeoisie during the interwar years arose from the survival needs of large-scale industry confronted with the havoc wrought by an anarchic liberal capitalism, whose operating principles were no longer adequate to the development of the productive forces.

After the Armistice in 1918, state intervention had been dismantled along with the apparatuses of the war economies as such. The defeat of the working class and the confinement of its revolution to Soviet Russia allowed the bourgeoisie to opt for a rehabilitation of pre-war patterns of class and economic relations, and to retreat from the danger-zone of state control. In their evaluation of state intervention, the liberal bourgeoisie did not doubt for a minute the accuracy of Lenin's assessment of state-monopoly capitalism as the 'threshold of socialism'.

The state-monopoly tendency in the bourgeoisie, on the contrary, estimated that capitalism could profit from a mitigation of economic liberalism and a systematic state intervention. As indicated in Chapter One, such ideas had been propounded from the late nineteenth century on by Hobson, Ford, and others, and gradually, their reasoning came to be shared by a generation of the bourgeoisie dependent on state support, cartelization, and other economic arrangements contradicting the money-capital concept and the liberal order. When laissez faire exploded in 1929 and failed to respond to orthodox liberal methods of reviving it, the productive-capital concept gravitated to a hegemonic position and the condition of capitalist society elevated the fractional interest of the state- monopoly tendency to the level of the apparently general interest. The concrete forms of its breakthrough and the political struggles accompanying them differed greatly, but everywhere in the North Atlantic area the corporatist restructuration of class relations, the 'domestication' of the circuit of money capital under state auspices, and the crystallization of sphere-of-interest arrangements in the international field unmistakably signified the triumph of the state- monopoly tendency.

Reciprocating the entrenchment of socialism in one country in the Soviet Union, Atlantic capitalism temporarily sought to consolidate itself by an experiment with Lenin's October emergency programme.

The Rockefeller nexus

In the decade after 1909, the American iron and steel industry ceded its position as the fastest growing industry to the transportation machinery, oil, and chemical industries.4 The most dynamic component of the transportation machinery category, the automobile industry headed by Ford, in the same period embarked on a course of international expansion which would make the bourgeoisie associated with it part of the mass of interests which in the later stages of the New Deal threw in its weight for the international extrapolation rather than national consolidation of Fordism. As we shall see below, this development helped predetermine US hegemony in the restructuration of Atlantic capitalism after the Second World War, since in Europe a comparable breakthrough of the automobile industry and the concomitant restructuration of capital towards a relative-surplus-value, progressive-accumulation configuration did not occur.

The state-monopoly tendency in the American bourgeoisie, therefore, had its centre of gravity primarily in the two other fast- growing sectors: oil and chemicals. Unlike the automobile production firms, these industries faced stiff competition from their European counterparts, organized in powerful cartels. The cartel movement, which had its epicentre in Germany, was a key factor obstructing the growth of a consumer-durables sector, but other- wise enhanced Europe's competitive position. In order to bolster the position of American firms in meeting this competition and combining with or against European cartels, Congress in 1918 passed the Webb-Pomerene Act qualifying US anti-trust law in its extra- territorial aspects.

The support for the state-monopoly concept on the part of the American oil industry was relayed through the anti-liberal thrust of its cartel orientation rather than being a straight reflection of the productive-capital vantage-point,5 since the revenues of oil capital were predominantly composed of commercial profit and ground rent. Although it was integrated into the emerging automotive complex at an early date (US gasoline sales surpassed those of kerosene for illumination purposes just before World War One), the oil industry much more than the automobile industry remained dependent on state support, even apart from its publicly subsidized link to the national soil through the depletion allowance. A.C. Bedford, president of Standard Oil of New Jersey, set the example for the other Rockefeller companies in this respect by his presence on Bernard Baruch's War Industries Board during World War One.6

J.D. Rockefeller, the genius behind the Standard, was already a proverbial tycoon in the 1890s, but the real history of the Rockefeller financial group began when they stopped managing the Standard Oil companies and shifted their main activity to banking. Between 1920 and 1930, the Rockefellers acquired the Equitable Life insurance group and the Chase National Bank, putting Winthrop Aldrich, John D. Rockefeller Jr.'s brother-in-law, in charge of their operation. 7

The contribution of the Rockefellers to the characteristic profile of the state-monopoly tendency in the USA lay in two areas. In the field of labour relations, they developed a strategy of pre-empting trade-union organization via industrial representation schemes. After the Ludlow massacre of1914, in which a tent camp of Colorado Fuel & Iron strikers was machine-gunned and burnt down, killing eleven children, J.D. Rockefeller, Jr., who was the principal owner of the company, began to venture into the labour-relations field. Having been publicly exposed as supporting the CF &1 management throughout the conflict, Rockefeller hired the Canadian politician Mackenzie King to work out the eventual Industrial Representation Plan. The plan envisaged regular discussions between workers and management representatives under company auspices, without interference from 'outside' unions. Partially as a result of this example, corporate welfare and representation schemes proliferated during the open shop 1920s. In the meantime, the Rockefellers continued to fund advanced behavioural research (like Charles Merriam's group at the University of Chicago), while sponsoring a new category of labour relations experts, of whom Arthur Young of the Rockefeller-financed Industrial Relations Counsellors, Inc. was the most prominent. 9

The second contribution of the Rockefellers to interwar capitalism was their elaboration of a politics of rivalry with Britain and co- operation with Germany. Nelson Rockefeller, one of J.D. Jr.'s sons, become the main protagonist of this viewpoint. As was the case with Aldrich, who as a public spokesman was the counterpart of Morgan's Lamont, Nelson's importance lay in the area of political strategy rather than economic management. In the course of his apprenticeship at the Chase Bank in London, Nelson adopted the cartel outlook prevalent at the time, albeit with an internationalist accent commensurate with the global reach of the Standard Oil companies and their joint ventures. In this context, he also came to share the anti-British prejudice of the directors of Standard Oil, N.J. of which the German, Heinrich Riedemann, who was the director of international strategy, continued to be the vehement protagonist long after the world cartel agreement with Royal Dutch/Shell and Anglo-Persian was concluded in 1928.10

Except for Britain, where Standard Oil's affiliate' Anglo- American' competed with the virtual state monopoly established for the domestic market by Shell and Anglo-Persian (Shell-Mex & BP Co.), Standard tended to base its strategy upon the national oil policies sponsored by the state-monopoly tendency in the European bourgeoisie, thus challenging the British-Dutch position carried over from the liberal internationalist era. In this sense, a second- generation, sphere-of-interest Atlantic connection was created between corresponding class fractions in the United States and the continent that would remain pertinent in the post-war context. This was particularly true of France.

Paribas in the interwar years played a key role in the effort to emancipate France from the hold of foreign oil interests. In the process, the bank became a stronghold of the state-monopoly tendency. Successively, Paribas participated in the formation of the Omnium Internationale des Petroles in 1920 (set up to manage the Rumanian oil holdings held by the Deutsche Bank until 1918), the Cie. Standard Franco-Americaine (with Standard Oil), and the Cie. Française des petroles (CFP), the national oil company established in 1924.

The main protagonist of French interests in this context was Ernest Mercier, who together with Louis Loucheur may be considered as one of the effective leading figures in the state-monopoly tendency in the French bourgeoisie. Besides holding key posts in the electricity industry, Mercier headed both the Omnium and the CFP; in politics, he was the driving force behind French right-wing corporatism through the Redressement Français, in which managers from the oil, chemical, and aluminium industries were organized.12 Mercier in 1928 represented French interests in the negotiations with Standard's Walter Teagle over the French share of Middle East oil, typical of the sphere-of-interest struggles conducted in the period. Paribas, which had interests with both parties mediated in this matter, but by establishing Standard Franco-Americaine (the future Esso-Standard), Standard Oil already had become a silent partner in the development of a 'national' French oil industry. Standard was also the majority owner of the Le Havre refinery set up by a consortium of US companies under the Webb-Pomerene Act, which started production in 1933. At the diplomatic level, Standard's interests at a critical juncture were looked after by Teagle's brother-in- law, W.C. Edge, who was Hoover's ambassador in Paris. 13

With Germany, a comparable web of connections developed. Standard Oil's German subsidiary, DAPG, was already operating profitably in the 1920s, and again, to quote the official company history, 'benefited from the general rise of economic activity after Adolf Hitler came to power.' DAPG had a market share of29% in 1938, which made it the most important oil company in Germany. 14 Standard's connections with Germany ranged from the world of banking (Deutsche Bank, Warburg) to that of shipping (on account of its important German tanker fleet), and most of them survived World War Two. Several cartel agreements, moreover, linked Standard Oil to the German chemical combine, IG Farben. These agreements, regarding synthetic oil and rubber, were vital to German industrial autarky as well as to the country's military capacities.

This company policy fitted into a broader strategy pursued by the Rockefeller group. In 1934 the family public-relations expert, Ivy Lee, was sent to Germany to discuss with IG Farben how its image, and that of the Third Reich in general, could be improved. 15 Eventually, the agreements between Standard and IG Farben became a public scandal when after the loss of South-East Asian natural rubber supplies to the Japanese, US capacity for making synthetic rubber appeared to have been sold to the Nazis. After the war, IG Farben was dismantled, but the German connections of the Rockefeller group were carried over to the Atlantic integration context, in which they notably made themselves felt in the sphere-of-interest interludes between the American offensives.

Of the internationalists gravitating to the Rockefeller orbit in the interwar years and adopting a pro-German and sphere-of-interest outlook in the process, the Dulles brothers and their group were the most prominent. Religion provided the occasion for an early connection between John Foster Dulles and J.D. Rockefeller, Jr. Together with his endowment of labour-relations research and behaviourist social science, Rockefeller in the 1920s and early 1930s became the most important financier of liberal and ecumenical Protestantism, subsidizing such organizations as the Interchurch World Movement and the subsequent World Council of Churches. Rockefeller, Secretary of State Hughes, and Dulles wanted to ensure that religion would adapt itself positively to such new phenomena as mass consumption and American expansion abroad. 16 Although the ecumenical movement clearly cannot be reduced to Rockefeller influence, it is clear from the memoirs of the Secretary General of the World Council of Churches, Visser't Hooft, that Rockefeller money and Dulles's personal involvement were major factors in the organization's development and international policy. (The fact that wartime discussions of federalist European unity, involving Rossi, Spinelli, and partially inspired by Bonhoeffer, were held in Visser't Hooft's home in Geneva and that Visser't reported on them to Allen Dulles, who as head of the European Bureau of the Office of Strategic Services (OSS) likewise was in Switzerland, further add to the significance of the connection in terms of the present discussion.)1

As with the Rockefellers, the Dulles brothers played a historic role in shaping both the economic and political form of modem Atlantic imperialism. Sullivan & Cromwell, the Wall Street law firm in which they were partners and which they turned into a financial group in the 1930s, was the American agent for IG Farben and the Vereinigte Stahlwerke, while the brothers were also directors of IG Chemical Corp. Sullivan & Cromwell had further links with the German Schroder Bank and with Lazard Freres; Allen Dulles was a director of the J. Schroder Banking Corporation in New York. 18

Kuhn, Loeb in the interwar years also became part of the Rockefeller orbit. Its German partner, the Warburg bank, because of the anti-semitic terror in 1938 was renamed Brinckmann, Wirtz & Co., but the connections with Kuhn, Loeb and with Rockefeller were not affected. Shortly after the war, R. Brinckmann became chairman of the board of the German affiliate of Standard Oil. 19

These particular personalities and financial groups shared an inclination to sphere-of-interest arrangements in international relations loosely linked to a pro-German orientation that in many respects dovetailed with the mobilization of 'isolationist' industrial and agrarian forces in the Middle and Far West of the United States. Drawing on the productive-capital concept typical of industry as well as on the anti-chrematism of the agrarian Populists, the prevailing outlook in these regions complemented the Rockefeller. Dulles position in terms of international preferences but otherwise failed to transcend the immediacy of the state-monopoly configuration. As Schuker notes, 'in the Middle and Far West particularly there existed a potential for coalescence of pro-German sentiment with traditional isolationism and agrarian hatred of the ill- understood Eastern "money interest". '20

In industry, the backbone of Midwestern, Anglophobic isolationism was to be found in Chicago. The main families making up the local elite (Armours, Fields and McCormicks), their press voice (The Chicago Tribune), and the companies under their influence (International Harvester, Sears, Roebuck, and Inland Steel), tended to take a hostile view of American involvement outside the Western Hemisphere. The complementarity of their interests with those of the users of Chicago-made agricultural equipment contributed to a mutual affinity in this respect.

A second major centre of isolationism developed in Cleveland heavy industry. The iron and steel industry underwent a major- transformation when it was geared to the expanding automobile, engineering, and oil industries. This transformation at the level of the technical labour-process was marked by the introduction of the continuous wide-strip mill in the 1920s. As a consequence, US Steel, the original near-monopoly organized by Morgan, lost ground to newcomers catering to the flat steel market. These firms, concentrated notably in the Cleveland area, in turn, became the torch- bearers of reactionary nationalism in the interwar years. Charles Hook of the American Rolling Mill Company (ARMCO) which had developed the new type of rolling mill, was a close friend of conservative Republican Senator Robert Taft, while the Cleveland steel companies (Youngstown Sheet & Tube, National and Republic), were all linked to the isolationist, anti-New Deal wing of the Republican Party. Through the Mather family (owning Youngstown and Republic in Cleveland and Inland Steel in Chicago) the Cleve- land and Chicago heavy-industry groups were linked among them- selves. Kuhn, Loeb was the underwriter of the Cleveland steel companies.21

Although the postwar export interests of some of the firms in this nationalist bloc would modify their opposition to international activism, the context of their rise to prominence remained relevant. In the Eisenhower administration, where George Humphrey (of the Cleveland Hanna-Mather group) and John Foster Dulles held the reins at the Treasury and State Departments respectively, this fraction reasserted itself and demonstrated by its actions the pertinence of its lineage to the sphere-of-interest configuration of the interwar years.

Hi-tech industries of the 1920s

Turning next to the other bastions of the state-monopoly tendency in the North Atlantic area, the chemical industry (including rayon) may be singled out as a sector which would continue, at later junctures, to manifest its interwar heritage. The chemical industry, of course, predated the state-monopoly era, but, as with the oil industry, it was only after World War One that it became a social force of consequence. As Fortune put it, 'Chemically.. .the chemical industry dates from Leblanc and 1791; industrially, the chemical industry was recognized only after the World War'.22

The American chemical industry, the third fastest growing national industry in the decade 1909-1919, was notorious for its protectionist and cartel propensity. Originally lagging behind the German chemical firms, the confiscation of German patents during the war put the industry firmly on its feet and enabled it to participate as an equal in the sphere-of-interest arrangements with its counter- parts on the other side of the Atlantic. Having hitherto followed a conservative policy of self-financing, the industry now opened itself to the massive infusion of bank capital. Thus, Du Pont de Nemours, the great munitions trust which out of its war profits had been able to gain control of US Rubber and General Motors, was forced during the 1921 recession to turn to Morgan for credit to absorb losses incurred by GM. Since the chemical industry had most to fear from German competition, it tended to be less receptive to pro-German policies than the Rockefeller or Dulles groups, which through their financial or direct investment stake in Europe could participate in the autarky or quasi-autarky policies pursued by the European states in the period. This applied not only to the smaller Allied Chemical & Dye, whose chairman Orlando F. Weber had a reputation as the 'vigilant defender of the American chemical industry against foreign invasion' (Fortune), but also, in spite of General Motors' European investments, to Du Pont itself. 23

In Germany, the chemical industry had a much longer history. The tendency towards autarky championed by the German chemical industry in a sense related to the origins of the industry as an attempt to produce synthetic equivalents of natural products ever since medieval alchemists had tried to make gold. The necessity for synthetic replacements made itself felt whenever European powers were denied access to the sea. Thus, the industrial applications of chemistry experienced a first breakthrough at the time of the British blockade of France during the Napoleonic wars. Later, the centre of gravity in applying the results of science to industry shifted to Germany, where a weak capitalism without colonies had to marshal all available assets to engage in foreign competition. The experience of the British blockade during World War One only reinforced the implicit concepts on which the development of chemical industry had hitherto been based and actually fostered the conviction among German chemical engineers and capitalists that economic autarky was the only viable basis for prosperity. American competition in the interwar years contributed to the continued economic relevance of this idea.24

The German chemical combine IG Farben was constituted in 1925, but the merger did not eliminate important differences in outlook amongst its constituent firms. The light chemicals group, composed of Bayer, Agfa, and BASF, with their American subsidiary General Aniline & Film, represented an internationalist interest. Carl Duisberg, the head of IG Farben until 1932, came from Bayer. At the time of Duisberg's incumbency, the Frankfurter Zeitung, the liberal newspaper under IG's control, still attacked the cartel policies of heavy industry. Duisberg's successor, Carl Bosch, on the other hand, came from explosives and fertilizer plants at Oppau and represented the autarkic tradition of Hoechst. By the time Bosch took the reins, German experiments in the direction of a corporate- liberal synthesis had failed due to the inability of the technologically advanced, export-oriented firms to generalize a strategy of relative surplus-value production and to subordinate to that end heavy industry and its cartels.25

As far as international cartels were concerned, IG Farben up to the close of the 1930s had concluded 162 separate cartel agreements with American firms26 of which the agreements with Standard Oil have been mentioned already. The oil and chemical cartels were inextricably interwoven: ICI for instance held 10% preferential shares in one of the licensing companies for synthetic oil jointly owned by Shell and Standard under the latter's world rights for the hydrogenation process obtained from IG Farben.27

ICI was, in fact, the single most important outpost of the state- monopoly tendency in Britain. Formed in 1926 out of Brunner- Mond, Nobel, United Alkali and British Dyestuffs, its directors distinguished themselves as architects of corporatism in Britain. Sir Alfred Mond, the chairman, following the General Strike of 1926 took the initiative to open discussions with the TUC on a flexible format of British labour relations. Lord McGowan, one of the prominent directors, headed the advisory committee on the cartelization of electricity distribution companies. 28

The manifold links between ICI and German capital predisposed the fraction associated with it to a lenient attitude with respect to German expansion as long as this could be contained within a sphere-of-interest arrangement. The Anglo-German Fellowship, which had its office on the Unilever premises, and in which ICI officers and stockholders like Sir John Simon were prominent, in this context served as a vehicle for ascertaining Hitler's intentions and maintaining his good will.29 Significantly, the pro-German groups at his juncture generally were in favour of a neo-colonialist reconversion of the British empire as well; after the war, ICI notably stuck to this line and threw in its weight for British participation in Western European integration rather than banking on Commonwealth ties.

As in other countries, the predominance of a strategy basically deriving from the requirements of productive capital did not prevent particular banks from subscribing to it. In Britain, the Midland Bank and the Philip Hill merchant bank in this sense were a product of the state-monopoly era. As Aaronovitch writes, 'The rise of the Midland Bank and the Hill-Higginson group in relation to the older merchant banks was possibly based on the shift towards domestic industry before the older merchant banks were able to muscle in.'3O The Midland Bank was a major investor in ICI and had a joint directorate with it in the person of Lord McGowan.

In France, the chemical industry likewise was a major catalyst in the formation of a state-monopoly tendency in the bourgeoisie. The Gillet empire in the Lyons region constituted one pole of the 'Lille Lyons axis' which linked it with the Motte textile interests in the North, and which the American historian, Quigley, sees as the backbone of the state-monopoly tendency in France as it crystallized in the1930s.31 The Gillet family whose interests ranged from the chemical firms of today’s Rhone-Poulac and Kuhlmann to Pechiney, the aluminium group, and the Credit Lyonnais, was backed by the dominant Protestant banking-house of the interwar-years, Mirabaud. The banks specifically associated with the state- monopoly tendency in France, apart from Paribas and Lazard Freres, were Worms & Co., constituted as a bank in 1928; the Credit Commercial de France; and the Banque Nationale du Commerce et de l'Industrie (BNCI), which was established in 1932 and in 1966 merged with the Comptoir National d'Escompte into today's Banque Nationale de Paris.32 In politics, the Lille-Lyons axis was represented by Louis Loucheur, who was associated with the Motte family. The BNCI had its front man in Pierre Laval. As we shall see in next chapter, the state-monopoly tendency only really took power in Vichy, when most of the French empire was virtually amputated from the motherland and the weight of liberal colonial capital was accordingly reduced. Before the war, the influence of the new industries expressed itself only in coalition arrangements, in which Tardieu, the 'darling of the technocrats', was a prominent figure sharing the same vantage-point. 33

Everywhere, the chemical industry contributed to the formation of a generation in the bourgeoisie rejecting cosmopolitan liberalism and subscribing to sphere-of-interest arrangements in international affairs. The autarkic impulse also was a formative force in the rise of the mainly European synthetic yarn-and-fibre industry which expanded eight-fold between 1920 and 1929 surpassed wool as the textile raw material on the eve of World War Two. AKU (today's AKZO) in the Netherlands, launched by Rotterdam/Ruhr coal merchant F .H. Fentener van Vlissingen; SNIA Viscoj in Italy, converted to rayon production in 1929 by Franco Marinotti; Courtaulds in Britain; and lesser firms in other European countries, retained their cartel and state-monopolistic propensities formed in this era. As in the chemical industry generally, managerialism was prominent here. In Belgium, it was personified by the figure of Roger de Staercke, who managed chemical and rayon firms on behalf of the Solvay and Janssen owner families. Fascist tendencies also were at work in the world of chemical industry: in Germany IG Farben and in Italy, G. Donegani, the founder of Montecatini, who was an important supporter ofMussolini.34

Electrical engineering firms like General Electric, AEG and Siemens were already major economic powers before the First World War. Yet, the electrification of domestic labour and leisure was a phenomenon of the 1920s, and the mass production of electrical household appliances, together with continuing electrification of production and transportation, gave the industry a greatly increased salience in national policy. Like the auto industry, electrical engineering was a principal vector of emerging 'Fordism'. In the case of firms with a liberal-internationalist background - like GE or Siemens - this took the form of support of a corporate-liberal synthesis comparable to the approach of the American automobile firms; others, like ITT (founded in 1920) and Philips, retained a strong state-monopolistic and sphere-of-interest profile.

In the field of labour relations, the electrical engineering firms were particularly dependent on quality labour. They needed high-quality performance by their manual labour power, but also had to establish a smooth working relationship with their engineers, on whose inventiveness they depended for product innovations. At Siemens, the maintenance of a trained workforce was given top priority. As Sohn-Rethel relates, the Siemens workers, whether the blind women and girls employed on account of their sensitive fingertips, or the engineers, were seen as the essential factor in the company's success and were paid relatively high wages. For the greater part, the workers were hand-picked specialists at their jobs, often trained in three-year courses at the expense of the company. They lived in Siemens-town and were well taken care of. Fascism eventually destroyed the subtle forms of the subordination of labour at Siemens and in comparable companies, substituting instead the absolute surplus-value strategy of the German war economy. 35

In the United States, labour relations were likewise developed with circumspection by the employers in the electrical engineering industry. The pioneering Hawthorne experiments in industrial psychology in the 1920s were conducted at Western Electric, but as early as the turn of the century, General Electric took the initiative to establish an apprentice school for training workers, which by the time of World War One had set the standard for an organized group of industries typical of the era, like International Harvester, Westinghouse, and Western Electric. 36

In terms of international orientation, the German electrical companies had held a strong position even in the United States, but after World War One they shared in the general decline of internationally operating German capital. Siemens after its adventure with Stinnes in 1930 was forced to borrow $14 million through Dillon, Read & Co., without however surrendering to foreign interests. Like the Deutsche Bank, to which it had a long-standing affiliation, Siemens belonged to the fraction of German capital maintaining their autonomy vis-à-vis US capital in the period. AEG, on the other hand, turned toward General Electric in 1929 for support in its struggle with Siemens; a development which coincided with increased influence of the Dresdner Bank in the AEG board of directors. 37

A major investor abroad, and through Owen Young directly involved in the rehabilitation of the Atlantic circuit of money and finance capital, General Electric in response to the crisis of 1929 developed seminal proposals anticipating the New Deal. Its contribution to the formation of a state-monopoly tendency in the American bourgeoisie, although merely transient from the company point of view, was crucial in determining the form of American state intervention and represented an early instance of the corporate- liberal synthesis. In late 1931, Gerard Swope, head of General Electric, at a meeting of the National Electrical Manufacturers Association presented a plan for compulsory cartelization of American industry, to be supervised by a board of employers and workers. Within a month, the Swope Plan had been endorsed by key liberal capitalists, including Henry I. Harriman, president of the US Chamber of Commerce. Baruch incidentally had proposed a plan like this already in 1925, but his plan was part of a more restricted and, isolationist concept of control. 38

In Britain and Belgium, the electrical engineering industry was dominated by foreign interests, notably General Electric and Westinghouse. In Britain, the major domestic factor in the electrical engineering industry, the Lazard group with English Electric, was part of the appeasement bloc as a corporate member of the Anglo- German Fellowship, but after the war gravitated to the pro-Atlantic fraction. Lord Brand, the managing director of Lazard Bros. at the time, was a major figure in the Cliveden set and the British Round Table Society; director Adam Marris joined the UK embassy in Washington in 1945 and played a key role in the preparations of the Marshall Plan.39

In France, the electrical engineering industry was penetrated by the ever-present General Electric group, but otherwise constituted a bulwark of the state-monopoly tendency. Mercier, Loucheur and A. Petsche held important posts in the industry. Detoeuf, of Alsthom (of which Mercier, too, was a director), was a prominent advocate of corporatist labour relations and championed Franco-German rapprochement. Significantly, electrical engineering was the only industry in which an industrial entente of the type foreseen in the Bruning-Laval agreement of 1931 In fact materialized. 40

Philips of the Netherlands, finally, was a typical product of the state-monopoly era. Specializing in electrical household appliances, the company undersold its competitors by its low wages and by a 'feudal system of exploitation', as the president of General Electric's international division called it in 1935. The American company's influence in Philips, on account of its 18.7% investment and a licensing agreement, declined in the 1930s. Anton Philips, the founder, was an admirer of Henry Ford, who upon his visit to the Netherlands in 1930 made him chairman of the board of Ford's Dutch subsidiary. In a 1945 article, Fortune correctly qualified Philips as a 'firm believer in cartels'; the company ever since has tended to define its interests in terms of some form of European cohesion.41

But the list of industries which, in a parallel process on both sides of the Atlantic, bred a generation of the bourgeoisie steeped in the productive-capital concept, state-monopoly capitalism, and a sphere-of-interest strategy of international relations, should not obscure the basic qualitative difference setting apart American from European capitalism at this juncture: the growth in the United States of a strongly internationalist automotive complex supporting a new mode of accumulation which for the first time in history allowed a class compromise between capital and labour to be constructed around a common interest in a rising rate of exploitation. This fact, in conjunction with American financial hegemony, provided the basis for the acceleration of American state monopolism into a new corporate-liberal synthesis, consummated in the New Deal and subsequently extrapolated to the North Atlantic area as a whole.

2. The corporate-liberal synthesis

The Depression marked the watershed between the era of liberal internationalism and a new era characterized by the compartmentalization of the Atlantic economy under the aegis of the productive-capital concept and the state-monopoly tendency in the bourgeoisie. This 'Great Transformation' for a time seemed to develop along parallel lines on both sides of the Atlantic, but in the course of the American New Deal, US state monopolism became part of a renewed outward thrust, in which 'progressive' state intervention was inserted into a revitalized liberal internationalism. In Europe, on the other hand, state monopolism galvanized the mass of interests opposed to orthodox liberalism only in a negative, tendentially reactionary way.42

Fordism and the automotive complex supporting it were the key factors shaping the transformation of American state monopolism into the corporate-liberal synthesis, providing the specific ingredients for both its social-imperialist aspect and the internationalization of finance capital from the United States. Ford's mass production strategy allowed him to break the resistance of skilled labour- power to its subordination to capital, tap the reservoir of cheap unskilled workers, and dramatically raise the rate of exploitation. In combination with the economic and social aspects enumerated in Chapter 1, Fordism through the generally competitive dynamic of American capitalism and its 'rational' class structure rapidly became the hegemonic mode of accumulation, spreading well beyond the actual automobile industry.

Articulating high living-standards and a flexible format of labour relations with a new lease on life for the steel industry through the continuous production of sheet steel, the American automobile industry engendered a veritable automotive complex involving the oil, rubber, and glass industries, pioneered new marketing and maintenance practices, and stimulated the development of road networks, suburbanization, new forms of vacationing, and so on. After the steam engine and the railroad, here was another truly epoch-making innovation of industrial capitalism. 43

Already in the 1920s, therefore, the accumulation of capital in the United States and the strategies of the main financial groups in large part revolved around the automobile industry. Du Pont de Nemours' acquisition of General Motors stock was significant in this respect, and when Dillon, Read & Co. in the interwar years challenged the hegemony of Morgan, this involved, next to their plunge into the Atlantic circuit of money capital, an (ultimately abortive) attempt to build a rival automotive complex out of Chrysler and Goodyear Tire and Rubber, with which they confronted the General Motors/US Rubber combination (controlled by Du Pont and Morgan) and Ford/Firestone. 44

At the same time, the American automobile companies from an early date engaged in active internationalization in response to the tendency of European governments to protect their weak automobile industries by tariffs. In Britain, when McKenna imposed a 33 1/3% protective tariff in 1915, more than one-quarter of the automobiles produced in Britain came out of the Ford subsidiary already. 45 In France, Ford's first direct investment dated from 1913, while the German automobile industry was virtually divided between General Motors and Ford in the course of the 1920s.

In Europe, automobile production largely remained the domain of skilled workers until after World War Two. Here, the low value of labour-power in the context of a more hierarchically stratified class structure tended to act as a brake on the rationalization of production along Fordist lines. Narrow national markets, and a heavily cartelized steel industry resisting its transformation into a supplier of cheap sheet steel for automobile production, often reinforced by various forms of shop-floor resistance, effectively frustrated the introduction of new methods of producing and selling popular automobiles. Cars accordingly were expensive and bought only by the wealthy. In 1938, every fifth American drove a car, whereas in Western Europe, the ratio was 40:1.46

Thus, while the American automobile industry was not only the most dynamic economic force in the country (and an internationally oriented one at that), but also served as the crystallization point of the emerging progressive mode of accumulation and the corporate- liberal synthesis as such; in Europe the automobile industry, in the absence of the conditions favouring a comparable development, was either an ancillary of American capital or part of a defensive array of interests controlled by the state-monopoly tendency in its own bourgeoisie.

In Germany, according to Gossweiler, Opel, owned by General Motors, in the interwar years belonged to the Dresdner Bank/DANAT Bank grouping together with AEG and comprador strongholds like Thyssen; the Daimler-Benz and BMW firms, mean- while, were part of the Deutsche Bank group. Hitler's car for the common man, the Volkswagen, remained a prototype until after the war. In France, Lazard and Paribas in 1936 cooperated with the rubber monopoly Michelin, the main owner since 1934, in the reorganization of the ailing Citro~. Renault, also linked to Paribas, at this point still refused state interference but after the war was put under national supervision. In Italy FIAT, an independent and inter- nationalist concern, resorted to Mussolini's protection to consolidate its virtual national monopoly during the critical interwar years. In the Netherlands, the buildings of the Spijker factory, the last national car firm, were sold to a paper manufacturer in 1929.47

If in Britain the automobile industry flourished compared to the depressed situation on the continent, this occurred under the specific conditions of the Imperial Preference System and the corporatist collusion between capital and labour under the auspices of the state-monopoly tendency in the bourgeoisie. The breakthrough of a consumer-durables industry and the rise of strong automobile firms like Austin and Morris here represented a protracted 'consumption' of British imperial hegemony rather than a restructuration of industry towards a Fordist accumulation pattern, as is testified by the resistance put up by the steel industry to the introduction of a continuous wide-strip mill and the conditions of its eventual operation in 1939.48

In the United States, the restructuration of class relations towards the progressive accumulation pattern and the new corporate-liberal concept of control was consummated between 1933 and 1941. Roosevelt's New Deal, far from representing the realization of a clear-cut program, consisted of a process of class formation in which various fractions, through intense struggles, successively were integrated into the new hegemonic coalition, while others dropped out after having been temporarily included. The transition from the crisis of liberal internationalism to the new corporate-liberal synthesis passed through four main phases. 49

First, the actual breakthrough of the state-monopoly tendency at the expense of international money capital, in which the Rockefeller group and chemical industry, notably Du Pont, were prominent. Secondly, a social-imperialist phase characterized by domestic reform and a corollary, albeit still timid, internationalist departure from the initial state-monopolism. This second phase, which soon assumed a veritable 'revolutionary-democratic' quality highly disturbing to Roosevelt's supporters in the bourgeoisie, was followed in 1937 by a third phase of countercylical economic policy aimed at containing working-class pressures within the constraints of the new Fordist social order. The effectiveness of this policy partially accommodated the segment of the bourgeoisie which had deserted Roosevelt and had established the Liberty Leagues in the second phase; but it took until the fourth phase, when Roosevelt embarked upon a program of support for Britain against Hitler, before the disaffected mainstream bourgeoisie and the traditional financial aristocracy, too, were able to find their place in the New Deal coalition.

The eventual corporate-liberal coalition of mass-production industries, 'reformed' international bank capital, the state apparatus, and, at a subordinate level, the domesticated trade unions, hence- forward would remain committed to the arrangements of the era of American hegemony and Atlantic integration, through which the Fordist mode of accumulation and the class compromises on which it rested were extrapolated- to the international level. Yet, only during the offensive phases, with the domestic US economy going at full tilt and the Democratic Party in command, would this configuration be geared to its full potential, articulating state intervention, social imperialism, internationalism and activism abroad.

The 'unreconstructed' state-monopoly tendency in the American bourgeoisie, as much as its liberal-internationalist counterpart, in the postwar period could only reassert itself as part of the recurrent tendency, mostly under Republican auspices, towards the disintegration of the offensive class configuration. In between the American Atlantic offensives, the prominence and policies of Rockefellers and Dulleses in this sense can be traced to the period of their original ascendancy in the context of the compartmentalization of the Atlantic economy and the resurgence of Germany.

Corporatism in labour relations

The elaboration of synthetic concept of control with respect to the working class was a crucial achievement of the New Deal, and an integral aspect of the Roosevelt offensive's export model of class relations. The basically private forms of labour control associated with the new industries of the 1920s failed to contain the intense class struggles erupting between Roosevelt's election and World War Two. The industrial welfare and representation schemes pioneered by Rockefeller, and hardly challenged by the restrictive organizing practices of the AFL, generally had involved only the better-paid, skilled workers. They had functioned to make the workers accept the reduction in wages dictated by the orthodox policy of deflation, but left unorganized the larger mass of semi-skilled production workers, often already outside the integrative context of Anglo- Saxon culture.50 When in the course of the crisis mass unemployment spread, class consciousness among this segment of the working class grew.

Through the mobilization of millions of working-class new voters and the resulting expansion of the active electorate, the campaigns of Franklin Roosevelt in 1932 and 1936 swept away the Republican-dominated electoral system established by McKinley's landslide of 1896. This overturning of forty years of Republican big-business electoral hegemony raised the spectre of mass radicalization. Thus, America's most eminent academic economist, Irving Fisher, warned President-elect Roosevelt that close observers of local working-class opinion were 'smelling revolution'.51 This threat, in turn, functioned to loosen the liberal deflationist orthodoxy of a critical segment in the ruling class. The example of the Swope Plan shows that in certain capitalist circles a state- monopoly solution was actively contemplated.

Indeed, quasi-heretical state intervention in monetary and financial policy had been attempted first under Hoover, who created the Reconstruction Finance Corporation, a major instrument of state intervention through the Truman period. Hoover, however, did not dare to venture into the field of forced cartelization along the lines proposed by the Swope Plan. 52 It was only the grounds well of the working-class movement which removed these hesitations. As banker James Warburg noted in his diary in March 1933, 'There is tremendous and increasing pressure for inflationary relief from all possible sources and taking all possible forms. . . .Cheapening the dollar would make all these people happy at least for a certain length of time, and during this time it will be possible to develop a real program'.

Confronted with a threatening breakdown of the capitalist order, the American ruling class preferred playing for time and thus allowed Roosevelt and his advisers a free hand in taking the necessary measures. The 'real program' at first amounted to an enactment of the Swope Plan by the National Recovery Act. The Act, and the executive organs it created, put the American economy on a state-monopolistic footing with control in the hands of the fraction most closely acquainted with this approach. The National Recovery Administration was headed by former Baruch aide Hugh Johnson; Walter Teagle of Standard Oil led its Industrial Advisory Board and sat on the National Labor Relations Board; while Swope sat on both bodies. The Du Pont group, alienated by Hoover's liberalism, was prominent among the backers of the project at this stage.

However, Roosevelt's appointment of a woman, Frances Perkins, over the opposition of the AFL, signalled a new approach to the mass of unorganized workers. Arguing that 'unorganized as well as organized labour should be represented' 54, the Administration inserted NRA's famous section 7a, which recognized labour's right to organize within the company and to engage in collective bargaining at the industry level. This everywhere encouraged the unorganized to organize, and trade unions to press new demands. However, strikers who turned to Washington for help in the face of employer victimization (which was extensive everywhere in the first years of the New Deal) quickly discovered that NRA chief Hugh Johnson and Secretary Perkins were more interested in the success of the integrative mechanisms of the NRA, and its impact on the macro- economy, than in any particular rights or struggles of the working class as such. 55

Although the Supreme Court –a last bastion of economic liberalism—ruled the NRA unconstitutional in 1936, its assumptions still guided the Roosevelt Administration's search for a corporatist format of industrial relations. If, on one hand, the New Deal had to overcome employers' resistance to unionism tout court; on the other, it had to constrain and 'deradicalize' the more militant tendencies of the rank-and-file working class. The first major challenge was the great sit-down wave of 1936-37 which, for virtually the first time in American history, saw a mass transgression of employer property rights. Faced with awesome company repressive apparatuses (private police forces, extensive 'fink' networks, etc.), organizing committees of the newly-formed Committee (later Congress) of Industrial Organization(s) launched epic sit-downs; first in the Akron rubber industry, then in the very heart of General Motors' power: its Flint, Michigan Chevrolet complex. This new form of working-class action, which won recognition for the CIO's rubber and auto unions, put the companies on the defensive since they were compelled to limit the use of force for fear of damaging plant and equipment. In 1937, however, Congress, with the assent of the Administration, outlawed sit-downs. The unions, despite rank-and-file protest, complied and returned to picket-lines outside the plants: with the result of 10 dead and 26 wounded outside a Republic Steel plant in South Chicago in 1937.56.

Also in 1937 pressure was brought to bear on the Roosevelt administration to cut public spending for employment and thus quell working-class militancy. The recession came in the midst of the CIO drive and worked both to undermine the workers' will to strike and to bolster the employers' will to resist. 57 At this juncture, the AFL took the offensive, and as a result of its greater financial resources and broader support in the capitalist class, succeeded in recapturing much of the territory lost to the CIO and more. The AFL in the previous period had lost influence as a consequence both of mass production and deskilling tendencies, and because of company feudalism; now that the lightning advance of the CIO was halted, the AFL veered back to its original pre-eminence by combining some of the lessons it had been taught by the new organizing practices of the CIO with its rich experience of class collaboration.

The restructuration of labour relations from the pre-New Deal format to the new Fordist pattern far from obliterated the forms of some of the previous arrangements. Company feudalism paradoxically was reinforced in some sectors, like chemicals and business machinery, where the challenge of the CIO spurred employee- representation schemes and pre-emptive wage comparability. But if the overall outcome was heterogeneous (also due to the fact that the protracted struggle of the working class took place under changing legal and political conditions), the compromise, worked out on the national level, between high-productivity industry and organized workers became its dominating feature. In the course of the Roosevelt offensive, organized labour first had to be cut down to size to make this compromise attractive to the capitalist class; but once this renewed subordination was achieved, the corporatist mechanism allowed for a relatively smooth interplay between the big unions' economic demands and the expansion of American capital. The AFL and CIO both supported labour-saving mechanization in exchange for pay rises for the stably employed workers forming their core constituencies. The miners' leader and strategist of the CIO drive, John L. Lewis, right after World War Two was the first to accept such a deal openly. 58 Eventually, this compromise also functioned in the context of the internationalization of American capital, making the AFL and CIO junior partners in the post-war organization of an informal American empire.

In Europe, the preconditions for the introduction of a Fordist pattern of labour relations were largely absent. In the interwar years, European backwardness lent a particularly reactionary aspect to the state- monopoly tendency, notably on the continent. Whereas in the United States, the possibilities of expansion, coupled to the rational two-class structure and the owner-cultivator pattern in agriculture, made a basically progressive, social-imperialist consensus possible; in continental Europe, the productive-capital concept was disproportionally developed from the vantage-point of the pre-capitalist critique of money capital, and in its Fascist variety eventually would entail the enslavement of the working class.

However, the same processes of rationalization of industrial production were at work, and the requirements of large-scale mechanized production, as well as the typical class compromises developed in its context, did assert themselves in Europe in the interwar period, if only temporarily. Northern European Social Democracy would develop as a crucial agent for the introduction of the Fordist pattern of labour relations in Europe; and in the interwar years two lines of development in this respect stood out: the British example of a national compromise and its subsequent devolution to the plant, level, and the German pattern of plant councils evolving into a national compromise (postponed to the post-war era after its initial. failure in 1928).

In Britain, which in terms of the transition to a Fordist pattern of accumulation occupied an intermediate historical position between the United States and continental Europe, the state-monopoly tendency materialized in the specific form of a conciliatory tendency within both the capitalist and the working classes. Due to the dominant position of the international commercial and financial interests, industrial capital at an early date was forced to work out a basis of agreement with the workers, notably in the new industries. Since these often were operated by relative outsiders (Americans in the electrical engineering industry, Germans in chemicals, the Quaker families in the food industry), these experiments did not immediately or hostilely incite the established, liberal ruling class.59

In the Depression, these experiments, which after the General Strike of 1926 had gained prominence through the Mond-Turner discussions already referred to, were elaborated as a general framework of labour relations, exemplified in the Macmillan Report of 1931.60 Although the British bourgeoisie was not above contemplating new forms of state intervention—a 1927 Tory manifesto inspired by Mussolini's New Order carried the signatures of Churchill and Harold Macmillan—only the Labour party could invest all its political capital in a prospective corporate-liberal synthesis. The stability of real wages in Britain during the crisis, contrasting sharply with developments elsewhere, did much to strengthen the hand of the right wing of the trade unions and the Labour Party, allowing them to plot a course of state intervention along reformist lines compatible with the corporate liberalism championed by the United States after the war. The early break with Marxism under the auspices of the Fabian Society greatly facilitated the absorption of Keynes's recommendations for a euthanasia of the rentier class and a calculated deficit policy for employment; although formulated by an avowed enemy of the working class, this recipe found its historical executor in the Labour Party, being the only political force in Britain basically committed to modernization and an enlarged state role.61 It was this ideological homology which eventually would turn the TUC, the labour Party, and leaders like Ernest Bevin into crucial relays of American influence and intervention in Western Europe.

In some contrast to the British pattern (which on account of economic and historical similarities was also influential in the Netherlands), German Social Democracy developed its prototypical contribution to the corporate-liberal synthesis from the vantage- point of productive capital in direct production. In Germany, there was a strong tradition of company feudalism in the metalworking industries employing skilled workers. Worker and employee committees had been in existence in German companies since 1891 and had become compulsory in 1916, but the self-elected workers' councils transcended the corporatist format. This was evident at the close of World War One when the revolutionary shop stewards among the skilled metalworkers led them into a struggle that for a time seemed to develop in a genuinely revolutionary direction. Their initiative was not followed by the semi-skilled workers in the larger factories, however, and the German majority Socialists and the trade unions, working closely with enlightened capitalists of the type represented by Walter Rathenau, were able to recapture control of the councils movement in the years that followed.62

This course of events demonstrated the inability of merely syndicalist movements, no matter how revolutionary, to provide a viable alternative to a vision of reformed capitalism, which by its own workings, and Henry Ford's in particular, seemed to hold out the promise of fulfilling the workers' material needs. In Germany, this reformist ideal was elaborated out along the lines of the Keynesian critique of money capital, but due to its origins in the councils movement remained linked to a concept of industrial democracy rather than being state-oriented. Here, not just the state, but the large corporation already was seen as a neutral instance. The notion that production 'unjustly', 'capitalistically', was subordinated to the interests of money capital was taken as a starting point for several influential studies by leading Social Democratic theoreticians. Fritz Naphtali in 1928 recommended that the workers' representatives take part in the management of large corporations, and eventually, of state economic policy as well. The socialization of labour within the plant, and the promise of more harmonious industrial relations that it held out, led Naphtali to believe that socialism might not need a violent struggle after all. 'Though it is far from US', he wrote, 'to conceal the highly capitalist nature of the new forms of organization, we believe that from this development. . . a major impulse in the direction of the democratization of the economy will result and is beginning to do so already.' A comparable point of view was put forward in Eduard Heirmann's Soziale Theorie des Kapitalismus of 1929.64

Social-Democratic ideology, proceeding from the assumption that socialized labour in the factory represented a major step towards an overall planned economy –and, if managed democratically, possibly its equivalent—was dependent on the capacity of modern mass-production industry to provide a relatively high standard of mass consumption. When Naphtali's and Heinmann's studies were published, this was already proving an illusion. In the prosperous year 1928, when the boom associated with the influx of American capital was at its peak, the real wages of the entire working class were still not above the pre-war level. Mass consumption accordingly failed to develop sufficiently, and eventually the trade unions in the relatively 'progressive' industries (e.g., chemical, electrical, etc.) which had achieved a semblance of nation-wide bargaining through arbitration, had to swallow the across-the-board lowering of wages through the Emergency Decree of December 1931.64 Only after World War Two did the managerialist and technocratic doctrine of Naphtali and Heinmann became relevant again in the context of Atlantic integration. Cementing and in some respects transcending the productive-capital concept, this outlook tended to favour coalitions between productive capital and organized labour, and at the state level, between finance capital and Social Democracy. In the Federal Republic, this led to company co-determination schemes favouring productive investments to the detriment of dividend payments, and to the adjustment, through the Godesberg Programme of 1959 and other policy changes, of Social-Democratic policy to the corporate-liberal and Atlantic unity concepts.65

3. The New Deal versus rentier control

The failure of liberal-internationalist capitalism to revive its economic order after 1929 also brought about, in due course, a fundamental restructuration of profit distribution as well, The stock market crash and the bank crises of the early 1930s had made abundantly clear where the weak links in the system were to be found. In the margin of the momentous class struggle which accompanied the agony of liberalism , small savers clamoured for the money invested abroad by investment banks operating in the international circuit of money capital. In the United States, these investments became the object of the Senate investigation led by Ferdinand Pecora. Three billions of the eight billion dollars of foreign bonds which the large. investment banking houses had sold to the American public in the the 1920s had defaulted.66 The uproar among the small savers, coinciding with the battles of the mass-production workers, further: added to the turbulence of the period and to its apparent anti-capitalist thrust. In fact, what was at stake was the need to emancipate industrial capital from the tutelage of the investment banks and the petty investors' community. As Keynes put it in the Concluding I Notes of his General Theory, 'with the disappearance of (the rentier aspect of capitalism) much else in it besides will suffer a sea- change. . . (But) the euthanasia of the rentier, of the functionless investor, will be nothing sudden. . . and will need no revolution. '67

The Banking Act of 1933 was meant to separate the functions of money-dealing commercial capital from the interest associated with fictitious capital. Several banks had anticipated the restructuration: in 1932, the security affiliates of the National City Bank of New York and the Chase National Bank were set up as independent companies. Winthrop Aldrich publicly spoke out in favour of the separation of commercial and investment banking. In order to save the position of the Chase Bank (and Aldrich's), the Rockefellers decided to sacrifice chairman Albert Wiggin to the Pecora Committee. At the National City Bank, a comparable fate was reserved for Chairman Mitchell.68

The Morgan Bank, forced to split into a commercial bank and an investment company renamed Morgan, Stanley, could not bear the brunt of the attack, since it was the virtual embodiment of Atlantic, money-capital in the United States. Although J.P. Morgan, Jr. professed to welcome the inflationary measures of the administration, the consternation at the bank was complete. Lewis Douglas, a financier of the group, upon being informed of Roosevelt's decision to devalue the dollar, lamented that it meant the 'end of Western civilization'. 69 James Warburg, too, approved of inflation as a temporary measure, but the transfer of the legal title to the gold of the Federal Reserve to the American state in 1934 as part of the initial state-monopolism forced him to resign as Roosevelt's adviser and join the anti-New-Deal Liberty League.

The bankers from pavenu or anti-Morgan institutions, however, supported the New Deal for a variety of reasons. Apart from Chase and the National City Bank of New York (whose former chief, Frank Vanderlip, headed the pro-inflation Committee for the Nation), this category included A.P. Giannini of the Bank of America, who had a clear interest in the curtailment of Wall Street tutelage over American banking and whose experiments with branch banking predisposed him favorably to Roosevelt's domestic programme. The newly prominent investment bank combination of Lehman Bros. and Goldmann, Sachs, also was receptive towards the consumer orientation of the New Deal on account of its interests in department stores and light industry; moreover, their awareness of the need for structural change apparently transcended even immediate economic interest or resentment against anti-Semitism on the part of the Morgan interests. Thus, one could hear Paul Mazur of Lehman Bros. complaining over the 'tragic lack of planning' in the capitalist system, while Sidney Weinberg, a Lehman partner and head of Goldmann, Sachs, was assistant campaign treasurer of the Democratic National Committee in 1932 and 1936.70 According to Burch, W. Averell Harriman, head of the pro-Roosevelt Business Advisory Council (BAC) formed in 1935, acted as the liaison between the Jewish bankers and the Rockefeller group.

In 1934, the termination of the era of rentier control was further marked by the introduction of the Securities and Exchange Commission under Joseph Kennedy. When in 1935 the attack on investment bank control was carried into the field of their holdings in utilities, Morgan however no longer stood alone. By its increasing reformist content, the New Deal had assumed a new quality in the eyes of several of its initial supporters, and in the conflict which ensued, the conservative state-monopoly tendency in the bourgeoisie, headed by the Du Pont group, broke out of the Roosevelt coalition and regrouped in the reactionary Liberty League.

At the same time, a new horizon was opened for capital by the internationalist turn the Roosevelt Administration was making. The Reciprocal Trade Agreements Act of 1934 already revealed the ad- ministration's strategy of providing a new international framework for the envisaged industrial expansion. Compared to the previous deflationary policy bolstering the dollar, and to the Hawley-Smoot tariff established under Hoover, the traditional emphasis between trade and foreign investment was clearly reversed as internationalization of capital was hinged on the expansion of US industrial capacity at home. In line with the 1933 bank policy, the new Export- Import Bank was set up as a means to shift foreign investment risks to the state, while at the same time, as J.F. Dulles observed with a keen eye for the political dangers inherent in a domestic mass-consumption economy, 'allowing foreigners to acquire goods for which domestic consumers would otherwise have to be found.'7.

Thus Hull's free-trade policy brought agreements with the Netherlands and its colonies and with Belgium; in 1936, a reciprocal trade agreement was concluded with France and its empire. The combination of sales prospects abroad with the dampening effect of business abroad on domestic wages eventually offered a way back into the Roosevelt coalition to some of the disaffected industrialists. Thus, while General Motors head Sloan had followed the Du Pont representatives out of the BAC in 1935, a vice-president of the same firm in 1936 publicly declared that because of Hull's trade policy he would vote for Roosevelt in the November election. 72 As part of the same strategy, steps were taken towards monetary stabilization in the Atlantic area. The agreement with Britain of 1934, extended to France following the devaluation of the franc in 1936, prefigured the Bretton Woods system by stipulating mutual consultation in advance of parity changes as a means to facilitate the flow of trade and payments. 73

However, the sphere-of-interest policy in international relations inherited from Hoover, still remained the overall framework of US foreign policy in the earlier New Deal period. As late as 1936, Roosevelt instructed his ambassador in Berlin to be alert to proposals coming from Hitler which might ensure peace, thereby allowing for German objectives abroad.74 Politically, Roosevelt persisted in the policy of non-interference in European affairs, until his 'Quarantine the Aggressors' speech of October 1937 announced that the strategy of accommodation with the Fascist powers had been abandoned.

The subordination of money capital in Europe

On the other side of the Atlantic, comparable developments took place, albeit with less opportunities for bank capital to recover in the context of international finance capital. In Britain, although the City had triumphed when Churchill had put the country back on gold, the industrial interest, represented by the employers' organization FBI, after 1926 succeeded in challenging the automatism of subordinating national economic policy to the interests of money capital, and effectively promoted its concept of tripartite corporatism. The National Government formed in 1931 was the expression of this shift, and if the liberal fraction supported it, it was primarily on the assumption that the spectacle of national unity would shore up confidence in the pound.76 The drastic deflationary policy upon which J.P. Morgan had made new loans to Britain conditional, forced the underlying fractional differences to the surface. The fact that the final incident which caused the critical loss of confidence leading to the break with gold in September 1931 took place in the British Navy symbolized the decline of the maritime-liberal fraction. The 'mutiny' of sailors over their pay cuts thus inaugurated the hegemony of the state-monopoly tendency led by Neville Chamberlain and John Simon, which, in turn, forced the liberals (whether in the Labour Party like Snowden or in the Liberal Party, like Samuel) out of the government in due course. As far as the banks were concerned, a separation of functions was not necessary since the merchant banks already were distinct from the joint-stock commercial banks.

In Germany, the subordination of money capital took the form of a temporary majority participation by the state in the banks most deeply involved in the post-war Atlantic circuit of money capital (DANAT and Dresdner Bank), whereas the Deutsche Bank, which through its merger with the Discontogesellschaft even more became the bank of the state-monopolistic heavy industries, was only indirectly supervised. The DANAT bank collapsed and the Dresdner Bank suffered heavy losses in the bank crisis of1931. The two banks merged in 1932, and the German state took an interest of 75% in the new institution, compared to a 35.6% participation by the central bank in the Deutsche Bank. The latter eventually emerged from the bank crisis reinforced at the expense of its rivals. In the Third Reich, the banks were re-privatized without any separation of functions. 77

In Italy, the IRI was founded in 1933 as a holding for the deficitary industrial assets hitherto held by bank capital. In this way, a separation of functions was achieved in practice. As a result of the losses incurred, the Banca Commerciale, the Credito Italiano, and the Banco di Roma also passed under the influence of the IRI. Of these, the Commerciale was the main outpost in Italian banking of the State-monopoly tendency; its head, E. Conti, was also the founder of the national oil company AGIP and incidentally belonged to the minority in the Italian bourgeoisie which all along had opposed Fascism. The Bank of Italy in 1936 was put under state supervision, too, but retained considerable autonomy. 78

As major foreign investors, the other continental European countries attempted to cling as long as possible to original gold parities. Belgium was the first to leave the gold standard in 1935 after having already separated holding and deposit banks. The subordination of money capital here was part of the emancipation of Catholic Flanders, with its light industry and agriculture, from the tutelage of liberal Wallonia and Brussels, where the financial aristocracy con- trolling the coal and steel industries had its fiefs. 79

In France, the separation of functions had to wait for the liberation from the Nazi occupation. As in Britain, the distinct existence of a banking aristocracy and a lesser banking bourgeoisie already pre-ordained a certain separation of functions of bank capital. The Popular Front reforms also included a reorganization of the central bank, but until 1941 the banks largely circumvented central bank interference due to the ample liquidity at their disposal. The nationalizations of 1945 finally terminated the independence of the biggest banks, made them subordinate to the modernization plans, and introduced a strict division into three categories.80

In the Netherlands, which together with France was the last country to leave the gold standard in 1936, no separation of functions was carried through and the subordination of money capital was postponed until the postwar crisis of the dominant colonial and shipping capital bloc.81

The contradiction between money-capital's attempt to artificially bolster the Atlantic circuit of speculative investment through deflationary policies, and large-scale industry's need to maintain demand, was ultimately resolved at the expense of money capital. As was illustrated in the case of Germany, it was not the inter-war state- monopoly tendency per se which put an end to liberal internationalism; rather, the reactionary comprador liberals themselves created the conditions in which the autarky policy and the corporatism typical of the state-monopoly tendency could be realized. Allergic to the allegedly socialist aspect of state intervention, these liberals saw a frontal attack upon the working class as the only way of reversing the trend; whereas in reality, the presence of working-class organizations in the emerging state-monopolistic structure was an aspect of a conflict between fractions of capital (money capital and productive capital) and the concepts of control developed by them.

In this struggle, the liberals were fighting the very course of capitalist development itself. The conflict of interest between the liberal bankers and the nationalist industrialists everywhere was decided by the subordination of the international bankers to state intervention intended to shore up the accumulation conditions of large-scale industrial capital and complemented by corporatism. The way in which the challenge of the working class was handled varied greatly, from ruthless suppression in Germany and Italy to conciliatory strategies in America and France. In fact, the absence of a complementary attack on the working class in the United States caused concern among those most suspicious of latent 'socialism' in Roosevelt's policies, and this concern drove renowned liberals like Will Clayton, the cotton broker, and James Warburg, the banker, into the Liberty Leagues. Their sympathy for fascism resembled that of Schacht and Thyssen in believing that a death blow to the organized working class would restore the conditions of their cherished liberal order. In the United States, however, the outward thrust of capital soon was resumed after the primacy of industrial capital had been established. In the context of a synthesis between liberal inter- nationalism and state intervention, men like Clayton and Warburg rejoined the Roosevelt regime and became leading missionaries of the corporate-liberal ideal.

In Europe, however, the subordination of money capital led to a generalization of state-monopolistic controls of the economy, postponing the restructuration of class relations by imposing a reactionary united-front configuration on the bourgeoisie, first in Italy and Germany, and subsequently in Hitler's Europe. In sharp contrast to the New Deal, Fascism did not effectively transform the structures and concepts developed in the liberal context, but remained confined to acting out a cruel caricature of a restructuration of the class structure by its genocide of the Jews and the annihilation of working-class organizations. As Gramsci already observed in his Prison Notebooks, the Fascist order 'has operated to shore up the crumbling positions of the middle classes and not to eliminate them. . .' Because of 'the vested interests that arise from the old foundations', Fascism was becoming 'more and more a machinery to preserve the existing order just as it is rather than a propulsive force'. 82

The Atlantic Charter and the Roosevelt offensive

The accumulation cycle of American capital following the 1937 recession coincided with the tendential internationalization of the mode of accumulation and the concomitant class compromise for which the base had been laid during the earlier New Deal. From 1937 on, American foreign policy was gradually recast in a Wilsonian framework, culminating in the promulgation of the Atlantic Charter in 1941. Simultaneously, the war mobilization of the US economy, overcoming the previous domestic constraints of New Deal economics, created the context for a sweeping new economic and political consensus. This consensus, which in the tradition of American New Left historiography of the 1960s I have typed 'corporate-liberalism', combined industrial Fordism and state intervention with a reaffirmation of the free international economy dear to the protagonists of the money-capital concept. Its basic ambit was US hegemony in the North Atlantic, although in the heady war years Washington planners talked of an Americanized 'One World', including both China and the Soviet Union.

The material basis of this Atlantic extrapolation of the New Deal was the American ability to sustain a high rate of real fixed-capital accumulation, complemented by trade and payments liberalization and increased military expenditure. Moreover, the Roosevelt offensive (as well as its postwar successors) also linked a social-imperialist exteriorization of popular aspirations to a profit-distribution pattern skewed to productive capital. In this way, the universalism of the Atlantic Charter (as of the Atlantic Union and Atlantic Partnership concepts later on) not only expressed the dynamic, expansionist character of the domestic US class compromise between productive capital and organized labour, but also became the lodestar for those sections of the European bourgeoisie aspiring to follow the American path of mass-consumption capitalism, or, at least, opting for US protection in the post-colonial, Cold War world-situation.

1. Internationalization of the New Deal

As we have seen, Wilson's Crusade for Democracy was the paradigmatic example of an offensive response to popular demands and the challenge of socialism: social pressures generated by full employment were absorbed into a missionary idealism, drawing on racism and Anglo-Saxon chauvinism. Through the filter of social- imperialist ideology, Wilson's universalism articulated foreign interventionism with the social aspirations of classes which would not have supported such expansionism if it had not coincided with concessions and reform. For Wilson, then, the reform year 1916 had been necessary to forge the domestic class compromise allowing him to launch the overseas offensive demanded by the international bankers.

The context of the Roosevelt offensive, on the other hand, was notably dissimilar in key regards. For instance, the liberal- internationalist fraction had first of all to publicly re-legitimize itself, having been cast into the political underworld as a result of sensational congressional exposes in the banking and munitions industries. The New Deal itself, as we have seen, found it convenient to allow bank capital - particularly its internationalist segment - to become the scapegoat for the crisis of capitalism. By 1939, moreover, the situation in Europe resembled 1914 rather than 1917, since the Soviet Union seemed to have settled for a role in the European balance of power. In these circumstances, Roosevelt, who as a Democratic vice-presidential candidate in 1920 had experienced a landslide defeat generally interpreted as a stunning rejection of Wilsonism, was anxious not to appear too offensive-minded.1 Although Roosevelt's 'Quarantine the Aggressors' speech, delivered in October 1937, three months after Japan’s attack on China, was already of unmistakeable Wilsonian inspiration, the actual implementation of policy hardly broke the confines of isolationism. (Since Japan’s war on China was officially 'undeclared', the Neutrality Act of 1935 was not applied, and the Japanese military became the second biggest customer of theUS aircraft industry. 2

Soon after Roosevelt's 'Cash and Carry' message to Congress in September 1939, in which he proposed lifting the arms embargo prescribed by the Neutrality Law, Clark Eichelberger, a traditional internationalist and director of the League of Nations Association, called a meeting of the executive committee of the Union for Concerted Peace Efforts of which he was a member, Other members included James T. Shotwell of Columbia University, one of the founders of the Council on Foreign Relations, and Hugh Moore, a prominent industrialist. They decided to organize a Non-Partisan committee for Peace Through the Revision of the Neutrality Law, and asked the Kansas newspaper editor, William Allen White, to lead the undertaking. 3

White, who according to Walter Johnson was 'the spark of the internationalist movement during these years [and who] became something of a folk hero to America', accepted the chairmanship on he condition that the campaign would not be financed by munitions makers, international bankers, or the steel interests. White's statement of conditions was intended to shore up his credentials with a suspicious and anti-war population and hardly reflected any real animosity to the 'Merchants of Death' or their bankers. On the contrary, White was a close friend of Morgan partner and Round Table stalwart Thomas Lamont, and the personalities joining the committee for Peace, included several Morgan men, like former Under Secretary of State and Morgan lawyer Frank Polk, as well as he future Republican presidential candidate and proverbial universalist, Wendell Willkie. For the rest, the Committee's roster read like a corporate 'who's who', including Henry I. Harriman; Archibald and Thomas Watson, of IBM and the International Chamber of Commerce; Henry Stimson, former Secretary of State and prominent Wall Street lawyer; as well as several internationalist Chicagoans, like Frank Knox, Republican nominee for Vice- President in 1936 and publisher of the Chicago Daily News, and Department store tycoon Marshall Field.

In June 1940, Knox and Stimson were appointed Secretaries of the Navy and of War by Roosevelt—a gesture that amounted to landing over the American war machine to the interventionists 'allied by White. The latter took care to have the Senate approve of heir appointment by appealing to important constituents of Senators whose position on this issue was still in doubt. This did not mean that military preparation had to wait for these Republican internationalists to enter the government, Roosevelt, ignoring the isolationist Secretary of War Woodring, had already worked directly with Assistant Secretary Louis Johnson (future Secretary of Defense under Truman and President of Consolidated Vultee aircraft company) in promoting an armaments programme.4

In the meantime, the White forces had been constantly regrouping. In December 1939, the Commission to Study the Organization of the Peace was launched, which, apart from those previously mentioned, included Lamont, Lucius Eastman, Professor Quincy Wright, and, most significantly, Clarence Streit who represented the British Round Table Society, favouring formal unity with the United States.

Ideologues of intervention

Clarence Streit came from Missouri and volunteered for Europe in June 1917. After his discharge, he remained in France as a recruit of the American intelligence service to assist the American Peace Com- mission in Paris during the Armistice negotiations. In 1920, he returned to Europe on a Rhodes Trust stipend, and in 1929 became the New York Times' stringer at the League of Nations. It was here, according to his own account, that he got first-hand knowledge of the workings of that organization and came to reject it as impractical, although it might perform a transitory role in paving the way for a world organization organized 'on a sound basis'.5

Streit's disapproval of the League of Nations was shared by the Rhodes Trustees in Britain, who considered the League an obstacle both to creating an Atlantic community and to redirecting Hitler's ambitions towards the East. When in 1937 German preparation for war assumed a clear anti-British thrust and the readiness of the American ruling class to subscribe to the grandiose sphere-of- interest arrangement contemplated by the Cliveden Set still was in doubt, the Round Table Society sent Streit back to America to work for Atlantic unity. Supervised by Lord Lothian (Philip Kerr), one of the inner circle members of the British Round Table who became British ambassador in Washington in August 1939, Streit spent the next eight years vigorously lobbying for Anglo-American unification. In 1938, he published the well-known Union Now; in 1941, when Western Europe was overrun by the Nazis, a new book, Union Now with Britain, argued the case with renewed urgency.

Union Now was received with great enthusiasm by pro-British groups in the United States. Fortune (April 1939) characterized the project (in its usual hyperbole) as 'the greatest political and economic opportunity in history, by comparison with which the opening of the North American continent was a modest beginning.'6 Streit's proposal emphasized the formal aspects of Atlantic federation, like the constitutional arrangements between its various organs, the seat of the federal executive, and so on. Generously allowing both the United States and Britain their share in the Anglo-Saxon heritage, Streit proposed that the model of federation would be provided by the American Constitution, while Britain would contribute the tradition of representative government as such.7 The area which could be united on this basis in the more modest version of 1941 was reduced to the actual Anglo-Saxon world: North America, Britain, the white Dominions, Ireland, and the white population of South Africa.8 Like the 'Grand Area' projected by Council on Foreign Relations planners as necessary for the survival of liberal capitalism, Streit's federal union was conceived basically in sphere-of-interest terms, although its potential for expansion was crucial to the scheme's logic. Western Europe, Scandinavia, Latin America, but also in the long run, the European colonies - might gradually be incorporated until a truly world government was achieved. If, as Streit proclaimed, 'despite all that the Nazis, the Stalinists and their stooges say, the Union policy (was) the opposite of imperialism', the difference would have eluded most non-Anglo-Saxons. 9

Reciprocating Streit's vision in this respect, George Catlin may be singled out as the second major ideologue working for Atlantic unity on the eve of US entry into the war. Catlin, who was of British nationality, was an adviser to Wendell Willkie in the 1940 presidential campaign, selected because of his supposed expertise in foreign policy. Like Streit he was an inveterate geopolitician. 'I began in terms of some "organic union" " Catlin wrote in retrospect, 'and of the Anglo-American-Canadian "triangle of power" . . . In sub- sequent revisions, I expanded this nucleus to include much of Europe - impracticable in 1940 - and Australasia. Streit began at the reverse end with specific stress on "federal union" for the demo- cratic or "free" world'. 10

In 1938 Catlin elaborated the ethnic connection in The Anglo- Saxon Tradition, and, following the Willkie candidacy, he published One Anglo-American Nation as 'A British Response to Streit' in 1941. The book was dedicated to Roosevelt, who by this time was firmly engaged on a course of aid to Britain (although he could not go as far as Willkie, who could ignore other interests and only voice those of his backers in the Morgan orbit by proposing an economic and social union between America and the British Commonwealth). II In his 1941 book, Catlin emphatically demanded a 'North American "Anschluss" '. He did not project a world government but settled for the inclusion of the Atlantic nation in a 'loose federation of world extension, centred at Geneva'. Atlantic unity thus remained a sphere-of-interest arrangement of only potentially universalist quality. In fact, Catlin thought that the formalization of the Atlantic bond was necessary to maintain this potential for any future emer- gency. 'It is highly desirable to provide, through regional federal union, a catchment within which the receding waters of emotion, ebbing after the peace from war, general intervention, and universalism, can in fact be held and stayed.' 12

By this time, the initial formation established by White had regrouped again and were openly advocating US support for Britain through the new Committee to Defend America by Aiding the Allies. This organization, no longer hiding its purpose by cover names, completed the full range of traditional liberal support for an Atlantic-unity policy by enlisting such men as Will Clayton, Houston cotton merchant and proverbial laissez-faire liberal; Lewis Douglas, Morgan group financier and future ambassador to Britain; J.P. Morgan; Henry Luce, editor of Fortune and Time-Life publications; and social-democratic trade unionist David Dubinsky.

In June 1940, coinciding with their new hold on the defence departments, the group took a major step towards direct intervention in actual policymaking when a special team was set up composed of members of the Committee to Defend America and the Council on Foreign Relations. This group, called the Century Group after the upper-class club where it met, was organized by Francis P. Miller, the organizational director of the Council, and Lewis Douglas, and was supported financially by the silk manufacturer, Ward Cheney. Whitney Shepardson, the secretary of the American Round Table group, also participated.13 The famous proposal to exchange American destroyers for British bases in the Western Hemisphere originated with the Century Group and was taken up by Knox and Stimson. The eventual destroyers/bases agreement of September 1940, brought new adherents to the Committee to Defend America, which had led the mobilization of public support. Governor Lehman of New York, of Lehman Bros., was among the new subscribers. The legality of the destroyers deal, finally, was defended by a team of lawyers led by Dean Acheson.

The adherence to the Committee to Defend America of a leading trade unionist, Dubinsky of the garment workers, reflected a larger process of gearing working-class opinion to interventionism. The mobilization of the liberal-capitalist fraction in the course of 1939-40 coincided with steps to extend the New Deal compromise with the organized workers from the new mass-production industries into the realm of foreign policy. In May 1940, Sidney Hillman, Vice- President of the CIO, was appointed labour representative in the newly-formed National Defence Advisory Commission. In December of the same year, labour's position was further enhanced, when Hillman was made co-equal head of the Office of Production Management (OPM, the precursor of the War Production Board of 1942).14

In response to the sophisticated and increasingly effective campaign of William Allen White and his associates, the hitherto ascendant state-monopoly tendency set up organizations to rally a mass following. The most important of these was the America First Committee, founded in September 1940. John Foster Dulles was a prominent member, and Robert E.,; Wood, of Sears, Roebuck, was its president. In the press, its most prominent supporter was the Anglophobic Chicago Tribune. 15

Dulles's activities in the pre-war Atlantic circuit of money capital had J:I!volved him with cartelized German industry and with the Schroder Bank, a key supporter of Hitler's. In July 1939, Dulles shocked a meeting of the World Council of Churches by stating that Hitler's territorial demands were justified and that an 'effective international order' (which was the topic of the WCC conference) could not be based solely on the status-quo. 16

On the eve of American entry into the war, Dulles changed his position and announced in favour of Anglo-American unity. The version he championed, however, was the anti-Soviet one of the Chamberlain tendency in the Cliveden Set. In an article entitled 'Peace Without Platitudes', Dulles advocated the idea of a redistribution of imperialist spheres of influence through a 'supernational organization' which would consolidate American gains. 'The real failure today would be for America now to expend her treasure and perhaps her blood without thereby pushing forward the frontier of peace', the future Secretary of State wrote in an article printed briefly after Pearl Harbour. 17 By 1943, the negative undercurrent of his endorsement of Roosevelt's universalism came out into the open. As the political adviser to the Republican Presidential candidate, Dewey, Dulles's interpretation of, pushing forward the frontiers of peace' turned out to be directed against the Soviet Union after all. The USSR, Dulles recommended, should be excluded from the post- war Anglo-American bloc Dewey proposed in September, 1943.18

Not unexpectedly, the Rockefellers were prominent in the actual process of synthesizing the liberal with the sphere-of-interest approach presided over by Roosevelt. Just as Dulles in this process contributed the minimal, anti-Soviet approach to Atlantic unity, which at that time was still marginal to the mainstream universalism; so the Rockefellers inserted their tradition of rivalry with Britain. In 1940 Nelson Rockefeller had moved to Washington to become coordinator of the Office of Inter-American Affairs. At the time, Standard Oil's foreign oil supply was still largely concentrated in Venezuela, and in that light, Rockefeller's policy 'to lessen the dependency of Latin America upon Europe as a market for raw materials and a source of manufactured articles' reflected a clear-cut economic perspective on his part. Concretely, the thrust was against British investments in Latin America, and one memorandum emanating from Rockefeller's office recommended asking the British to put up their holdings in Chile and Argentina, candidly qualified as 'good properties in the British portfolio we might as well pick up now', as collateral for wartime aid. 19

With the liberal fraction and the Round Table network actively working for Atlantic unity, the new labour leadership enlisted in the armament effort, and prominent protagonists of the state-monopoly tendency lobbying for their strategic preferences as part of the interventionist coalition - the main ingredients of the corporate-liberal synthesis were brought together in the course of 1940-43; matched, as we shall presently see, by the first stirrings of a counterpart process in Europe developing in response to the Roosevelt policy. Meanwhile, the economic basis supporting the Atlantic extrapolation of the New Deal class compromise was provided by the government-supported expansion of fixed industrial capacity, notably in the three years 1941-43, and the resulting industrial emphasis in the profit-distribution process. Bank and rentier capital were temporarily disenfranchised by the emphasis on real accumulation: banks 'were occupied principally as fiscal agents of the Federal Government. . .interest rates were kept low, yet the banks had no recourse but to buy war bonds and help distribute part of the load to the public as a means of enforced savings'. 20

Cooptation of the trade-union bureaucracy into the administrative apparatus now proved functional in preventing labour strife from upsetting industrial production. To this end, the Defence Mediation Board was set up in 1941, transformed in 1942 into the National War Labor Board. While the trade-union members of this body helped administer highly unpopular wage controls, labour representatives were removed from the commanding positions in the main administrative organs dealing with the other aspects of war production. The establishment of the War Production Board in 1942 under the control of Sears, Roebuck director Donald Nelson, signalled the abandonment of the corporatist arrangement of-the OPM and with it, the original domestic New Deal compromise. As Hamilton writes, 'Although in the National Recovery Administration labor and the public were recognized and had their places in the high command, it was the business interest alone which was enthroned in the War Production Board.'21 One result was the tight policing of wages. Wages in the course of the war rose due to overtime, but still lagged behind rising prices by a third over the period 1941 to mid-1945; in industries like steel, where because of continuous production overtime was not so widespread, wages in 1943 (i.e., under full employment conditions) were 'at the lowest point in 20 years'.22

The British predicament

In Great Britain, the war with Germany swept the appeasers of the state-monopoly tendency from the scene, propelling the liberal fraction to the fore instead. Churchill in 1939 once again was put in charge of the Royal Navy, and Anthony Eden, upon Churchill's recommendation, was taken into the government as State Secretary for the Dominions on account of his influence with the modernizing elements in the Conservative Party and with 'moderate Liberals'. When, following the Norwegian fiasco, Churchill became Prime Minister, he promoted Macmillan to a junior cabinet post, the eventual architect of British corporate liberalism in the context of Atlantic integration. Finally the truce with the working class was effected by making trade-union leader Ernest Bevin Minister of Labour. 23

The reshuffling of fractional interests, and the diminished weight of continentally-oriented industry and finance, gave the maritime- liberal fraction a strategic position within the Churchill government. In particular, Lord Leathers of the P & O group and Max Beaver- brook played key roles in the war effort. Churchill's determination to preserve the integrity of the British Empire and maritime hegemony was manifest in his tenacious resistance to Roosevelt's demands that Britain provide territorial or geopolitical concessions in return for US aid. In late 1940, Churchill appealed to the President in terms reminiscent of those used by Captain Mahan in his correspondence with Theodore Roosevelt. 'It seems to me', Churchill wrote, 'that the vast majority of American citizens have recorded their conviction that the safety of the United States as well as the future of our two democracies and the kind of civilization for which they stand are bound up with the survival and independence of the British Commonwealth of Nations. Only thus can those bastions of sea power, upon which the control of the Atlantic and the Indian Ocean depends, be preserved in faithful and friendly hands. . .'24

The arrangement implied in this letter might have been compatible with the 'Grand Area' concept or the federal set-ups propagated by Streit and Catlin, but the American perspective, in which redistributive elements combined with universalist tenets, chose to view the future world order in dimensions commensurate with the United States' combined military and economic power. The fact that in mid-1940 the British were bearing the brunt of the Nazi onslaught was seen by American decision-makers to offer distinct opportunities to make that country comply with US wishes for a liberal world economy. Particularly after the fall of the Netherlands and France, the Americans cast an eager eye on those countries' colonies as well as on Britain's relatively unprotected overseas pos- sessions. Many of these were of crucial importance to the raw material position of the United States itself, and the Japanese threat added a further incentive to extend the American sphere of influence. Discussing tin supplies in Malaya and the Dutch East Indies in late 1940, Fortune estimated that the situation presented 'a purely materialistic case for playing a strong imperialist game in South- eastern Asia'.25 But American ambitions were not confined to that region alone. Churchill in his war memoirs complained about the cynical mission of an American warship to fetch the gold of Cape Town, and of the acquisition of the American subsidiary of the British rayon concern, Courtaulds, at a bargain price and its subsequent sale by the US government at a profit. 26

Even Anglophilic supporters of the Committee to Defend America by Aiding the Allies were hardly sentimental about the British Empire. The Luce press carried several articles and editorials emphasizing that Atlantic unity with Britain was secondary to the ultimate goal of a remaking of the world after the American Open Door design. In an article of June 1941, entitled 'How America Can Take the Offensive', the globe-trotting journalist, Edgar Snow, proposed the conclusion of a 'kind of pact of democracy with Britain and separately with Canada, Australia, New Zealand and the Netherlands' in order to deter Japan. At the same time, he estimated that 'our tie-up with Britain now would limit the effectiveness of any political offensive unless Washington could induce London. . . to make a joint statement defining our whole struggle as a revolutionary war of democracy having for one of its prime political aims the emancipation of the advanced colonial countries and their entry into a federation of democratic nations at the conclusion of the war'. Or, as the editors of Fortune put it bluntly in May 1942, 'America. . . owes the world a substitute for the Pax Britannica, which is dead'.27

The breakdown of the Pax Britannica seemed already imminent at the time of the Atlantic Conference, and the universalist contents of the Atlantic Charter reflected the strong position of the Americans. The British, struggling to retain control of the air against the German bomber offensive, were only able to add the 'due regard to present obligations' clause to the Charter's Article IV dealing with equal access to trade and raw materials, but as Sumner Welles, who replaced Hull, recollected later, 'It was fully understood. . . that this reservation was inserted solely to take care of what it was hoped would be merely temporary impediments to the more far-reaching commitment originally envisaged in that article'. 28

Churchill, however, clung to the 'existing obligations' clause and stubbornly resisted American pressures for liberalization. 'I found the Cabinet at its second meeting on this subject even more resolved against trading the principle of imperial preference as consideration for lease-lend', he cabled to Roosevelt on February 7, 1942, two weeks before the Anglo-American Lend-Lease Agreement was con- cluded.29 The Agreement again contained a compromise formula on the post-war international economy, reflecting British determination in this respect. Any attempt to emphasize the historic nature of the Atlantic Charter was accordingly rejected. In a telegram dated 9 August 1942, Churchill asked to see the message that Roosevelt was going to send him on the occasion of the Charter's first anniversary on 14 August. 'We considered the wording of that famous document line by line together and I should not be able, without mature consideration, to give it a wider interpretation than was agreed between US at the time. Its proposed application to Asia and Africa requires much thought'. 30

To Churchill, 'Atlantic Union' in the sense of an ultra-imperialist alliance was necessary to preserve the integrity of the British Empire, and, thus, his resistance to the offensive universalism characterizing American policy from 1941 through 1944 did not at all preclude his quest for an Anglo-American 'special relationship'. In a discussion with Wallace, Stimson, Ickes, Welles and Senator Connally in Washington in May 1943, Churchill recommended the European idea of Coudenhove-Kalergi as the basis for a European Union, that, together with other regional unions, might constitute a world organization. According to the Foreign Office record, he said 'that these proposals did not exclude "special friendships" devoid of sinister purpose against others. He saw little hope for the world unless the United States and the British Commonwealth worked together in "fraternal association".' Advocating common passports and even forms of common citizenship allowing each other's citizens a right to vote in elections held in the 'fraternal' country, Churchill also said he was in favour of 'the common use of bases for the common defence of common interests'.3. However, Churchill had to wait until the subsidence of Rooseveltian universalism before he could effectively press his concept of Atlantic Union.

Domestically, the class configuration in Britain in important respects paralleled the American situation, albeit without the perspective of internationalization to alleviate the anxieties of capital. For obvious reasons, war time economic policy strongly boosted the position of real production in the profit-distribution process. In sharp contrast to World War One, the financial markets in Britain were tightly controlled and interest rates were kept in check. The rate of return on war bonds (3%) was low and their opportunity costs came on top of heavy taxation. 32 In the context of full employment and on account of its position of power during Britain's lonely fight in the early stages of the war, Labour was able to push for the inclusion of a strong welfarist component as part of the emerging corporate-liberal blueprint. For example, Bevin, the Minister of Labour, ensured that the Atlantic Charter contained an article five dealing with 'improved labour standards, economic advancement and social security'. As a general frame of reference for its future policies, Labour in early 1942 issued a report entitled The Old World and the New Society, in which economic planning and collective security were advocated as an integrated programme.

Labour immediately subscribed to the Beveridge Report when it was published in late 1942, although the Labour ministers were rather lukewarm to it. The British Employers Confederation was critical of the Report, but a conciliatory tendency headed by ICI director Lord Melchett (Alfred Mond) eventually prevailed. Within the Conservative Party, a Tory Reform Committee was set up in 1943, including Peter Thomeycroft and Quintin Hogg, which likewise urged the government to take action along the lines of the Beveridge Plan. Eden was not unsympathetic, but Churchill rejected the idea.33 Unlike the American case, foreign policy and domestic corporatism in Britain had not yet been articulated into a pervasive universalism in which the working class, industry, and the City could all project their interests.

Between 1942 and 1945, moreover, Labour's influence in the coalition waned. Attlee and Bevin, motivated by a militant anti- communism, increasingly yielded to the foreign-policy preoccupations of the maritime-liberal fraction to the point of defending the integrity of the Empire against Tory neo-colonialists, thus undermining their negotiating power in domestic issues. The capitalist class as a whole geared to a more contentious line, although the industrial tendency led by Lord Perry of Ford and Lord Lever-hulme, which favoured a strong anti-Labour line, never completely carried the day. 34

The European bourgeoisie in exile

Among European exile governments in London, the response to the Roosevelt offensive was prompt and positive, amplifying its universalist intent and contributing to its long-term impact. The Atlantic Charter was given multilaterial sanction by nine European governments in London including the Free French, and by Britain's Commonwealth partners. The United Nations Declaration of 1 January 1942, which opened with a pledge to the principles of the Atlantic Charter, further confirmed this support.

The concentration in London of cabinet ministers and key personalities from the business world of various countries provided the occasion for much transnational and international postwar planning, to which the Roosevelt offensive gave a liberal inflection by holding out the perspective of an open world economy. In February 1941 the Polish leader in exile, General Sikorski, and his adviser, Joseph Retinger, initiated discussions with members of the continental European governments concerning postwar European economic cooperation. Towards the end of 1941, the two Polish statesmen founded a Permanent Bureau of Continental Foreign Ministers, which held regular meetings. Out of these meetings, in which Belgians were also prominent, two projects emerged with important consequences for postwar European integration: the plan for a customs union between Belgium, the Netherlands, and Luxemburg; and the proposal for the creation of a European (initially 'Independent') League for Economic Cooperation (ELEC). 35

Actually, the idea of a customs union between the Netherlands and Belgium had been discussed already in June 1941 by J. van den Bro~'(a director of the Royal Dutch/Shell group and from 1942, Minister of Finance in the Dutch London cabinet) and Camille Gutt, a mining director from the Societe Generale orbit and a member of the Belgian government. They agreed that a customs union should be formed in London, so that industrialists and farmers in their occupied home countries would have no chance of vetoing it. Yet it took two more years before Belgian foreign minister Spaak and his Dutch colleague Van Kleffens reached agreement on a fixed exchange rate of their currencies. The actual Benelux plan was made public a few days after the liberation of Brussels. 36

ELEC was the second important outcome of the discussions animated by Retinger, who became its secretary general, while its first chairman was Paul van Zeeland, a Belgian politican linked to Solvay and SOFINA. P .A. Kerstens, Dutch Minister of Economic Affairs in London and himself of colonial background, succeeded Van Zeeland when the latter became Minister of Foreign Affairs in 1949. As Rebattet writes, 'The vast majority of (ELEC'S) members were conservatives politically and economically, they represented the elite of modem liberalism in Europe. It was in fact an association for promoting free trade, sharing the laissez-faire spirit of the International Chamber of Commerce with which it had many personallinks'.37 Although ELEC was formed as such only after the war, it was a direct outcome of the London agreements.

In the same period, and even more directly as an outcome of American pressure for liberalization, the Dutch announced the postwar reorganization of their empire. On several occasions the Americans made it clear to the Dutch that after the war some form of independence, at least for Java, would be mandatory. Cordell Hull spoke to Van Kleffens in this sense, and in private discussions with Queen Wilhelmina, Roosevelt admonished her to include a statement on the political future of Indonesia in her speech before the United States Congress in August 1942.38

The ally of the Americans in this case was H.J. van Mook, the surviving senior civil servant in the Dutch East Indies. Although distrusted by the Dutch London government for his advocacy of colonial autonomy, he succeeded in being appointed Colonial Secretary in May 1942 upon his arrival in London. Van Mook, who was a participant in the wartime discussion groups with British and American politicians and businessmen animated by Prince Bern- hard, actually drafted a major speech of Queen Wilhelmina on the subject. This speech, broadcast to the occupied Netherlands on 7 December 1942, promised a Commonwealth arrangement to the colonies. It was favourably received both by the American press and by liberal Dutch Resistance newspapers.39 (In the end, however, it would take an armed struggle in Indonesia and renewed pressure on the part of an activist administration in Washington before the promise was actually realized in 1949)

2. The impact on Nazi Europe - America's 'Vichy Gamble'

Even within Occupied Europe, including Germany itself, the Roosevelt offensive influenced and mobilized elements in the bourgeoisie favourable to Atlantic cooperation. The French case is particularly interesting, because the United States first attempted to seek an accommodation with the state-monopolist currents supporting Vichy. One result was the souring of relations with the Gaullists, with important negative implications for American-French relations in the postwar period.

The history of American collaboration with Vichy was first compiled by the historian William Langer on commission of the US State Department itself. Langer, a member of an advisory circle organized by the Council on Foreign Relations, was given special access to pertinent diplomatic files in the hope that he might dispel charges that the State Department had supported French fascism.40 In fact, Langer's well-known study, Our Vichy Gamble, showed that American aid stopped only short of the most egregious pro-German groups. Langer tried to justify extensive US dealings with Vichy by pointing out that there was simply no other political context in which America could have hoped to influence France in the early days of the war.41 As Robert Murphy, the American diplomat who played a key role in the preparations for the eventual US landings in North Africa, put it in his memoirs: 'It was not until 1943 that General de Gaulle presented a clear-cut alternative to the Vichy government'. 42

The real story of American collaboration with Vichy was, in fact, not so simple. In 1940 US concern was focussed on the French fleet, which if it fell into German hands, might endanger the trans-Atlantic lifeline to Britain. Accordingly, American policy towards France was initially preoccupied with preventing this from happening, and the choice of interlocutors in France itself proved to be a consideration at best secondary to this objective. In the midst of the disarray caused by the military collapse, Ambassador Bullitt as one of his final duties obtained assurances from Prime Minister Reynaud and from the military concerning the fleet. In Vichy, the pledge not to surrender the fleet to the Germans was renewed by the Petain government, in which P. Baudouin, of the Indochine group, held the post of foreign affairs. In July 1940, Bullitt had another long talk with Admiral Darlan, who remained a 'necessary' partner to the Americans until his assassination. 43 The British for obvious reasons preferred quick action with respect to the French navy, and their raid on French warships at Mers el-Kebir infuriated the French.

The Americans, still dependent on diplomatic means alone, had to probe their way between the yet small group around de Gaulle, backed by the British, and the protagonists of the state-monopoly tendency led by Laval. Whereas the Gaullists hoped to secure the French empire by relying on Britain, and Laval was hoping to achieve the same by supporting Hitler, the Americans had to look for class supports willing to believe that the future of French overseas possessions depended neither on Britain, nor on Germany, but lay in collaboration with the United States. When Laval triumphantly returned in October 1940 with assurances from Hitler that the British Empire, and not the French, would serve as war booty for Germany, the Americans went on the offensive. In his telegram to Vichy, Roosevelt warned that if in the course of a shift to closer relations with Germany, the French Navy were handed over, the United States 'could make no effort when the appropriate time came to exercise its influence to insure to France the retention of her overseas possessions'.44 At the same time, the Americans were secretly negotiating with anti-Laval elements in the Vichy cabinet, the most prominent of whom was the Interior Minister Peyrouton, who, later in 1942 after the Allied landings, would be installed by the Americans as Governor-General in Algiers.45 Partly as a result of these machinations and Roosevelt's threat, Laval was removed from power in December 1940. In the new government, the Foreign Ministry found its way to P. E. Flandin, who in the thirties had been a leading advocate of American mass production methods as well as an exponent of collective security against Hitler. 46

Sensing that the situation offered new opportunities, Roosevelt sent Admiral Leahy to Vichy as his ambassador. As a navy man and close associate of Roosevelt, it was hoped that Leahy would be able to win the confidence of Petain and the French naval officers. At the same time, the Americans singled out Maxime Weygand, an esteemed military leader but also associated with the Suez Canal Company, as the potential successor to the Marshall, judged capable of outflanking de Gaulle as well. Weygand was anti-British, anti-German, and accordingly, in the situation France was in at the time, 'really on our side', as Leahy wrote later .47

The pre-war liberal leader, Herriot, too, was cultivated by the Americans. OSS chief Bill Donovan and Sumner Welles both proposed that Herriot should be put at the head of an alternative to the Gaullist movement. In June 1940, Herriot had favoured continuing the struggle in North Africa, whereas Weygand was 'a broken reed'.48 Since Weygand as the Vichy military commander held the actual keys to North Africa, however, the Americans dealt with him instead. In January 1941, Murphy concluded an agreement with Weygand, authorizing the French in North Africa to buy non-strategic goods in the United States using hitherto frozen French assets for payment. Weygand wanted the aid because he feared that the Germans sooner or later would try to bring French North Africa under direct control and 'that the Germans would force the issue in the spring and that it was therefore important that the country should be strong enough to offer effective resistance'.49 As Kolko has pointed out, the Open Door aspect of the Murphy- Weygand agreement lent it the aura of imperialist redistribution at the expense of Britain. 50

A shift in underlying capital fractions became more evident after Darlan assumed the Vichy premiership in February 1941. Bank and merchant capital in the orbit of the Worms group now entered the government in force. 'Practically every minister or secretaryship touching economic affairs was in the hands of one or another of the Worms clique', Langer writes. 51 Other authors, too, have pointed to the particularly strong connection between the Darlan government and the Worms bank, prominent in shipping and, through the Banque industrielle de l’Afrique du Nord (jointly with Indochine and Paribas), in North Africa. 52 At no time during the Vichy period, was big capital so directly present in the government. The shift from the Lille-Lyons axis to the trade and sea transport orbit of Worms, moreover, was significant as it coincided with the launching of the Roosevelt offensive, made tangible by the Murphy- Weygand agreement. On the other hand, the reactionary, pro-German outlook of the Worms clique prevented the convergence of US political and Vichy economic interests from developing further than a temporary marriage of convenience.

When Germany invaded the Soviet Union, Roosevelt had Murphy approach Weygand again, promising military support 'at some future date' should the general decide to make a stand in North Africa. However, the Germans learned about Weygand's conversations and forced him to withdraw in November 1941 (although he first succeeded in denying them use of the naval base at Bizerte in Tunisia). A further US attempt to return him to Africa to 'assume command there with the full military and economic support of the United States' failed when Weygand refused to act without Petain's consent. 53 By that time, obstacles to American influence in France were multiplying as rapidly as German victories were being reported from Russia. After the recall of Weygand, the United States suspended trade with French North Africa, restoring it only after an agreement prohibiting German use of French naval bases in the Western Hemisphere. A month after the signing of this agreement, in April 1942, Laval again took power at Vichy. Leahy was duly recalled. The class alliance which had been formed in response to the original Roosevelt offensive disintegrated.

Laval's return and the American entry in the war forced the unpalatable prospect on Washington of having to deal with de Gaulle. Bad blood between the Fighting French and the Roosevelt regime dated back to the first, unsuccessful attempts by de Gaulle to secure a base of operations in French Africa. His ill-fated attack on Dakar in September 1940, right at the moment when the Americans were doing everything possible to prevent Vichy from surrendering the French Navy to the Germans, severely prejudiced relations between de Gaulle and Roosevelt, leaving the latter with an enduring 'distrust of de Gaulle's judgement and discretion'. 54 This exacerbated the more fundamental difference in vision between the two leaders over the future of the Frel1ch Empire.

Meanwhile, six months passed between Laval's return to power and the Allied landings in North Africa. The most important contacts of the Americans in this period remained the representatives of colonial capital in North Africa, especially J. Lemaigre-Dubreuil, co-owner of the peanut oil monopoly, Huiles Lesieur.55 After Murphy had arranged with Admiral Darlan to allow surprise Allied landings, Lemaigre-Dubreuil brought the support of General Giraud (whose democratic credentials were no improvement on Darlan's).56 The Allied landings took place on 8 November 1941; three days later the Germans occupied Vichy. In North Africa the Americans, through Murphy, became involved in a succession of Petainist coups and counter-coups, leading to the death of Darlan and Giraud's notorious police terror.57 In the aftermath, the Americans found themselves stuck with thoroughly unsavoury collaborators in North Africa, cut off from the process of political realignment in German-occupied France, and with practically no influence or moral authority over the metropolitan resistance movement headed by the Gaullist Jean Moulin. In this situation, Roosevelt directly intervened by sending Jean Monnet to North Africa.

Upon arriving in Algiers in March 1943, Monnet, who carried letters from Harry Hopkins and Felix Frankfurter, Roosevelt's closest advisers, soon realized that de Gaulle, who in a month's time was to be officially endorsed by the newly-formed National Resistance Council under Moulin, was well on his way to power. Accordingly, his task of effecting a reconciliation between Giraud, the man of the Americans, and de Gaulle, was bound to result in a transfer of formal power in North Africa to the latter. The State Department had not been consulted in the preparations of the Monnet mission, and Hull, who had warned that Monnet had closer ties with the Gaullists than was generally assumed, could only see his fears con- firmed. Murphy, too, was furious over Monnet's action. The letters Monnet were carrying gave him the status of a President's envoy, and 'it was this authority which led to the establishment of de Gaulle as a challenge to Roosevelt's own attitude towards the French empire'. 58

Judging from Monnet's past and future actions, however, his attitude towards the French Empire was not at all identical to de Gaulle's. By mid-1943, however, the French bourgeoisie was re- grouping on the basis of a concept of national independence, and a vanguard of representatives of French capital abroad, as well as the forces directing the metropolitan resistance, had rallied around the general, against whom Giraud with his reactionary friends proved to be no match.

The Americans did not give up: to the very last minute, they tried tocapitalize upon their contacts with, on the one hand, Vichy officials, and, on the other, the liberal leaders. In 1950, Herriot made it known that the Americans in August 1944, on the eve of the liberation of Paris, had put pressure on Laval to convene Parliament and hand over the government to Herriot. However, after several conversations with Laval and several threats to his life by the Resistance forces, Herriot refused to cooperate. 59

If the Lille-Lyons axis in the prewar French bourgeoisie, and the Worms and Indochine groups, were excluded from the wartime Gaullist coalition because of their association with Vichy, what were the interests associated with de Gaulle? First of all, the Rothschild group - reacting against the anti-semitism, not just of the Nazis, but especially of the state-monopoly tendency in France. The young banker, Guy de Rothschild, joined the Free French in London soon after their formation. Subsequently joined by other family members, like the wine-growing Baron Philippe,6O Guy de Roths- child worked closely with de Gaulle and was adjutant to the military governor of Paris at the war's end.

This did not prevent another prominent Rothschild group director, Liberal politician Rene Mayer (head of Le Nickel), from tempararily joining Giraud, whose representative he was in the negotiations with de Gaulle.

Eventually, the entire financial group of which the Rothschild Bank in the Rue Laffitte was the centre, aligned themselves behind the general. And once de Gaulle had firmly established himself in command, and the prospects for the liberation of France had brightened, the elements common to de Gaulle's nationalism and Rothschild's economic interests acquired new salience. For instance, de Gaulle was firmly committed to the preservation of France's position as a leading proprietor of colonial mineral wealth, while the Rothschild’s were the owners of most of the French non-ferrous metal-mining industry. It is not surprising, then, that there was a strong convergence between de Gaulle and the Rue Laffitte - a connection further reinforced after the war when Rothschild banker and mining director Rene Fillon became treasurer of the Gaullist party, and Georges Pompidou, Guy de Rothschild's right-hand man and bank director, became the general's Prime Minister and designated successor.

At the same time, an element of continuity with Vichy was provided by the realignment to de Gaulle of the fraction of the Protestant banking aristocracy associated with the pre-war Lille- Lyons axis. This realignment was personified by Maurice Couve de Murville's joining the general in North Africa. Couve de Murville, linked by family ties to Mirabaud (and like de Gaulle himself, to the Banque de l'Union Parisienne (BUP)), early during the war success- fully conducted negotiations on behalf of Vichy with the Germans concerning French gold reserves, which had been shipped to a safe spot in the French Sudan. The sphere-of-interest predilection of de Gaulle's future foreign minister, however, was given an anti- American injection when Jewish bankers among the American authorities in Washington and North Africa attempted to comer Couve on account of his earlier association with Vichy. (To assist in the epuration effort, Paul Warburg had joined Murphy's staff following the Allied landings in North Africa.) In the attack on Couve, imperialist rivalry may have played a role as well, for other- wise one wonders why Henry Morgenthau, on a visit to Algiers, expressly ordered Murphy to get rid of Couve de Murville; while Peyrouton, the Vichy Secretary of the Interior, who was Governor- General of Algeria at the time, but who in his former function had issued the first anti-semitic degree of Vichy, was confirmed in his office in spite of public protests in Washington. 61

In any event, de Gaulle quickly cut short American interference. Peyrouton was forced to resign even before Giraud had surrendered to de Gaulle. Couve de Murville, on the other hand, on account of his expertise and the interests he represented was given the key Finances post in the newly-formed provisional government, in which Mayer got Transports and Public Works (both Rothschild areas of interest), and Monnet and Pleven, Armaments and Colonies, respectively. 62 After the war, the nationalist coalition formed in Algers was reinforced by industrial interests represented by men like Albin Chalandon, a resistance commander and banker in the Dassault airplane group (in the 1950s he became treasurer of the Gaullist party); Leperq of the Schneider group, and others.

Roosevelt's demarche toward Vichy, concentrated in the period between the Four Freedoms speech in January 1941 and the proclamation of the Atlantic Charter, failed to achieve its aim. The reactionary character of the groups which responded to the American offensive, followed by the breakdown of the Vichy state as a quasi-independent entity, greatly undermined the Atlantic connection with France. On the contrary, American actions gave the real rulers of France, united around de Gaulle, a reason to regard American policies towards Europe with suspicion. In effect, the outsider position of French capital in the Atlantic circuit of capital which it had occupied before the war, as a result of its orientation to the colonies and Eastern Europe, was reproduced as a consequence of American-French rivalry during World War Two.

The agony of the axis liberals

The possibility of a liberal class fraction coming to the fore in Nazi Germany might have seemed at first sight unlikely, but the reactionary liberals who had supported Hitler's rise to power had not been completely silenced. Schacht, as we have seen, was dismissed as President of the Reichsbank in January 1939 because he dared to disagree over credit policy with Hitler, and in January 1943 he lost his position as Minister without Portfolio for criticizing the conduct of the war in a letter to Goering.63 As the conviction grew, moreover, among the Schacht circle that Germany might lose the war, the opening of contact with the Allies became a priority. The figure selected to represent the German liberals was Carl Goerdeler, ex- Mayor of Leipzig and less tainted than Schacht by Nazi complicity.

Goerdeler was one of the few civic leaders who avoided joining the Nazi Party, although in the period of their march to power he had favoured negotiations with Hitler when scouted as Minister of Economic Affairs in the von Papen government. As the Nazis reorganized the German economy in the course of the 1930s, Goerdeler launched a traditional liberal critique. In several books and articles, he denounced the 'over-organization of the economy' and advocated the liberalization of currency controls and reconciliation with Germany's creditors. In 1937 Goerdeler retired as Mayor of Leipzig after a conflict with the Nazis over the Mendelssohn monument.64 Later, in 1942-43, he wrote a formal economics treatise inspired by the ideas of Dietz and Eucken, the liberal economists from whom Ludwig Erhard also drew theoretical inspiration.

Goerdeler's particular importance, however, was not just his critique of Nazi state-monopolism, but his advocacy of many important elements of subsequent Atlantic and European unitarian ideology. After Hitler came to power, Goerdeler was one of the few leading liberals continuing to search for a basis of rapprochement between Germany and her creditors. Thus in a 1936 paper on how to restore the free flow of capital and goods with Britain and the United States, he argued that Germany should be allowed to take part in the exploitation of the French colonies - an idea that Schacht actually raised in negotiations with Leon Blum during the Spring of that year. Also as Mayor of Leipzig, Goerdeler enjoyed a wealth of contacts as a result of the city's great international trade fair, which he utilized in his extensive travels in 1930s to promote liberal schemes. The trips, which took him throughout Europe and the United States, were paid for by Krupp and took place under the cover of his role as a representative of the Bosch electrical empire. Reporting back directly to Bosch, Krupp and Schacht, as well as to Goering.65 Goerdeler opened fruitful contacts with the powerful Swedish finance capitalist Wallenberg, one of the instigators of the International Chamber of Commerce, and with the Belgian king, with whom he broached the possibility of joint development of the Congo. Finally in America, he had extensive discussions with an authoritative cross section of the current power structure: Hull, Welles, Wallace, Hoover, Stimson, Young, Morgenthau, and others.

The crux of the message that Goerdeler was carrying on behalf of his backers was that the German need for a sphere-of-influence should be taken as an opportunity for economic cooperation rather than for war. Moreover, once war had broken out, the liberal reaction was desperate to prevent the prospect of two-front conflict pitting Germany against the Soviet Union in the East and an Anglo- American alliance in the West. In 1941, Goerdeler prepared a memorandum, 'The Goal', advocating comprehensive European integration under German leadership but with an emphasis on friendly relations with Britain and America, prefiguring the Atlantic partnership concept. Unlike other semi-official proponents of peace with Britain, such as Albrecht Haushofer or Rudolf Hess, who wanted a free hand in the East, Goerdeler also opposed an attack on the Soviet Union. In Goerdeler's vision, an abandonment of further aggressive ambitions by Germany would ensure that it would lead a united Europe in ten or twenty-years time. 66

The invasion of Russia and, later, the American declaration of war, threw the advocates of an understanding with the West back into a state of illegality. In a secret memorandum of late 1943, Goerdeler again expounded his concept of a European federation, but this time without any pretence of reforming the Nazi leadership. Indeed, he estimated that the 'criminals would have to be sent to the devil' before his plans could be implemented. If Hitler could be removed soon enough, Goerdeler argued, there would be a chance for Germany to unite Europe against Bolshevism with Allied support. All this was of course conditional, he added, on finding a way around the Allied demand for unconditional surrender. 67

As the Atlantic liberals - in league with disaffected Prussian aristocrats moved into the stage of active conspiracy against Hitler in 1944 (the 'July 20 Conspiracy'), the question of Allied terms became increasingly urgent. Goerdeler wanted preliminary negotiations with the Western powers, but Ritter describes how on the eve of the actual assassination attempt on Hitler in July, the conspirators were on the verge of bowing to the unconditional surrender demand - but only on the Western front. Goerdeler and General Beck offered to facilitate Anglo-American occupation if the Soviets could be blocked from breaking through in the East. It was this fear of the Soviet offensive, and the almost certain extinction of the Junker order in Prussia and the Baltic, that rallied so many noblemen to the conspiracy. Since the turn of the tide on the Eastern Front, it had become clear that it was the East German landed interests who were going to pay for Nazi aggression, while the West German industrial interests could still hope for the benevolence of the Americans. 68

The failure of the 20 July coup and the bloody repression that followed it, crushed the combined hopes of the Atlanticists and Prussian latifundists for a deus ex machina to save them from the Red Army. It also brought about the liquidation of Goerdeler, the only major politician who was acceptable to both the bulk of the German capitalist class and to the Western Allies.

Schacht, who was among those arrested following the coup attempt, due to his role in Hitler's rise to power had lost the credentials for leading a liberal alternative to Hitler under American auspices, although he still figured in the calculations of the State Department and of Goerdeler himself, who from his death cell made Schacht's release a preliminary condition to the Nazis in the mediation negotiations he implored his friend Wallenberg and the Swedish government to undertake. Of the younger men, the eventual leader of the liberal fraction, Ludwig Erhard, still lacked the necessary standing in his home country; it would in fact take two further American Atlantic offensives before he could take power in 1963. For the moment, the liberal arsenal in Germany seemed exhausted.

In Italy, class relations had developed in the course of a resistance struggle in which the powerful Communist Party had succeeded in forcing its way into the government coalition which presented itself to the public as soon as the Fascists were brought down. In 1943, two months before the Allied landings, a coup by Marshall Badoglio, who had led the Abyssinian campaign in the thirties, destroyed the domestic power base of Mussolini. Not unlike the subsequent Goerdeler coup attempt, Badoglio and the Italian King had deserted Fascism in order to save national capitalism from a defeat at the hands of the Left, which in Italy was a domestic force. The coup was supported by liberal capitalists, whose spokesman, Pirelli, had overtly opposed Fascist autarky policy from the mid-thirties on.69

Roosevelt, therefore, was ready to work with Badoglio, since he seemed the best assurance of preventing the Italian fleet from falling into Nazi hands, and of preventing the Communists from taking power.7o In the spring of 1944, however, the Communists in a spectacular turnabout declared their support for Badoglio and entered his cabinet.71 When Allied troops had liberated Rome, the local resistance council refused to deal with Badoglio. A new government under Bonomi, a right-wing Socialist, comprising the major parties of the resistance, was formed. In November 1944, the continuing frustration of fundamental social reform led to the resignation of Nenni's Socialists and the Action Party from the Bonomi government.

n spite of furious attacks by the Christian Democrats on the Communists, who were depicted as the instigators of anarchy, the ( decided to join the reorganized Bonomi cabinet, together with : Liberals and Christian Democrats. In doing so, however, they undermined their own position in several respects: becoming the accomplices of laxity in purging the fascist state apparatus, while allowing themselves to become subject to the Italian government's deals with the Allies which included the isolation of the fighting resistance forces in the industrial North. As Claudin puts it, 'The German troops, with the support of the neo-Fascists, launched one offensive after another against the partisan army, while the Allies scrupulously observed the truce they had granted until the spring. South of the Gothic Line, the Bonomi government and the anti- Fascist parties did nothing to mobilize the people against this criminal complicity of the Allies. The partisan army and the fighting working class of the North held out on their own against the Fascist offensives during the long hard winter of 1944-5'. 72

Capitalists in the North, meanwhile, were not at all committed to programme of national unity, but were instrumental in secret cuss ions between the German forces in Italy and the Western lies meant to prevent a penetration of Soviet or Yugoslavian forces into Italy, who might establish a direct link with the powerful Italian resistance. Allen Dullles, who conducted these negotiations, mentions Marinotti (of Snia Viscosa), Olivetti, and Baron Luigi Parilli, who had been the Italian representative of Nash-Kelvinator before the war, as key contacts. According to a German source quoted by Dulles, the Pope, too, was completely informed about the content of the negotiations. 73 By this time, however, the dynamics class formation was shifting to a corporatist format, and Christian democrats rather than Atlantic liberals reinforced their positions.

3. The shift to Cold War conservatism

At the time of the Atlantic Conference, the Soviet armies were being routed by the Nazi invaders and great credence was not given to the power of the Soviet Union in the post-war world. Soviet reactions the Atlantic Charter were mixed. In September 1941 Ambassador Maisky in London promised the most energetic support, but Stalin a few months later complained to Eden about the Charter's supposedly anti-Soviet content. The Russians would invoke the Charter when it suited them (e.g., to repudiate Polish border claims in 1943), but at bottom looked at it as an Anglo-Saxon scheme for hegemony.74

Gradually, however, the Roosevelt scheme came to include the Soviet Union as one of the areas to which the American Open Door strategy was applicable. In the course of 1942-43, as Allied unity seemed to provide an increasingly favourable context for such an initiative, ideas about the economic penetration of the Soviet Union began to mature as well. Kolko mentions Hull and War Production Board chief Nelson among those who in the last months of 1943 started serious thinking on future economic relations with the USSR. Discussions with Moscow not only touched upon trade, but in a more general way pertained to the envisaged position of Russia in the open world projected by American post-war planners. 75

Penetration and modification of Soviet conduct rather than confrontation was the key aspect of the universalism crystallizing at the peak of the Roosevelt offensive. Pioneer-spirited solidarity like Ambassador Joseph Davies's proposal in the 1942 postscript to his Mission to Moscow to send American engineers to Russia here paved the way for long-term considerations of an apparently generous, but basically anti-communist nature. Sumner Welles in 1944 put the tremendous possibilities for trade with the Soviet Union in the perspective of a gradual abandoning by the Russians of 'many of the more radical forms of political organization which time and experience have proved to be inefficient'. 76

The Morgenthau Plan which envisioned the deindustrialization of Germany also had the aspect of depriving the USSR of German reparations, and thus driving it to seek American credits. Making the Soviet Union dependent on American aid was a constant concern of those who wanted to disburse it. 'We should. . . enter the postwar years with a definite willingness to aid the USSR financially', the expert on international creditor practices in the State Department, Herbert Feis, wrote in July 1945. 'Simultaneously, the assignment of American diplomacy will be to obtain effective acceptance by Russia of American views on matters vital to US and to work out compromises when there appears to be divergence of interests or purposes. If that effort fails, we should be compelled to reconsider our course'. 77

The offensive, integrative approach towards the Soviet Union, and to the world at large, which characterized Roosevelt's universalism, rested on a real expansion of the American economy which lost its impetus by 1944. Profits and corporate income had risen initially, but in 1942, corporate income tax was raised from 19% to 40% in order to recover the costs of the war from industrial profits made largely on federal orders and investments. By this time, real expansion was giving way to inflation, and bank capital was able to appropriate a larger share of the total mass of profits. To quote Josephson, 'as the money supply doubled and redoubled, the banks earned more, floating easily on the higher flood of paper money'. 78

In this context, the social-imperialist truce disintegrated in due course. Roosevelt in 1943 had to issue a dramatic 'hold-the-line' order to prevent rapidly multiplying strikes from destroying his wage controls. The new National Wage Stabilization Board, established in December 1945, broke down within a few months' time under the impact of intense labour struggles. 79 As the truce between industrial capital and organized labour which hitherto had underlaid the Roosevelt offensive disintegrated, the universalist synthesis between internationalism and state intervention likewise fell apart. Increasingly a rentier attitude, socially conservative and passive in international affairs, again pervaded the thinking of critical layers of the American ruling class.

Policy-makers in Washington in the last year of the war began 110ticing the weakening of idealism which would continue until 1947. Showing a keen understanding of what was at stake, Sumner Welles in 1944 made a dramatic appeal to maintain the self-confident posture to domestic and international challenges that' had characterized the Roosevelt offensive. 'The forces of reaction are again stirring', Welles wrote. 'The people of this country should learn that world revolution is not something they need dread, but rather something that can be made to rebound to their own benefit.'80 However, eloquent statements could not reverse the trend dictated by the class struggle and by the bourgeoisie's fear of labour's strength in the reconversion period. The diminishing relevance in such a situation of Roosevelt's universalism (or the New Deal, for :hat matter) was reflected in the removal from the Democratic ticket of his Vice President, Henry Wallace, whose 'Century of the Common Man' rhetoric increasingly irritated the propertied classes. The Southern oil speculators, town bankers, and big city bosses who lad connived to get Harry Truman the vice-presidential nomination, were catapulted into the government following Roosevelt's heath. In one of the typical transitions that followed, Morgan partner and former Lend-Lease administrator Stettinius resigned as Secretary of State to be succeeded by James Byrnes, a South Carolinian close to the embattled textile interests in that state.

Under Truman and Byrnes, anti-communism became the unify- ing theme of American policy. In September 1946, Presidential assistant Clark Clifford delivered a memorandum-to the President in which the new national security doctrine was formulated.81 In the same month, Wallace, demoted to the post of Secretary of Commerce in the Truman cabinet, was forced to resign because of his adherence to the offensive instead of the aggressive, but basically defensive, approach to the Soviet Union. 'Wallace was essentially pleading for a renewal of the Administration's invitations of 1945 to the war-decimated Russian economy to join a friendly game of economic competition with the American industrial mammoth and to play the game according to American rules'.82 Facing a backlog of popular demands both at home and abroad, however, the dominant tendency in the American ruling class in 1945-47 was neither inclined to moderacy nor capable of launching an offensive policy based on new compromises with the working class.

Atlantic unity against the Soviet threat

In these circumstances a more restricted concept of Atlantic unity could again assert itself over the global universalism still espoused by Wallace and other New Deal veterans. A forerunner of such cold war Atlanticism had been Walter Lippmann's 1943 book, US Foreign Policy. 'There is a great community on this earth', Lippmann wrote, 'from which no member can be excluded and none can resign. This community has its geographical center in the great basin of the Atlantic. The security of this community turns upon the relations pf the two great powers - Britain and the United States. In this area and at this phase of historic time, they have the arsenals and the military formations necessary to the waging of the war. And there- fore their alliance is the nucleus of force around which the security of the whole region must necessarily be organized, to which, when their alliance is firm, the other members of the community will in their own interest freely adhere. '83

Lippmann canvassed the likelihood that potential antagonism with the Soviet Union would ensure that an Atlantic capitalist alliance would be a more practical arrangement than any global New Deal.84 'Once that potential antagonism is recognized by dissolving the alliance which exists in order to wage this war, one or all the three victors will inevitably move towards arrangements with the defeated powers. As this arrangement develops, the former victors will become competitors for the revival of power of their former enemies. For unable to enforce the disarmament of the vanquished, because they have now antagonized one another, they will see that the next best form of security will be to make allies of the rearmed vanquished.'8s

This bold projection of a Cold War power configuration was increasingly corroborated by the resurgence of sphere-of-interest politics. The Soviet Union, single-mindedly devoting its diplomatic efforts to the establishment of a cordon of friendly states against any repetition of the German invasion, proved unwilling to subordinate its interests to the American Open Door scheme; but spheres-of- interest also were reemphasized between the Atlantic allies. To the extent that the British could recover any economic or political room to manoeuvre, they distanced themselves from earlier forced enthusiasms for an American Open World. At Yalta, the Atlantic Charter was reaffirmed in the Declaration on Liberated Europe, but it no longer reflected the thrust of events. Churchill this time did not yield on the colonial question. In a secret protocol on territorial trusteeships, the latter were agreed to be applied only to League of Nations mandates, 'territories detached from the enemy as a result of the present war', and regions voluntarily seeking United Nations protection. This left the British and other Allied colonies outside the scope of the UN trusteeship system.86

At Yalta and Potsdam, Roosevelt's universalism collided with the stubborn persistence of European spheres-of-interest, but the subsiding of the American offensive also undercut whatever activism might have been contemplated with respect to an Atlantic community. Hence, it was Churchill who took up the thread and came to America to propagate his Atlantic Union concept. In his famous 'Iron Curtain' speech delivered in Fulton, Missouri in March 1946, the British statesman added the atom bomb to the assets of Atlantic unity, but otherwise remained within the line of argument traditionally propounded by the Round Table. Explicitly referring to the 'fraternal association of the English-speaking peoples', his statement met with hostility on the part of universalists like Wallace but also irritated Stalin, who in an interview correctly pointed to the analogy between Anglo-Saxon chauvinism and racism. 87

Soviet sphere-of-interest policy hardly warranted Churchill's advocacy of an Atlantic Union. Coupled to an illusionary idea of post-war reconciliation with liberal capitalism which took shape in the course of the war, Stalin's essentially defensive policy only corresponded obliquely with the world-wide upsurge of the forces of change haunting the imperialist leaders; yet served as a pretext for American-led counterrevolution. In the spring of 1943 Stalin dissolved the Comintern, a measure, according to its author, which was 'proper and timely because it facilitate(d) the organization of all freedom-loving nations against the common enemy'.88 As in previous changes of Comintern line, strategy and tactics were scarcely distinguished. Stalin preferred to adorn each tactical shift with the full paraphernalia of Marxism-Leninism and the Communist parties outside the Soviet Union duly followed suit. There- fore, although the political influence of these parties grew immensely due to their resistance record and the heroic struggle of the Soviet armies on the Eastern Front, the conciliatory policy towards the United States and Britain had the effect, as Claudin rightly observes, of 'spreading among the masses the illusion that equality and fraternity between nations were compatible with the survival of the principal imperialist states; the illusion that these states, by virtue of their being at war with their capitalist rivals alongside the Soviet Union, really intended to build an ideal world. '89 This, exactly, was the message Roosevelt was trying to get across, and American idealism, thus, found a paradoxical resonance in the Western Com- munist parties.

At the very level of international trade-union cooperation, the Soviet Union also found itself on the defensive. At the high tide of wartime Allied cooperation in December 1943, the TUC announced plans to hold a world trade-union conference for 1944. Its proposal to include the Soviet trade unions in the preparations for a new international trade-union organization led to the AFL's refusal to take part and ushered in the CIO. In the course of 1945, two conferences led to the foundation of the World Federation of Trade Unions (WFTU) in September. United Nations recognition of the new organization, however, was withheld after the AFL galvanized British and American opposition. 90 On the other hand, the Americans invested greater energy in reviving the old International Labor Organization (ILO), which was integrated into the United Nations framework. The influence of American idealism resulted in the adoption of priorities reflecting the value scale of bourgeois society like the selection of individual human rights as the central focus of ILO social policy at the 26th International Labour Conference in Philadelphia in 1944.91 More specifically, a corporatist format for international trade-union activity was proposed in 1943 by Bevin in reference to Article Five of the Atlantic Charter. ILO-coordinated industry-wide bargaining could serve to uphold previously established wage bargaining practices in the context of a liberal world economy. 92 In fact, this idea was meant to facilitate the Atlantic extrapolation of the New Deal and its articulation with European bargaining practices at the international level. It would take until the Marshall offensive, before the AFL and the International Trade Secretariats (ITSs), which already were committed to the international bargaining practices envisaged for Bevin's ILO Industrial Committees, would be able to destroy the weak WFTU and impose their Cold War concept on the Atlantic trade-union movement in the context of a renewed American offensive.

The Marshall offensive and capitalist restoration in Europe

1. Corporatist stalemate in liberated Europe

American world hegemony after World War Two served to generalize a new mode of accumulation in the North Atlantic area. The Roosevelt offensive, in which the forces supporting the Atlantic extrapolation of the New Deal first were welded into a stable coalition, created the general political conditions for this new era but without yet securing its economic substructure. This was not achieved until the subsequent Marshall and Kennedy offensives, which led to a concrete transformation of the European class structure along lines of the US model. The offensives tended to mobilize the elements least tied to specifically national class configurations and most susceptible to opportunities engendered by mass production and consumption in a highly internationalized context. Politically, the transformation of liberal internationalism into corporate liberalism was most conspicuous in the European Liberal parties and in Social Democracy, since even apart from concrete Atlantic allegiances and interests dating from the turn of the century, the self- confident approach to revolutionary challenges characterizing the Wilsonian-type offensives most easily was inserted in the inter- nationalism traditionally espoused by these parties.

In 1945, however, the temporary hegemony in the United States of a conservative, domestically-oriented configuration of the bourgeoisie was matched by narrowly national class compromises in Europe, in which there was little room for internationalism. On the European continent, the power of the working class and the general mood of change at the end of the war jeopardized the entire framework of capitalist relations of production. In such a situation, only those groupings on the Right that had cultivated a working-class base of their own could be trusted to handle the precarious give-and-take that was necessary to save capitalist production relations. This was not merely a matter of capitalists' calculations. Metropolitan and colonial trade and shipping had declined during the war, as had those branches of industry, like textiles, which had developed in the context of empire. Accordingly, the European liberal parties and liberal tendencies, traditionally associated with these activities, found themselves in an objectively weak position after the war. Having developed no working relationship with the working class beyond cash payment, they had to leave the task of reconstruction to the corporatist tendency in the bourgeoisie capable of working with the Socialists and Communists.

Visiting Western Europe in 1946, an American correspondent considered the degree to which religious loyalties had penetrated politics the most outstanding feature of the contemporary political situation. 'Movements close to the nationally prevailing Christian churches have emerged as a mainstay of new social integration all over Western Europe - with the one exception of England. . . . In the Netherlands, Belgium, Denmark, and Switzerland, Christian parties had developed positive social action long before the war. And it could not exactly be called a surprise that Italian Catholicism was politically available when Fascism evaporated. But the ascendance of the Catholic Mouvement Republicain Populaire to controlling power in France is an unprecedented political success story.' Both in France and in Italy, moreover, the American observer was struck by the 'remarkably smooth cooperation' between Socialists and Catholics. I

In Germany, the Christian Democrats soon became the favourite political formation of the Americans. Like the network of Goerdeler and Bosch, and the Protestant group of Bonhoeffer, a small Catholic underground had been active under the Nazi regime: the Walberberger circle. This group drew its members mainly from Rhineland and Westphalia, and discussed postwar social relations in Germany in terms of a reconciliation between the classes. The areas mentioned had been described as a cradle of Christian ethics and international reconciliation by Fritz Thyssen in his book I Paid Hitler, and had been accordingly recommended as a pivot of a new post-Hitler Germany. With the separation of the Eastern half of Germany and its aristocratic traditions, the possibility of experimenting with more elastic methods of social control had been objectively enlarged. Traditionally, the Rhineland area as well as parts of Bavaria had been adverse to the Prussian system, and it was the Church, the only legal institution available at the end of the war, which served as the vehicle for capitalists and politicians from these areas to put their ideas into practice. 2

Adenauer, it will be recalled, had traditionally been a proponent of reconciliation with France, and had actually been nominated president of a separate Rhineland republic favoured by France when socialist revolution threatened the integrity of Germany. Moreover, he had extensive ties both with American capital (through his marriage with a Zinsser daughter, of the Morgan/Dresdner Bank network, which made him a relative of McCloy and Lewis Douglas) and with German capital.3 The most important connection in the latter respect was his lifelong association with the Oppenheim bank in Cologne: first, through a friendship with the bank's partner, Louis Hagen; later, also with Robert Pferdmenges, who became a partner of the bank in the 1930. Both Adenauer and Pferdmenges had been close to Kurt von Schroder until 1933; while Pferdmenges also had ties with the Deutsche Bank, which Radkau takes as a clue explaining the major role of that bank's president, Hermann Abs, in West German affairs after the war.4 Like Adenauer, Pferdmenges kept his distance from Nazism and actually was among those arrested after the 20 July affair. He became the key figure in the new CDU, organizing the new party in the Rhineland and setting up the financial fund for the conservative parties to improve their performance in the 1949 federal elections.5

This web of connections, to which others might be added (like Adenauer's relations with the Wehrhahn mining and grain merchant family), for the moment, however, were less important than the capacity embodied by the Christian Democrats to re-establish a hold on the working classes and restore the legitimacy of capitalist rule. Adenauer had extensively studied Catholic social doctrine in the 1930s, and although he was also influenced by liberal economic theory (Ropke), he took care to insert its teachings in a comprehensive doctrine of which the 'social' aspect was stressed re- peatedly.6

In 1945, the capitalist class as a whole was on the defensive, and modernizers among the German manager class were ready to consider a degree of workers' control in order to save capitalist relations of production as such. On the ideological front, the corporatist bourgeoisie even went further. In the radical Ahlen programme of the CDU, they denounced Nazism as a form of state socialism. Displaying considerable boldness in this respect, CDU propaganda even claimed that its social doctrine went beyond Marxism.'

Meanwhile, the SPD, the most powerful party on the Left, allowed itself to be incorporated in the Western occupation policy without aiming a share of power. Schumacher, its leader, was obstinate to both the Americans and the Russians. According to McCloy, he was ‘one of the most effective anti-Communists in Germany', but in international affairs, his attitude according to Acheson was 'just the me as if he were a Communist'.8 In the US zone, in line with the prevailing attitude in the United States, no Socialists were allowed in the government bodies created by the military authorities. Only in the British zone were German administrative organs allowed, and in 146, the Socialist, Victor Agartz, was made the head of the economic council of the British zone after protests over the background of the initial incumbent, rayon magnate and International Chamber of Commerce stalwart, Abraham Frowein.9

Very much in the same vein as the German Christian Democrats, the Italian DC, which had been one among several parties of comparable strength in the Badoglio coalition, tried to outflank the Communists I terms of proposed social reforms. In the context of national unity, they were able to become the leading party in the country within two years. The majority of the peasants and the urban petty bourgeoisie 'ho voted for the DC in 1946, did so, Claudin shows, not because they were reactionary, since the DC programme was for all practical purposes as radical as those of the Left, but because DC radicalism bore the stamp of the Church whereas the others did not. 10

In France, national reconstruction was supervised by a broad coalition ranging from the Gaullists to the Communists. This coalition was based on a broad acceptance of the thesis that, as the First modernization and Equipment Plan of 1946 put it, 'in the years to come France will have nothing to live on but the product of its labor' 11, and found its common denominator in a high-pitched quest for the restoration of French grandeur. Upon a visit to an international business conference in the United States, the Nestor of the French state-monopoly tendency, Ernest Mercier, declared that France was not in need of American dollars. 'Money will not do the job of reconstructing France', he told his audience, 'only our own toil will do that - probably ten years of it'. 12 A substantial segment f French bank capital was nationalized in order to centralize accumulation funds, and several industries and firms were placed under state supervision on account of economic collaboration during the occupation. In the same vein, a 'national solidarity tax' was levied on stockholders and a tax on illicit profits was enacted. 13

In the Netherlands, too, a self-contained industrial reconstruction policy was undertaken which initially proceeded on the assumption of a mobilization of domestic labour-power resources only, even discounting income from Indonesia. A drastic monetary purge was carried through and a war capital-gains tax, together with a special personal wealth levy, were introduced in 1945. 14 A corporatist concept of control here was worked out in the circle of political and business leaders held as hostages by the Nazis near Eindhoven, and put into practice by the first post-war government composed of Christian Democrats, Socialists and independents. Unlike their Belgian and French counterparts, the Dutch Communists however were not included in the national reconstruction government. 15

Britain had not been occupied, and capitalist relations were not in danger. Yet, as the conditions determining the policies of national unity were not national, but international, the same national corporatism was noticeable in Britain. The Labour government embarked upon a programme of social-welfare reform and a policy of cheap money to facilitate postwar re-conversion of industry. It secured the support of the TUC by rescinding in 1946 anti-union legislation dating from the aftermath of the General Strike. Significantly, the corporatist concept developed from the productive- capital point of view also made itself felt in the Conservative Party. Confronted with an upsurge of the Left of which the Labour election victory was only one instance, the Conservatives, not unlike the continental Christian Democrats, took pains to present themselves as contemporary, forward-looking, and even assumed a 'radical appearance'. 16 This was mainly due to the programmatic activities of R.A. Butler, a state monopolist and board member of Courtaulds. While Churchill was concentrating on defending British imperial interests against American and Soviet designs, a Conservative 'Industrial Charter' was launched by Butler, Macmillan, and others. The Charter's corporatist and state-monopolistic concept reflected the conciliatory policies that a segment of the capitalist class at this juncture judged necessary, and in the prevailing climate even became a bestseller.17

In Belgium, industry emerged relatively unharmed from the war with control of the Congo intact as well. Although the attempt by Liberal finance minister Gutt to make his deflationary money reform the basis of a full-fledged liberal economic policy was thwarted, and le Pierlot coalition was brought down over the issue in February 1945, it seemed as if in Belgium the liberal-internationalist bourgeoisie, thriving on colonial profits (and with temporarily booming textile and steel industries as well), was largely able to avoid the corporatist conjuncture. The only major intervention in the economy on the part of the new Liberal-Socialist-Communist government involved an ill-fated attempt to rehabilitate the coal lining industry. 18

Contraction of American involvement

The inward-looking American posture of the period was an aspect of basically defensive approach to working-class pressures. The large-scale privatization of federally financed plant and equipment, well as the magnitude of pent-up consumer demand would have seemed to make a Red Scare irrelevant. Yet, as domestically oriented small capitalists as well as rentier elements reinforced themselves in e profit-distribution process, the New Deal stalemate between capital and labour threatened to re-impose itself. In these circumstances, and following a strike wave in early 1946, anti-labour sentiment gained an upper hand, and a Republican majority was returned Congress, elected on an anti-labour, anti-taxation platform. The Republican Congress quickly passed the reactionary Taft-Hartley Act which outlawed solidarity strikes, secondary boycotts, forbade trade-union political donations and required an anti-communist affidavit of trade-union officials.

The conservative turn on the domestic front interacted with a loss of impetus abroad. Key American projects, like the International Monetary Fund (IMF) and the World Bank, as well as the eventually abortive International Trade Organization (ITO) ran into the increasing sphere-of-interest compartmentalization of the world economy. Among managers, surveys during the war revealed that internationalism was fairly steadfast and, as a consequence of wartime industrialization, had even spread to the formerly isolationist areas the West and Midwest. It was recognized that US productive capacity, notably in the capital-goods sector, required developed reign markets in order to avoid a major crisis and a deepening of state intervention. As Easkins has shown, anticipations of the Marshall Plan, although lacking the anti-Soviet aspect, had been formulated by the National Planning Association and the Committee for Economic Development as early as 1944.19 American capital with its immense productive resources and mass production ; techniques, occupied an incomparable competitive position in the world economy. But to take advantage of its position, American industry required a drastic liberalization of the world market. At the end of World War Two, American firms operating abroad were confronted with 'discriminatory tax and labor laws, inability to withdraw profits, and the constant threat of expropriation', notably in Europe. 20

The Bretton Woods system centering on the IMF was meant to provide American capital (and capitals matching their accumulation conditions) with an integrated circuit of capital internationally, but it was unclear how to begin to implement currency liberalization, when it seemed that the British Empire might suddenly break apart. During the debate in the US Senate on Bretton Woods, the isolationist opponents led by Senator Taft wanted to insert a clause requiring that any IMF member wanting to use the Fund's resources would have to remove all exchange restrictions first. The principal proponent of the new system, Senator Barkley, countered this demand by recalling that Britain had introduced the economic controls at a time when the country was 'all that stood between the rest of the world and Hitler' and by expressing his confidence that the British would do away with Sterling area controls in due course. 'No man who has been very ill is expected to get up and walk right away', he said.21

An international business conference assembled in New York at the close of 1944 had illustrated, at the private level, a comparable waning of American resolve. As Fortune reported, the Bretton Woods proposals were not opposed, but neither were they endorsed. Moreover, 'out of deference to the British, the report on cartels did little more than recommend further study'. 22 The readiness to allow European affairs to be handled the European way reflected the awareness that the United States temporarily was not capable of underwriting any alternative.

In this context the Atlantic connection dating from the interwar years, with its centre of gravity in Germany and comprising a series of investment banks linked to the Rockefeller group and Dillon, Read, reasserted itself. In the summer of 1945, Winthrop Aldrich of the Chase Bank and president of the International Chamber of Commerce, visited Germany and succeeded in making his bank the correspondent institution of the newly founded Bank Deutscher Lander, the precursor of the eventual central bank of West Germany. 23 McCloy, the American High Commissioner for Germany, was close to the Chase Bank as well, and would become its head in 1953. McCloy's deputy was B.J. Buttenwieser, of Kuhn, Loeb.24 Among the American military authorities in Germany, Dillon, Read was represented by director William Draper, who first held the job of economic head of OMGUS, the American military government, and after 1952 became European head of the Mutual Security Administration. In the War and Navy Departments, Patterson, a Wall Street lawyer for US investors in Germany, and Forrestal, president of Dillon, Read, were the respective secretaries. 25

In the period preceding the Marshall Plan, the old German hands in the American bourgeoisie exerted all their considerable influence against the spectres of German de-industrialization and neutralization. They lobbied strenuously against Soviet and French reparation demands in order to ensure that German industrial assets would be available to support the recovery of capitalist Europe. Their strategy was to make the heavy industries of the Ruhr a core of a new Western European economy: an idea first broached to Secretary Forrestal in 1945 by Ferdinand Eberstadt, a former Dillon, Read partner. 26 John Foster Dulles, then a Republican advisor to the Democratic State Department (and capitalizing on the new weight of his party in Congress), vigorously endorsed the idea. Further, in January 1947, he proposed the unification of the Western European coal and steel basin as a bulwark against the Soviet Union. 27 And in August 1949, Dulles declared during Senate discussion in closed session that 'if the I treatment of Germany is such as to involve the Germans becoming more friendly with the Russians than with the West, we are wasting any money at all in Western Europe.' Germany, even if only its Western half, would have to be fitted into the structure of Atlantic integration rather than allow self-determination lead to a disintegration of the Western European capitalist economy. 'Russia has indicated her willingness to withdraw if we do the same, and we are not willing to do the same', Dulles declared on the same occasion. 28

The eventual partition of Germany was explicitly envisaged in this light. In late 1946, Truman for the second time sent Herbert Hoover to Europe to assess the economic and food situation. Hoover's chief assistant, the German Weimar liberal, Gustav Stolper, in January 1947 put the question offending Germany after the loss of its Eastern half as a key priority in a memorandum to Hoover. A partisan of partition even at the cost of an open conflict with the Soviet Union, it was Stolper who drafted the eventual Hoover Report which recommended putting Germany on its feet by stimulating German exports and thus terminating the need for emergency aid.29

2. The 1947 turning-point

Beneath the surface economic geography of Europe a more fundamental problem resided in the prevailing class configurations carried over from the prewar period. If a Western Europe capable of with- standing the challenge of socialism was to be created and made part of an Atlantic economy in which the American mode of accumulation could be generalized, the restructuration of European class relations to resemble the US pattern was mandatory. This activist perspective, typically transcending the rentier outlook and reflecting the synthetic interests of internationally-operating finance capital instead, required the 'euthanasia' of class fractions associated directly with previous modes of accumulation. With respect to Germany, it was James Warburg who at this juncture specified the problem and advocated an offensive solution to it in a book called Germany - Bridge or Battleground? , published in 1947.

Germany, Warburg wrote, was the hub of the whole European economy, 'the largest single compact mass of skilled labor on the Continent'. It should be transformed from the 'present poor-house and plague-center', as he called it, 'into a powerhouse for a rapid reconstruction of Europe, without letting the powerhouse acquire too broad a permanent franchise and - above all - without letting the powerhouse ever again become an arsenal'. Demonstrating a solid grasp of the offensive approach to social revolution, Warburg argued that 'the Westward thrusting of Communism will not be stopped by any physical frontier. It can be stopped only by a planned, US-aided reconstruction so liberal and even revolutionary as to meet the challenge on its own grounds, and to strike the meaning from the accusation of American "dollar diplomacy" .' This offensive, the author estimated, would have to be directed at restoring German unity, which remained the key to the reconstruction of a viable European economy. 30

Warburg premised this Wilsonian perspective upon the imperative of reshaping class relations in Germany. What needed restructuration, the banker argued, was the German ruling class, which had appropriated the fruits of German capitalism and used them for war-making. German respect for status positions served as a breeding ground for authoritarianism, and foreign military government in this respect hardly distinguished itself from previous forms of government. Therefore, Warburg proposed to intervene directly in the German class structure. 'If the German machine produces, as it has in the past, for an authoritarian state controlled by a Junker- industrialist clique, it will probably produce ultimately for war -no matter what limitations are imposed on it.' 31

There was another factor, which both had determined the rise of 'Junker-industrialist' clique in Germany and now constituted the basis for the corporatist stalemate, and that was the strength of the organized working class. The liberal-internationalist strategists in the American government like Will Clayton, Undersecretary of ate for Economic Affairs, who played a key role in US post-war planning and in formulating the ambitious International Trade Organization (ITO) plan, were to find out for themselves that the corporatist, state-monopolistic policies pursued in Europe did not primarily derive from a positive programme, but rather were forced upon the ruling class in the absence of a viable alternative. Hence, when Clayton travelled to Geneva in April 1947 to press the American proposals for the ITO, he had to conclude that the less comprehensive General Agreement on Tariffs and Trade (GATT), which was simultaneously being negotiated in Geneva, was the best the United States could hope for in the face of the anti-colonial and Soviet challenges. After the Geneva conference Clayton toured Western Europe to assess the immediate needs and wishes of the Western European governments. His letters to Washington played an important part in the preparation of the Marshall Plan. 32

By that time, the lack of real thrust in American policy compared the aggressive language of the President increasingly began working against the Administration. The Republican Congress in 1947 trimmed Truman's modest foreign aid programme but at the same time charged his administration with being soft on Communism. The congressional mood, Barnet writes, was 'characterized by a blend of economic isolationism and political belligerency, while abroad, revolutionary situations in Iran and Greece both in the British sphere-of-influence) and Communist-supported 'construction with protectionist overtones in Western Europe threatened vital American interests. The threat of a breakdown now activated the state apparatus most directly involved, the State Department. As Jones writes, 'by the very nature of things the United States and the West were on the defensive in 1945 and 1946 ld (Secretary) Byrnes' role was a defensive role. But it is highly doubtful that, given his relations with the President and the State Department staff, he could have played any other. '34 Byrnes was replaced by General Marshall, the chief military officer of World War Two, but it was in fact Dean Acheson who ran the State Department under Marshall's nominal command. 35

The new Secretary immediately expressed his concern over the trend towards financial conservatism dictated by the forces in Congress who at the same time wanted strong action against Communism. 'I have been much concerned at the budget cuts as they relate to what I am moving into in foreign affairs', he told the Senate Foreign Relations Committee in February 1947. Amounting in Marshall's opinion to a beginning of withdrawal, 'it will stir up a complete lack of faith in any pretensions we make to accept our responsibilities in the world. '36 In the same month, a British note

communicating the intention to suspend aid to Greece and Turkey propelled the new foreign-policy leadership into action. The activists in the State Department within a few months were able to galvanize the critical mass of interests which had been developing in reaction to the haphazard incrementalism of the preceding period. The Greek crisis provided the opportunity for launching the Truman Doctrine and its programme of aid for the Greek counter- revolution Britain was forced to forsake; at the same time, it broke the limits imposed on foreign spending. If American dollars were used in the name of a comprehensive programme against the Soviet Union and Communism, a broad agreement between the traditional internationalists and the nationalists strong in the Republican Party was possible. The scenario for such a reconciliation had already been rehearsed by the architect of congressional bipartisanship, Senator Vandenberg, who urged Truman to 'scare hell' out of the American people and to 'mobilize facts' concerning alleged Soviet violations of the Potsdam Agreement in order to arouse public opinion. 37

The Marshall Plan announced in June carried the new offensive further: by injecting purchasing power for innovating production into Western Europe it represented the first important step in exporting American accumulation conditions. This aspect of the Marshall offensive catered to the corporate-liberal fraction which likewise moved closer to power in the course of 1947. In early 1947, Averell Harriman succeeded Wallace as Secretary of Commerce, and the eventual Harriman Report on the implementation of the plan announced by Secretary of State Marshall in June was crucial in determining the Economic Cooperation Act of1948. With Clayton, Harriman, and such members of the Harriman Committee as Paul Hoffman, back on centre-stage, corporate-liberal internationalism resumed its tenure in Washington. 38

The establishment of American hegemony in the North Atlantic area was directed simultaneously against the spread of planned economy and social revolution beyond the Soviet-controlled areas in hope and against the national, self-contained reconstruction programmes pursued by most Western European states in the immediate postwar period. These programmes, in which local Communist Parties participated, were judged unsuited for maintaining capitalist rule in the long run. 'Europe would have been Communistic if it had t been for the Marshall Plan', Marshall Aid administrator Paul Hoffman claimed in February 1950.39

At the same time, the Marshall Plan aimed at laying the material foundations for an Atlantic economy based on the generalization of Fordism. Through the Technical Assistance and Productivity program, the complete inventory of Taylorism and Fordism, like merit rating, job classification, shift labour in continuous processes, and so on, was exported to Western Europe. The key component of Marshall Plan hardware deliveries in this context was the technology continuous wide-strip mills for the steel industry. These advanced means of production were capable of producing large quantities of cheap sheet steel for automobiles and household appliances, and, thus, were instrumental in subordinating the traditionally reactionary steel industry to the system of relative surplus-value production, while at the same time consolidating the subordination of the , steel industry to the powerful automobile groups by cheap imports. 40 Twenty years after their introduction in the United States, the wide-strip mills with American aid broke the cartel barriers which hitherto had prevented their installation in Europe. In 1939 trope possessed only two such mills, with important restrictions their output imposed by their cartelized competitors;41 by 1953, in contrast, France, Germany and Britain each had three wide-strip mills, with others in Austria, Luxemburg, the Netherlands, and Belgium (two).

Hoffman, the former president of Studebaker and founder of the corporate-liberal vanguard, the Committee for Economic Development, intervened wherever policies contrary to the envisaged new production system threatened to be enacted, as for instance in the case of the original steel nationalization in Britain. Speaking to US Senators in closed session, he reassured them that the 1950 Schuman Plan for a European Coal and Steel Community was designed to facilitate the new Fordist mode of accumulation. 'Heretofore, the ice has been too high and wages too low for people to buy the products of the steel industry to the extent that they buy the products our steel industry here', Hoffman said. 'We take a ton of steel and put it in an automobile and you know how very few people can afford to buy an automobile in Europe. So, if you start this process, raising wages and lowering prices, you get that great expanding market in Europe, and that will take care of this increased production. Henry Ford introduced US to that new principle, and, when he did so, he started a revolution 'that we are still benefiting by, and I think that the Schuman plan may have that result in Europe'.42

The American unions versus European labour

Raising wages with these connotations required that in participating in the new mode of accumulation, the European working class limit itself to purely economic demands. Thus, in the context of a general confrontation with the Soviet Union; the Marshall offensive aimed at the elimination of revolutionary and anti-systemic ideologies in the Western labour movement. In this aim, the Atlantic corporate- liberal bourgeoisie found its privileged partner and relay in the Social Democratic parties, which under the impact of the American offensive would themselves undergo major transformation.

Yet, between 1947 and 1951, neither the international situation nor the domestic American class struggle were such as to generate a full-scale offensive. The social-imperialist aspect of the Marshall offensive was correspondingly disjointed; its constitutive elements were scattered over the four years in which, by leaps and bounds, the expansion of the American economy proceeded. A formal intervention aimed at preventing the trade unions from reaping the fruits of labour scarcity even was more or less avoided during the Korean War. In late 1950, a Wage Stabilization Board was installed to deal with pressures arising from war-induced full employment. In January of the next year, a wage and price freeze became effective. This time a slight increase of wages relative to cost of living did bring benefits to the workers, but then, in retrospect, controls hardly affected the trend of wages in the first place. 43

As far as the two main American trade-union organizations were concerned, the offensive context in which they undertook their foreign activities contributed to the gradual convergence of their respective positions, even if important contradictions remained. Because of the McCarthyist witch-hunt, the CIO gradually divested itself of its radical heritage and democratic procedure. The CIO's eventual decision to withdraw from the WFTU, and its joint action with the AFL to establish the International Confederation of Free Trade Unions (ICFTU) in 1949, were largely the initiatives of leaders trying to claim a place for the industrial unions within the Democratic Cold War consensus. Opposition to this anti-Communist turn within the CIO was met by the abrupt expulsion of thirteen class-conscious unions at the 1949 Convention. As to the AFL, a sympathetic observer writes that since the bulk of the membership and leadership were not interested in or informed about international labour problems, 'a handful of AFL leaders, assisted by several of their staff, constituted the AFL foreign-policymaking elite'. 44

Extending their own brand of economic unionism to Europe was a concern of both organizations, but as support activities in Europe were largely uncoordinated, a welter of trans-Atlantic connections was the result; through which unresolved conflicts between the two US unions became part of a wider set of political struggles. In the American zone in Germany, a conflict erupted over the issues of de-Nazification and anti-fascist trade-union organization between the AFL and the CIO, and between them and the 'New Dealers' in the American military government (OMGUS). German labour leaders in the United States had formed a German Labour Delegation in exile and obtained official recognition from the AFL. In April 1945, a Free German Trade Union Committee was launched in American- occupied Frankfurt. Due to the restrictions on political activity decreed by the Americans, this organization failed to be effective in moderating the influence of radical elements at the local and plant levels.

The initial willingness of the New Dealers in OMGUS to allow radicals to support their de-Nazification effort was soon overruled by the American business cronies of General Clay. The AFL likewise exerted its influence to thwart the grassroots democratization movement, although it took a visit of AFL Vice-President Doherty to Germany to ensure that the American military authorities heeded the organization's wishes. As a result, the CIO and the WFTU were denied facilities in the American zone altogether. 45

Thus anti-fascist elements in the German working class and their sympathizers among the New Dealers in OMGUS were effectively frustrated at an early stage, but the mass basis for a 'moderate' alternative was not yet available. To remedy this situation, individual trade-union bureaucrats like Markus Schleicher, the president of the Free Trade Union Committee in the American zone, and Blockler in the British zone, were parachuted in by the military authorities to negotiate directly with the German employers.46 These men took the lead in propagating the American pattern of trade-union organization. Upon his return from a trip to America, Schleicher told German workers' audiences in 1948 that they should be ready to discard the traditional German idea of workers' councils. Only then could they benefit from the type of national political influence that had so impressed him on his American tour.

The German labour movement's traditions could not be discarded with so easily, however, and the consolidation of economic trade- unionism in Germany was forced to absorb the council idea to a considerable extent. Indeed, it was precisely in order to stave off the dangerous socialization demand of the German Left, that the AFL began giving qualified support to the council idea. Eventually, the AFL formed a truly Atlantic bloc with the DGB to force the German employers' organizations and the US National Foreign Trade Council to accept the introduction of co-determination (Mitbestim- mung) in heavy industry, and in 1952, on terms much more un- favourable to labour, in the rest of German industry. 47

As the Marshall Plan got under way and the de facto partition of Germany became permanent, AFL intervention was also extended to supporting specific activities of the SPD, like the latter's undercover work in the Soviet zone. Significantly, the AFL already in 1947 had endorsed German rearmament. 48 The predominance of the AFL over the CIO ingredient in American trade-union intervention in Europe was based upon intransigent anti-Communism and this dovetailed with indigenous factors determining the resurrection of the German trade-union movement. The reformist tradition of the German trade unions, as well as the effectiveness of Free World ideology in a partitioned country, were complemented by AFL activity, not created by it. The claim of one of the AFL organizers, David Dubinsky, that the German trade unions would have 'gone Communist' in the absence of AFL intervention was an exaggeration; unless he meant that in the event of a series of developments linking the Greek Revolution with a popular front modification of one of the national coalition governments somewhere along the Mediterranean coastline, the weight of Atlantic liberal capitalism in Europe might have been critically reduced, ultimately involving Germany as well.

Such a critical juncture might have materialized in France, where the AFL was by all means an outsider. Given the resistance record of the Communist-led general trade-union organization CGT, AFL organizer Irving Brown considered the French situation to be 'not very encouraging'. Yet several contacts had been made with anti- Communist elements in the CGT, in particular with the Force Ouvrière (FO) group. Brown's strategy of encouraging opposition within the CGT still backfired at the 1946 CGT convention, but the Communists' growing difficulties in getting the French workers to support the 'battle for production' without compensating political gains tended to create a more favourable climate for stirring the opposition forces. Brown eventually succeeded in establishing fruitful contacts in Socialist circles, which had been supported by various American labour organizations since the end of the war. 49

The radical tactics of the Christian trade unions, on the other hand, which persisted as long as the Communists were in the government and which had a distinct agent-provocateur quality, did not attract AFL support. The AFL's concern was not to promote just any anti-Communist working-class agitation, but rather to build 'AFL-type unions that would not only guide trade unionism in a stable craft direction, but would work to gather support for US foreign-policy objectives among European workers'. 51 The Christian unions therefore by default became the object of CIO attention, and relations between the CFTC (today's CFDT) and the CIO unions persisted well into the 1960s (and after the merger of the AFL and CIO in 1955).

The cleavages in the CGT had deep local roots, but were aggravated by the Marshall offensive and the machinations of the AFL. What the AFL contributed notably was the militant anti- Communism often lacking among older reformist trade-union leaders like Jouhaux, who were still committed to what Irving Brown derogatorily called the 'myth of working-class unity'. The AFL, therefore, expressly supported the forces working for a split, by-passing the leadership around Jouhaux which hoped to regain a majority within the CGT. The AFL wanted a rupture, not just with Communism, but with any form of class perspective. As in Germany, the break therefore was not just with Communism, but with indigenous working-class tradition in general. The Americans sponsored avowedly Atlanticist leaderships that were ready to discard the national heritage of the labour movement. The results of this strategy varied greatly. The split in the CGT, formal in November 1947, brought only a minority into the pro-American camp, a minority which moreover had not succeeded in divorcing itself from the old reformist leadership, of whom several, but not all, followed Jouhaux into the CGT-FO.53

Although hardly a weak link, American influence in the British Labour Party was reorganized and made more effective in 1947. In the autumn of that year, the editorial board of the journal Socialist Commentary, which had been the organ of the non-Communist German Left exiles in Britain, welcomed Oxford lecturer Anthony Crosland, Allan Flanders, a former TUC official, and Rita Hinden, who had set up the Fabian Colonial Bureau. While AFL organizer Jay Lovestone recruited many of his agents from the former exiles around Socialist Commentary, the journal in its new set-up became the mouthpiece of the right-wing of the Labour Party and developed a close collaboration with the New Leader, an anti-Communist American magazine which from 1950 on was sponsored by the CIA. Flanders, who was in the United States studying the American trade-union movement, contributed anti-Communist articles to both publications, while Denis Healey, the future Labour minister became London correspondent for the New Leader in 1954.54

The TUC leadership not only played a critical role in splitting the WFTU, but also propagated the American methods of scientific management that its representatives had become fascinated by in the course of Washington-sponsored junkets. 55 The ruling Labour Party, apart from playing a major part in shaping the institutional framework of Atlantic integration, complemented TUC activities on the European continent by supporting the pro-American split-offs in European Social Democratic parties. On the other hand, rank- and-file Labourist support for the Nenni majority Socialists in Italy in 1948 was vigorously suppressed. 56

In Italy, the Americans failed to secure a majority in either the Socialist Party, or in the trade-union movement. They did, however, succeed in instigating defections from the main national trade-union centre, the CGIL. In October 1948, a confessional group walked out, and in early 1949 the new Social Democrats followed. The AFL supported the Italian Catholics; CIO support in Italy went to the Saragat Social Democrats and their union, the UIL.57 The Americans took pains to weld the various factions into a single whole, and Fortune in 1949 reported that 'one of the brightest phenomena of the current political scene is the weekly meeting of Christian Democrat, moderate Socialist, and liberal Republican labor leaders in the office of ex-bricklayer Tom Lane, labor attaché of the US Embassy in Rome and chief of ECA's labor division'. 58 Ultimately, however, these disparate splinters were incapable of realizing unity beyond their anti-Communism and common dependence on US support.

In the Netherlands, the initially powerful unified trade-union organization, EVC, was pushed onto the defensive once the Marshall Plan got under way. The socialist union, NVV, which was discredited because of wartime collaboration but was subsidized by the AFL, successfully blocked negotiations for a merger. In turn, the NVV channelled funds to the French FO and, at the request of the Americans, sent propaganda teams to address German workers' audiences. 59 In Belgium, finally, the AFL provided invaluable support to the Flemish section of the FGTB. The FGTB, in turn, initiated the proposal to convene a trade-union conference confined to the Marshall Aid countries. O. Becu, the head of the Belgian dockers union who had worked for the American secret service during the war, became the head of the ICFTU in the mid 1950s.6O

The trade-union Cold War was greatly facilitated by the overall reorganization of the international trade-union movement which was part of the Marshall offensive. Initially, it seemed that because of its membership in the WFTU, the CIO would be in the better position to influence international trade unionism, but while the CIO was still trying to get the Marshall Plan on the agenda of the WFTU, the AFL in January 1948 launched the initiative for a trade-union conference of Marshall countries. The conference was held in March of the same year and pledged full trade-union support for the execution of the Plan. In January 1949, a split in the WFTU further dismantled wartime trade-union unity. Following preliminary discussions between the CIO and the British TUC, the latter made a breaking point of its earlier proposal to suspend all WFTU activities pending a reformulation of the organization's goals.61

Another trajectory of the restructuration of the international trade-union movement along Atlantic lines grew out of the resistance of the International Trade Secretariats to their incorporation into the WFTU. The ITSs, as indicated already, had developed industry-wide international bargaining. They could be expected to favour the institutional and political climate of the ILO (which moreover had made a concrete proposal to incorporate ITS-style international bargaining into its structure) over the WFTU which boycotted the ILO until 1947. The failure of the WFTU to absorb the ITSs further reduced the need for Western European trade unions to come to terms with the WFTU at all.62

Welding together the reformist trade unions in the North Atlantic area, and isolating the Communist or class-conscious Socialist elements, were the most conspicuous achievements of the Marshall offensive with respect to the Western European working class. The rise of the ICFTU as the exclusive, anti-Communist trade-union international was the outcome of AFL predominance in the offensive. A more comprehensive offensive like Roosevelt's might have put the CIO in the forefront of the undertaking and even succeeded in subordinating the WFTU to American strategy. Thus, the defensive, 'negative' undertow of the Marshall offensive was reproduced by the prominence of the more conservative of the American trade-union organizations. Finally, through the purging and reorganization of the trade-union movement, an important step had been taken towards the restructuration of Western European labour relations to match the American pattern, opening the way to the further realization of an integrated circuit of capital in the North Atlantic area and the concomitant process of Atlantic class formation interacting with it.

3. The realignment of the European bourgeoisies

Universalism in the Marshall offensive was deflated to a Free World format. With respect to the Soviet Union, the wartime Grand Design was replaced by a policy of confrontation; with some important exceptions in Asia, the imperialist periphery largely remained untouched by the American offensive. The' Atlantic' dimension of the Marshall offensive therefore indicated the limitations rather than the universalist potential of ultra-imperialist collusion. The re- emergence of the Atlantic Union concept worked out by Streit and Catlin between 1938 and 1941, and unearthed again by Churchill in 1946, should be understood against this background. Symbolically, Will Clayton, the 'unreconstructed Manchester liberal' who still in, 1946 had declared that 'the people of the United States have accepted the fact that they are stockholders, whether they like it or not, in a corporation named the world'63, and who throughout the war had worked for liberal programmes of global scope, in 1949 became one of the leaders of the newly-founded Atlantic Union Committee together with Justice Owen Roberts and the Secretary of War, Wall Street lawyer Robert Patterson. 64

The actual initiative to found a North Atlantic military alliance was taken by Ernest Bevin in 1948 following a series of preliminary defence treaties between Western European states. Bevin, although vigorously supporting the counter-revolutionary policy of Churchill in Greece, nevertheless until 1947 subscribed to the Foreign Office strategy advocating a special relationship with Europe as a means to bolster the independent role of Britain in the Cold War.65 Acceptance of the Marshall Plan, however, led to the demise of this option for the moment, and it was Bevin himself who, following the Prague coup in early 1948, urged negotiations on some form of formal Atlantic cohesion of a political nature. 'There should be held, very privately, either in Washington or at some point in Europe, consultations between the UK, France, Italy, and the Benelux countries for the purpose of exploring what steps all may take collectively, or in groups, to prevent the extension of the area of dictatorship', Bevin proposed to US Ambassador Lew Douglas. American observers were sceptical about Bevin's intentions, Since hey considered the Prague take-over as a defensive move to prevent he defeat of the Left in Western Europe from spilling over to the Soviet sphere-of-interest. Yet in March, Marshall accepted the British proposal to begin secret tripartite talks (with Canada the third party) on an Atlantic security system. 66 After a year of negotiations, in which the British were able to remove an all too conspicuous US-Canadian draft provision regarding 'indirect aggression by invoking known French unwillingness to subscribe to overtly anti-democratic arrangements, the treaty establishing the North Atlantic Treaty Organization (NATO) was concluded in April 1949 in Washington. 67

The blockade of Eastern Europe was an integral counterpart to the Marshall offensive in Western Europe. The Foreign Assistance Act of 1948 commissioned the Marshall Plan Administrator in Europe to refuse delivery of American goods to producers planning to trade with European countries not participating in the Plan. Through the Export Control Act of 1949 and the Battle Act of 1951, with its additional provisions against non-obliging partners (which McCloy in Germany was having a hard time to bring in line), an effective embargo was established, coordinated through the Consultative ' Group Co-ordinating Committee (COCOM).68 Linking West Germany firmly to the Atlantic economy was a constant concern of American policy-makers in the period before its inclusion in NATO in 1955. Secretary of State Acheson in 1951 estimated that the Schuman Plan was useful in this respect as well, since it would 'pull Germany, certainly Western Germany, Into economic relationship with Europe. It will tie it in and lay a foundation which will allay , fears that Germany might come loose and go off on an independent or pro-Russian policy'.69

Another dimension of the Marshall offensive was supposed to be the reinforcement of the weak links of the 'free world' economy amongst the underdeveloped countries. Significantly; however, of the series of American projects launched in the period, only one was meant to cover the world at large. Point Four, so named for being the fourth of a number of items announced by Truman in his inaugural Address of January 1949, was an assistance programme to underdeveloped countries. It was meant, according to its author, 'to enable [the underdeveloped countries] to help themselves to become, growing, strong allies of freedom'. For this role, they needed both to emancipate themselves from European colonialism and to stop short of socialism; Point Four accordingly had 'nothing in common with either the old imperialism of the last century or the new imperialism of the Communists'. 70

When Point Four was enacted in 1950, its budget was ten and a half million dollars less than the minimum requested and, even with subsequent accretions, it remained extremely cheap compared to comprehensive assistance plans like Marshall Aid. Moreover the programme went on stream when the offensive international posture of the United States was already giving way to a sphere-of- interest stance. Nevertheless, Point Four provided a valuable model at later junctures when the United States intervened in the periphery of European imperialism or reached for indigenous support beyond the military dictatorships in its own hemisphere. As Senator Fulbright declared in closed Senate discussions, comprehensive, formal assistance programmes were government-directed, tying the Americans in with 'many governments and governmental activities which we might hesitate to support under other circumstances.' Point Four style assistance, on the other hand, was cheap and allowed direct contact with people, giving them a 'forceful impression that we . . . are interested in them as people and are working directly with them.'7.

Finally, the Marshall offensive coincided with an increase in domestic real-capital formation and, a sharp improvement of the US trade balance.72 Point Four, too, was conceived with an eye to sustained full-capacity operation of metropolitan industry. 'It has been estimated', Truman wrote in his memoirs, 'that an improvement of only two percent in the living standards of Asia and Africa would keep the industrial plants of the United States, Great Britain and France going at full tilt for a century just to keep up with the increased demand for goods and services.'73 By the time of its promulgation, however, this grandiose project had lost its basis in both the growth of American production and the supposed unity of purpose between the neo-colonial and colonial powers.

American free-trade policy was only briefly interrupted when the Republican Congress in 1948 adopted a bill considered protectionist at the time. It was promptly repealed when the Democrats regained control of both houses in the November election. 74 The embargoes against Eastern Europe and the relatively weak effort at penetrating the dependencies of European imperialism lent free-trade policy its markedly Atlantic accent. Free trade was an important element in the requirements placed before the recipient Marshall states by Undersecretary Clayton at the Paris conference in September 1947. Clayton's list, consisting essentially of a promise of regional self-sufficiency in four years, trade liberalization, and steps to achieve monetary and financial stability, which was repeated by the restive US ambassadors to each of the sixteen governments, showed the weight of Washington attached to the liberalization aspect. At the same time, it testified to the narrowing of the wartime global scope to Atlantic dimensions. The United Nations agencies, notably the Economic Commission for Europe which had been constituted not long before, had to be by-passed in implementing Clayton's seventh point: the creation of a permanent organization to execute the plan.75

This requirement in the prevailing context reflected the liberal offensive thrust rather than a wish for European integration in the federalist sense. Discussing the need to make Western Europe immune 'against the appeals of Communism or any other ism', Hoffman told the Senate Foreign Relations Committee in early 1950 living standards were momentarily held down to allow a high of investment. But then, 'we know that there is no possibility of Europe becoming the kind of an economy that will make it a great or of strength in the Atlantic community unless we break down barriers between those seventeen political subdivisions with which we are working. . . so that you can have a single market, or something close to it, in which you can have large-scale manufacturing because you have a large market in which to sell'. 76

The Marshall offensive sharply terminated the period in which cessions had been made to state-monopolistic patterns of international trade and payments. These restrictions had been rated to allow the European states to stabilize class relations during the precarious end-of-war period, a tolerance arising from absence of American capacity to underwrite an alternative icy. Now that the United States was on the scene, holding the keys to economic policy by its contribution to the modernization of European economy and control of equivalent sums of local currency as counterpart funds for US aid, the pressure was increased dismantle state-monopolist structures. Drawing a dark picture of .man autarky policies before and during the war as an extreme variety of the inefficiencies of these structures, Hoffman declared that unless something can be done to crack [the compartmentalization of the German economy], the enduring quality of our work will be present. '77

The balance of private versus public consumption of aid was one he more complex problems of the Marshall Plan. Ideally aid was 'posed to be directed towards the private sector, with maximum nulus to American exporters or overseas industrial subsidiaries. 78 At the same time, however, heavy investment was necessary to ensure construction of the infrastructure for the rise of productivity and the lowering of overall energy and raw material costs. This could only to be accomplished through the capitalization of state companies, like power utilities.79 In some cases, as in France, Marshall Plan appropriations to the state sector even outstripped those to private capital. Accordingly, there was an in-built contradiction in the Marshall Plan between the aim of tearing down the vestiges of the state-monopoly tendency and the necessary recourse to state intervention in order to achieve the more fundamental aim of developing the infrastructure for the new Fordist mode of accumulation in Europe.

As far as monetary relations were concerned, an Agreement on Multilateral Monetary Compensation was concluded in late 1947. To this agreement, only the future EEC Six (with the Anglo- American 'Bizone' in Germany for the future Federal Republic) were permanent parties. The remaining countries of the Organization of European Economic Cooperation (OEEC), the club of Marshall aid recipient states, were only loosely associated. This arrangement, meant to enlarge the credit margin in mutual trade, was succeeded by two Intra-European Payments Agreements. In these agreements, at the prodding of the Marshall Plan authorities, elements like mutual capital aid, drawing rights from a common fund, and com- parable arrangements were introduced. This time all OEEC countries participated, but the drawing rights were entirely dependent on American credit, and capital aid by better-off European states to poorer ones was also reimbursed by the Marshall Plan. These arrangements, therefore, reflected American preferences rather than the desire on the part of the European bourgeoisie to liberalize their payments arrangements.

In June 1950, the European Payments Union (EPU) was established. An American loan served as the initial contribution to the clearing-fund. Although this new set-up implied a major step forward to an IMF-like structure, the EPU was still very much tinged by the state-monopolistic approach. As Tew notes, it resembled Keynes's Clearing Union more than the IMF proper.8o At this juncture, however, American concern was still concentrated on the revival of international trade. This was seen as the precondition for the new assembly-line methods of production to make a real break- through in Europe. Hence the Americans made the important concession of allowing the dollar to be discriminated against if the European nations would resume mutual trading on a multilateral payments basis. In this way, the Western European Countries could lay the foundations for a domestic corporate-liberal synthesis and could build up their 'welfare states' without having to meet American competition directly.

Reorientation of European liberalism

The Marshall Plan allowed the liberal-internationalist bourgeoisie in Europe with a background in either the colonial or the Eastern European circuit of money capital to restructure their interests in a wider Pax Americana. For this fraction, the Free World literally was the last resort; otherwise, it was bound to disintegrate. By subscribing to the Marshall offensive and the Atlantic Union concept, however, the liberals once again helped clear the way for a mode of accumulation different from their own. For the concept guiding class formation of the European bourgeoisie henceforward would tend toward the corporate liberalism dominant in the USA. At the same time, the actual hegemonic concept would still shift between a liberal emphasis elicited by world market opportunities created by the American offensives, and a state-monopolistic emphasis notice- able when Atlantic class formation passed through the intermediate sphere-of-interest phases as American economic expansion and political activism contracted.

In all Western European countries under the impact of the Marshall offensive, the liberal bourgeoisie strongly reasserted its influence in the new Atlantic context. Liberal parties reinforced their position by entering the government or occupying key posts; but within other parties as well, notably Christian Democracy, the shift to liberalism was also manifest.

In France, the capital market was rehabilitated by rescinding previous measures prejudicing securities owners, floating state loans, and lowering the capital-gains tax and (in 1949) the tax on speculative trade. State income diminished drastically after 1948, and the accompanying deflationary economic policy attempted to mutually adjust the ongoing modernization and equipment plan and the owners' interests. Marshall Plan counterpart funds to a consider- able extent were used for the Monnet Plan.81

Liberal parties in the IVth Republic first entered the government in January 1947, under the Socialist Prime Minister Ramadier, in this cabinet, the last in which Communists participated, the Radical Party had two posts Oustice and Vice Prime Minister); the UDSR, Pleven's party, one (Veterans) held by Mitterrand (in 1946, the UDSI~ already had briefly occupied a Vice Prime Minister post). Also in January 1947, Herriot, the liberal leader, became President of the National Assembly. In November, Rene Mayer of the Radical Party became Minister of Finance. Mayer introduced a deflationary money reform, the Mayer Plan, but attempts to make him Prime Minister were unsuccessful until 1953.82 In the subsequent, short- lived Marie cabinet, the first led by a Radical, Mayer was Minister of Defence; in 1949, he would be the parliamentary rapporteur on the NATO treaty.

The second major instance of the resurgence of liberalism in France was the premiership of H.Queuille, from September 1948 to November 1949. It was Queuille, acting as his own Minister of Finance until January, who succeeded in carrying through the major financial and monetary adjustments required by the Marshall Plan over the protests of the Socialists.83 In the quick succession of governments in France that followed, the Radicals and the UOSR alternated in power, with Queuille and Pleven taking turns as Prime Minister three times between July 1950 and January 1952. In a moment, we shall come back to the actual capital groups involved in the liberal Atlantic turnabout.

In Germany, it was only in 1949 that a first Federal government was formed. The liberal Free Democratic Party, the FDP, had several cabinet posts, the most important of which, that of Vice Chancellor and, significantly, Economic Cooperation (i.e., the Marshall Plan), were occupied by the party's Chairman, Blucher. The party remained in the government until 1956. The liberal fraction had a traditional stronghold in the textile industry. As far as support for the Atlantic Union concept was concerned, the managers of German subsidiaries of US firms should be mentioned as well. W. Bauer, a textile industrialist and a former associate of Goerdeler's, was president of the German branch of CEPES, a European study and pressure group of liberal capitalists. Vice-president of this body was Otto Friedrich, head of the Phoenix rubber company. Phoenix was 25% owned by the Firestone concern of the USA, and thus sought to enhance its competitive edge vis-à-vis Michelin of France. Friederich according to Braunthal was an ardent follower of Erhard's neoliberalism and was rated by Fortune as 'the German equivalent of a Paul Hoffman'. 84

Furthermore, from the bastions of inter-war liberalism, like Thyssen, AEG, and the Dresdner Bank, several representatives came to tl}e fore as supporters of the Atlantic Union concept. H. Dinkelhback, a director of the Vereinigte Stahlwerke and considered by Fortune to be an exponent of the managerial revolution, was 'pointed head of the Ruhr trusteeship by the Allies. Kurt Birrenbach, chairman of the board of Thyssen after the Vereinigte Stahlwerke had been dismembered, actually took the initiative in Germany to collect signatures for the 1954 Declaration of Atlantic unity (a gesture of Atlantic solidarity to which we shall come back later). The eventual eleven undersigned were liberal politicians and Düsseldorf Bank director and politician, F. Etzel; most prominent was Karl messing, 'the most orthodox of all orthodox bankers' cording to Sampson; former collaborator of Schacht, director of Unilever and in 1958, president of the German central bank.85

The key institution after the war channelling US investment funds toGerman industry was the Kreditanstalt fur Wiederaufbau, a quasi-bank established in 1948. Its directors were Erhard, Schirner of the Deutsche Bank, Blessing, future Federal President Lubke, and the, conservative politician, Seebohm. It was alternatively headed by Hermann J. Abs and O. Schniewind. Of Abs, Pritzkoleit writes that he embodied what remained of German creditworthiness in the eyes of foreign capitalists and governments in these crucial years. In 1953, he put his signature under the London debt agreement by which the Federal Republic undertook to fulfil the obligations of previous German governments. Abs's career, as noted briefly in Chapter Two, started with a banker's job in the Merton group, after which he joined the Deutsche Bank. There he continued to playa prominent role while this institution developed into a major prop of Hitler's Thousand Year Reich. After the war, his relations with the Metallsellschaft and his command post in the Deutsche Bank were implemented by directorships in Shell, AKU, Solvay, Phoenix rubber, the German Libby-Owens, and other firms. Abs was chairman of the German-American Economic Association, of which Brinckmann, of the former Warburg bank and the German affiliate of Standard Oil, was vice-chairman.86 "

Otto Schniewind had been on Goerdeler's cabinet list in 1943. Privately engaged in insurance and real-estate financing, he was also connected with Felten and Guillaume of the AEG group. Like Abs, Schniewind remained committed to Goerdeler's strategy of carving out a German-dominated European sphere-of-interest as part of an Atlantic Partnership rather than to the Schachtian 'comprador' position implied in the Atlantic Union concept. In the Bizonal Economic Council, Schniewind was responsible for finances. In the early 1950s, he became chairman of the board of the third biggest West German bank, the Commerzbank. 7

As elsewhere in Europe, bank capital in Germany was on the defensive right after the war. High collateral requirements and compulsory deposits imposed on the banks temporarily kept them from cashing in reconstruction profits, but after 1951 German banks increasingly succeeded in eliminating government controls. The deconcentration measures after the war did not include a separation of functions, and, when in 1956, the original big banks merged again into their former selves, they would soon recapture their central, controlling position in the German economy again. The new central bank, established one year later and headed by Blessing, refrained from interfering with banking business for all practical purposes. 'Few, if any, attempts (have) been made over the 1957-70 period to make any direct restriction of bank lending'.88

In Britain, the modernizing liberals willing to trade the Empire for a position as junior partner in the new Pax Americana were hardly in a position to profit from the American offensive. Although the devaluation of the pound in 1949 prejudiced the position of the City and the position of the colonialists had been eroding as a consequence of the 1946 American loan and Indian independence, international affairs, geared to a militant Cold War line under Bevin, in the Conservative Party remained the domain of the maritime-liberal fraction led by Churchill and Eden, who were soon to return to power again. On the domestic front, the concessions envisaged by Tory corporatists and laid down in Butler's Industrial Charter of 1945 were rescinded in the 1949 manifesto 'The Right Road for Britain', and Butler and his tendency were curtailed in their freedom of action. With liberal tenets replacing the state-monopolistic and democratic elements in the Conservative doctrine, the architect of the post-war Tory organization, Lord Woolton (linked by an insurance directorship to the Atlanticist Liverpool group) in May 1947 concluded an agreement which formalized the electoral coalition with the National Liberals. 89 The Conservative Party clearly sought to capitalize on the pervasive internationalist liberalism of the period. In a foreword to the party programme for the 1950 elections, Winston Churchill wrote that the party was 'giving expression to the spirit ofliberalism with its sense of progress, tolerance and humanity which has spread so widely throughout our island and indeed throughout the world'. 90

The British Liberal Party mustered all its forces in an attempt to dominate the opposition against the planning policies of Labour. Their number of candidates was the highest since 1917, but the mere consolidation of their nine mandates showed that the Tories, and not the Liberals, were the main beneficiaries of the liberal trend. Since the imperialists headed by Churchill still held the reins however, the power of the Tories in 1951 led to a restoration of reactionary liberalism, culminating in 1956 in a last try at empire. Only Suez debacle, could ELEC members Macmillan and Eccles, younger Tory modernizers, Heath and Maudling, take der a corporate-liberal concept. Their liquidation of British interests and reorientation of the British economy towards emerging Atlantic circuit of finance capital fitted into corporate strategies pursued from the early 1950s on by Unilever, ICI, and Lloyds bank.91 "

In Italy the Liberal Party PLI was included in the De Gasperi government of 1948. In this coalition government of Christian Democrats, the Atlanticist split-off from the Socialist Party, PSD the PRI (modernizing liberal) and PLI, which replaced the previous national reconstruction coalition, the Liberal Luigi Einaudi embarked upon a deflationary economic policy to the detriment of industry. Already in 1946, the nationalized banks had restored their capacity to operate as private investors by the creation of a new investment bank, Mediobanca. Next to bank capital, the textile and steel industries were prominent bulwarks of support for the liberal Atlantic Union concept in this period. The textile capitalist and head Cofindustria, the employers' organization, A. de Micheli, typically saw the expansion of Italian capital in the perspective of a joint operation with American capital, with both economies supplying their excess assets. Rather than channelling Italian labour reserves into domestic industry, De Micheli proposed that the agricultural surplus population of Italy should be sent to Africa, by Italian and American capital: 'For as US and Italian capital flows into Africa it will bind that continent solidly into the Western Alliance'.93

Another stronghold of Atlantic liberalism was the private steel k. B. Falck in a Fortune survey of Italian business opinion that the 'nations of the West (should) extend the rule of liberty from the internal political field to the external international order. The Falck family also played a role in challenging the federalist European movement in Italy. In 1950, Senator E. Falck founded a short-lived National Committee of ELEC in Italy; when Duncan Sandy’s, Churchill's son-in-law, sought to rally the anti-federalist Italy, he also was brought into contact with E. Falck.94

In the Netherlands, the Liberal Freedom Party, PVDV, in January restructured upon the return to the Liberal camp of a group led by the pre-war Minister of Finance and champion of deflation, Oud, who had joined the renewed Socialist Party directly after the war. With their new People's Party for Freedom and Democracy (VVD), the Liberals for the first time since the war entered the government. Dirk Stikker became Minister of Foreign Affairs. It was Stikker, who, as we shall see, succeeded in making the tumultuous transition from colonialism under British supervision to Atlantic alliance in 1949.

The liberal bourgeoisie subscribing to the Atlantic Union concept was grouped around shipping, banking and industry in Rotterdam and Amsterdam. Unilever's Paul Rijkens took the initiative for the first Bilderberg Conference, of which Prince Bernhard was made the chairman. E.H. van der Beugel, holding several directorships in important industrial companies and banks of a liberal profile, like the NHM and S.G. Warburg in London, succeeded Retinger as Secretary of the Bilderberg group. J.H. van Roijen, Dutch Ambassador to the United States, was an adviser to Unilever, and M. Patijn, a Socialist MP, was a member of a family interested in that company. The Dutch Society for International Affairs (NGIZ), which organized the Atlantic liberals into a permanent forum, was led by L.J.L. Heldring of the Amsterdam shipping family. 95

In Belgium, it took until 1949 before the Liberal Party again participated in the government. After the fall in 1947, of the national coalition with the Communists, the Christian Democrats at first made a coalition with the Socialists, since the public debate over the wartime role of King Leopold III complicated cabinet formation with the Liberals, who were opposed to the King's return. The liberal bourgeoisie in Belgium in this period manifested itself in ELEC, of which Paul van Zeeland, Prime Minister and SOFINA director, was Chairman. L. Sermon, of the Banque de Bruxelles group; L. Motz, chairman of the liberal party and linked to the Société Generale; L. Camu, vice-president of the Belgian central bank; wartime Fascist, V. Leemans (Electrofina); and the Catholic, E. de la Vallee Poussin (construction) were members. Baron Boel was president of the European ELEC. Van Zeeland, Poussin, Eyskens, Gilson, Auguste de Schrijver (the head of the Christian- Democratic pressure-group Nouvelles Equipes Internationales) and Henri Fayat, a future state secretary for foreign affairs under Spaak, were the Belgian signatories of the 1954 Declaration of Atlantic Unity.96

The context of decolonization

At first sight, it may seem somewhat tendentious to speak of the general dominance of European liberalism in the Marshall period. Only in the Low Countries did the traditional liberal parties actually increase their electoral base, while elsewhere they either lost ground in elections (as in France, Italy and Britain) or failed to gain votes comparable to their pre-war strength (as in Germany). Liberal resurgence accordingly was not a mass phenomenon in party terms. Yet, the American offensive powerfully fostered liberalism in the sense of pervasive awareness that society was in need of an internationalist, essentially private-individualist turn of class relations if it was to withstand the challenge of socialism.

But it did so by restructuring the previous liberal internationalism rather than consolidating it. Through the Marshall offensive, the Pax Americana was imposed on the economic ruins of the defunct Pax Britannica in Europe. This in turn required the euthanasia of residual class fractions related to the pre-war accumulation and profit-distribution structures and colonialism; and thus, a struggle to eliminate or restructure the political parties hitherto expressing the interests of these fractions. Paradoxically, the new liberalism in a umber of cases found its most stubborn opponent in the Liberal arties, which were often still the domain of the 'old' middle class. 'he German FOP until 1956 was a right-wing small entrepreneur arty; in France, this category was represented by Pinay's Independents, while the Radical Party at the time was more urban and oriented to big capital (Mayer) and, subsequently, to the corporate- liberal technocracy (Mendes-France).97

The link between class formation and Liberal prominence on the one hand, and the Marshall offensive on the other, has to be analysed against the background of a fundamental restructuring of the liberal- internationalist bourgeoisie itself in the context of the restructuring f the world economy. This can be illustrated for the Netherlands, there because of the coincidence of Atlantic alliance and the de- colonization of Indonesia , its impact was greatest.

The American liberal offensive in the course of 1947 included diplomatic recognition of Sukarno's Republic in April and an invitation for Indonesia to attend the International Trade Conference in Havana in August. Among Dutch capitalists in Indonesia, opinions as to how to deal with the nationalist challenge were divided. Strong industrial capitals catering to consumer demand in Indonesia, like Unilever and Heineken, as well as the strongest among the plantation interests, were in favour of a neo-colonialist compromise pacifying both the Americans and the Indonesian bourgeoisie led by Hatta. The smaller planters, dependent on primitive exploitation relations and government trade channels, joined by the rentier class and the conservatives in the Netherlands, wanted strong action. This division extended well into the liberal party. Dud and his Rotterdam constituency, with its background in trade, shipping, and industry, and Stikker, director of Heineken and NHM, subscribed to the neo-colonialist solution as part of the Atlantic Union concept. In Amsterdam, however, the party was strong among bank and stock- exchange employees dependent on Indonesian ventures for their livelihood and fervently in support of conservative colonialism. 98

Under the influence of its powerful Amsterdam chapter and like- minded parts of the membership, the VVD in 1948 successfully campaigned on a platform of colonialist reaction. Yet, when the party entered the cabinet, Stikker, the champion of neo-colonialism who had kept in close touch with the conciliatory industrialists all along, became Minister of Foreign Affairs. It was Stikker who succeeded in having the NATO treaty ratified in the Dutch parliament in spite of American threats to suspend Marshall Aid to the Netherlands because of Dutch colonial aggression in Indonesia. Dutch recalcitrance was considered counterproductive by the Western powers after a massacre of 8000 Indonesian Communists by the Nationalists in September 1948 had reassured them about Sukarno's ultimate intentions. Thus, following the second military campaign undertaken by the Dutch in December, international isolation undermined the position of the hard-liners in the government. Stikker and Ambassador Van Roijen now were allowed to bring the negotiations on Indonesian independence to a conclusion. In the meantime, the assurance, obtained from Acheson directly, that Marshall credits to the mother country would not be affected in any event, enabled Stikker to convince the Right of the need to enter NATO.99

In the course of a few years, the modernizing liberals thus triumphed over the reactionary rentier interests, and at the economic level, the strongest capitals were able to survive independence. Dutch industry in Indonesia, notably Unilever, actually embarked upon a programme of large-scale expansion following independence. HVA, the largest estate owner in Indonesia, although slow in accepting the compromise with the bourgeois forces in the Indonesian independence movement, adapted to changed circumstances by settling in Ethiopia in 1951, obtaining highly favourable conditions or exploiting labour on its sugar plantations. Thanks to the support he Americans gave to Haile Selassie's repressive regime, the original link between colonial cash-crop enterprise and Dutch rentier interests could be restored, reorienting the international outlook of the class fractions involved accordingly. 100

The reorientation also allowed the articulation of Dutch liberalism with state-monopolistic elements carried over from the interwar situation. In the 1930s, a group of Rotterdam economists in the liberal Protestant party CHU were criticized by orthodox liberal internationalists like Colijn and by the shipping magnate and NHM lanker, Heldring, for their willingness to contemplate the introduction of a measure of state intervention in the existing liberal order for several members of this group, notably P. Lieftink, finance minister after the war, joined the newly founded Social Democrat Party (PvdA) after a comprehensive 'people's party' had proved unattainable. During the war, another member of the group, A. van Rhijn, ogether with Paul Rijkens of Unilever, worked out a blueprint for a corporatist social-economic council which eventually was established in 1950. In wartime London, Rijkens at the same time advocated Dutch membership of a future Atlantic trade bloc. 101

Unilever, Rotterdam industry and banking, and Philips were able to use the support for this concept to their advantage, and their most important representative, H.M. Hirschfeld, became the Dutch commissioner for the Marshall Plan. Hirschfeld had remained at the helm of the Dutch Ministry of Economic Affairs during the war, steering a compromise course between resistance to the Germans as practiced by the liberals (the Ruys shipping family, Kessler of Hoogovens, Stikker, and Twente textiles) and active collaboration on the other (Fentener van Vlissingen of AKU). Next to prominent liberal internationalists like Delprat (Twentse Bank, shipping) and J.E. Ruys, Hirschfeld and a score of representatives from the Unilever-Philips orbit were the undersigned of the 1954 Declaration If Atlantic Unity. 102

French colonial capital also was engaged in a process of restrucuration, but French imperialism was not as easily subordinated to American hegemony. Yet, the capitalists surviving colonial re- organization likewise became the core of the liberal fraction supporting the Atlantic Union concept. Since in Indo-China the independence movement was Communist-led, even the biggest capitals lad to resist decolonization. Clearly, the Michelin rubber plantations could not be repatriated, and control of them had to be balanced against military action. Bankers were in a more comfortable position. Henri Claude has shown that the Banque de l'Indochine was able to shift the bulk profits investments from South-East Asia to Western Europe, the Western Hemisphere, and Africa. The bank's South-East Asian assets, which still in 1931 represented 80% to 90% of total assets, by 1953 were reduced to about 18% .103 In the process, however ,the Indochine group was compelled to join forces with the Schneider group, thus linking with another axis of restructuration: the Eastern European/ Atlantic one. After World War Two, Schneider and its powerful holding, the Union Europeenne, through which it controlled a wide array of economic assets in Eastern Europe, had to face their definitive loss.

The single most important family associated with the new combination were the Giscard d'Estaings, of whom Valery Giscard was to become the most illustrious representative. 104 Giscard's uncle, J. Bardoux, already combined a prominent political role in the Third Republic with several directorships in the Indochine group. Valery's father, Edmond Giscard d'Estaing, was prominent in the ICC, president of the French ELEC, and actually was in the forefront of the struggle with the federalist tendency in the French European Movement which broke out in late 1950. He was among the undersigned of the 1954 Declaration of Atlantic Unity, and, from 1964 to 1966, he was president of the Comité France-Amerique –a body propagating friendly relations with the United States. Valery Giscard married the granddaughter of Eugene Schneider, thus complementing the economic links between the two groups. His brother, Olivier, was on the board of a whole series of French subsidiaries of American firms such as IBM, Trailor, McCann- Erickson, Gibbs-Hill France, and was also a member of the Comité France-Amerique. When in 1959, a European institute of business-management was set up at Fontainebleu as a subsidiary of the Harvard Business School, it was led by Olivier Giscard d'Estaing. G. Hereil, President of Simca (then owned by Chrysler), led the drive for contributions to make this enterprise possible. 105

The orientation of this fraction of the bourgeoisie was characterized by the appreciative identification of a liberal-international economy with American hegemony. At the time of the Marshall offensive, the president of the Banque de l'Indochine, Minost, even entertained the idea of inviting American direct investment in the French colonies to bolster the French position there, an idea which he discussed in 1949 with Ambroise Roux of the Suez Company, Henri de Wendel, and Hervé Alphand, future ambassador to the USA. 106

Nonetheless, the sections of the French bourgeoisie aspiring to a lte-liberal synthesis could not accept the subordination to American interests. They opposed reactionary colonialism, but preferred working out an active neo-colonial policy to silent surrender. The Marshall offensive in this respect activated the forces in France wanting to modernize the colonial sphere-of-interest rather than the Open Door on the French empire. This policy was launched by the first Pleven cabinet, and its execution was entrusted Francois Mitterrand, who remained in office also during the subsequent Queuille cabinet of 1951. Mitterrand, who later judged this period 'the major experience of my political life', used his powers to lay the foundations of a more viable relation between and its overseas possessions. Boldly replacing the French Communist Party as the privileged interlocutor of African nationalist like Sekou Toure, Modibo Keita and Houphouet Boigny, and tacked by the French Right for supposedly delivering Africa Communists, Mitterrand in fact conducted a moderate policy sought to reconcile an enlightened imperialism, styled after the Americana, with vested French economic interests in the colonies. The experiment was cut short when the Queuille’s government as brought down in the late summer of 1951 and reactionary imperialism increasingly became the dominant tendency. 107

Having been unable to penetrate the French colonial empire in the Marshall offensive, the Americans now set about depleting the power of the French by first exhorting them to fight to the finish the Communist insurgents, and then outflanking both by imposing a puppet of their own, Ngo Dinh Diem. In 1956, Giscard against the American go-it-alone strategy, expressing concern over the 'rising tide of misunderstanding and ideological hatred (which swept) through the underdeveloped nations while the Atlantic world remains hesitant, apprehensive, or divided'. 108

Finally, in regards to Belgium, its giant Congo colony was not in from either nationalism or American attempts at imperialist redistribution. Congolese nationalism was a phenomenon of a later decade, and during World War Two the United States had secured an agreement guaranteeing the supply of uranium and other rare earths of military value from the Congo. The Belgian colonial interests had nothing to fear from the State Department, and Lazard Frèrès participated in the Union Miniére, the Belgian mineral monopoly.

Liberalism within Christian democracy

In Germany, the Marshall offensive fostered liberalism in a different way. For the German bourgeoisie, the restructuration of capital resulted from the 'decolonization' of its Eastern European dependencies and the amputation of its own Eastern territories. The Marshall offensive both confirmed and compensated the expropriation of German capital in the East, which made for its strong ideological effect. The example allows US to analyse the role of 'liberals' in the dominant Christian Democratic parties in those countries.

After the D-Day landings, meetings of German capitalists began to make preparations for the postwar situation. 110 The key personality emerging from these preparatory groupings of German business was Ludwig Erhard. During the war, Erhard had been given the opportunity to set up his own Institute for Industrial Research and from an early date he had worked out proposals to skim off excess purchasing power by monetary reform. III Erhard's prestige in Germany was a function of American influence, and the Marshall offensive catapulted him into prominence. His orthodox liberalism, turned into a theoretical doctrine in the best of German traditions but also particularly functional for a society seeking ways to divest itself of the comprehensive economic order of Fascism and state monopolism generally, was widely acclaimed abroad. Carl Friedrich, the political scientist who was a member of McCloy's staff in Germany and who was the naturalized brother of the rubber manufacturer, Otto Friedrich, did much to popularize Erhard's 'neo-liberalism' in the USA. Fortune almost ran out of hyperboles describing his liberal virtues. 112 Significantly, however, Mendes- France in a comment on one of Erhard's publications, argued that German recovery did not result from the classical liberalism Erhard espoused, but on the contrary rested on a synthesis with state intervention. 113 What was a useful pretence in Germany, in other words, should not be taken too literally in a country where Monnet and the Plan modernizers were having a hard time pressing a degree of state intervention on a colonialist, Malthusian and rentier-spirited capitalist class.

As Badstbbner and Thomas observe, 1947 saw a change of priorities in the German bourgeoisie. Until then, the crucial issues in economic policy in West Germany had been those concerning the ownership of the means of production. As working-class pressure for structural reform relaxed due to the changed international con- figuration and the acceleration of the American Atlantic offensive, his concern, which still had been prominent in the recently formulated Ahlen programme of the CDU, receded into the background. The former emphasis on socialization as a means for preventing economic concentration now shifted to free competition as the favoured method of achieving deconcentration. 114

At the 1947 party conference of the Christian Democrats, the Ahlen programme was still at the centre of attention. A year later, at the second party conference, it was Ludwig Erhard who gave the main speech (on the merits of the market economy). This is all the more striking when one realizes that Erhard, by the time he became director for Economic Affairs of the Economic Council of the combined Western zones of Germany in 1948, was not even a member of the party (which he formally became only in 1949!).115 Braunthal, too, mentions the liberal turn of 1948, mentioning (in addition to Erhard) Etzel, Bohm, and Muller-Armack as the main CDU advisers in this respect. 116 It should be remembered that explicit liberalism in the CDU was primarily supported by the minority protestant membership. Its counterweight was the Catholic majority in the CDU and notably, its partner, the Christian Socialist in Bavaria, which sponsored corporatism and the notion of a Christian Europe united against Bolshevism. 117

The major policy decision marking the liberal turn was the monetary reform. A segment of the German rentier class, remembering the course of events following World War One, had seen to it that their holdings were titles to industrial property rather than money. The Frankfurt Stock Exchange even had been reopened in late 1945, quoting securities of ninety-five firms, practically all of which were bankrupt at the time. 118 This apparently odd state of affairs was to become highly profitable to those who had placed their trust in industrial over primitive accumulation, for with the currency reform, the small savers were wiped out.

A first German initiative for monetary reform was considered too respectful to these small savers by the Allied authorities, and a new measure, based on a 10/1 exchange rate of old for new currency, was dictated instead. Erhard, who had studied the matter for years, hypocritically spoke on behalf of the indignant small savers, but in reality he was in favour of the shock treatment in this matter. 119 The DM-balance law of 1949 more particularly allowed industrial entrepreneurs to depreciate old and war-damaged plant and equipment anew at a book value to be established by the owners. The net result of these drastic measures was to 'reclaim Western Germany to free and capitalist ways of business', as Fortune commented. 120

By 1947, liberal capitalists and ideologues in the German bourgeoisie accepted Atlantic integration as the new state of affairs even if this implied the definitive loss of Eastern Germany for capitalism. Ernst Matthiessen, formerly stock-exchange director of the Oresdner Bank, spoke for the bankers' and stockbrokers' community when he declared in November 1947 that Marshall Aid compensated for the loss of Eastern Germany. Gustav Stolper, the influential liberal who had accompanied Herbert Hoover on his German tour, echoed this idea when hailing the emergence of an Atlantic Community in his 1948 book Gentian Realities. Criticizing the lack of courage which had made the Americans accept Russian theses on the, Capitalist nature of Fascism and picturing German capital as a n}ass of small shareholders who could not possibly have influenced the course of events, Stolper argued that from now on, Westen Europe would import its foodstuffs from overseas markets rather than from Eastern Europe. 121

Actual private American investment did not materialize in the Marshall Plan period. Yet, the changes in economic policy made at this juncture were important to facilitate investments made later, as was explicitly recognized by Erhard and other liberals. 122 At the private level, the American Chamber of Commerce in Germany was revived in 1949; the German-American Capital Commission, meant to attract US capital, operated from 1951 to 1953. In these bodies, firms traditionally active in the Atlantic economy were represented. Link enumerates those present at a meeting of the Capital Commission in 1952,: on the German side, AEG, Robert Bosch, the Rheinisch- Westfalische Bank ( Deutsche Bank) as well as representatives from the chemical industry (Menne); on the American side, General Electric, National City Bank, Standard Oil, NJ, and Armco, Thyssen's partner in continuous rolling. 123

With big capital again discussing matters of mutual interest, those German capitalists who after the war had been imprisoned by the Allies because of their support of Hitler's terror regime were duly exonerated. In January 1951, Krupp was released on McCloy's orders and the confiscation of his property, judged 'repugnant to American concepts of justice', was recinded.124 German emigrants played their part in cementing the new friendship bonds: Carl Friedrich's role was referred to already, and Grewe mentions Professor Heinrich Kronstein of Georgetown University, a Jew who had fled Germany in the 1930s but who now propagated the 'new' Germany in the United States. In April 1953, Kronstein, who according to Grewe 'turned Georgetown into a bridgehead for connections with Germany' saw to it that the visiting Adenauer was given a honorary degree by this university. Sympathetic interest in West Germany was also supported by the American Council on Germany, a prominent member of which was Eric Warburg, who eventually became head of Brinckmann, Wirtz & Co., the Warburg family bank. 125

The prominence of Atlantic liberals in the Marshall period, whether of laissez-faire or of corporate-liberal inspiration, did not go uncontested. The very fact that the underlying capitalist class structure remained essentially unaltered and even proved capable of resisting the transformation towards an Atlantic framework to a considerable extent, worked to sustain German animosity against the Anglo-Saxon creditor states along lines reminiscent of the reaction against Versailles. A major incident of this kind occurred in January 1948 when G.J. Semler, the Economic Director of the Bizone at the time, sharply criticized Allied policy. When Semler was promptly dismissed, Adenauer protested, declaring that the intended restoration of German economic sovereignty was being mocked by the measure and warning the Allies that they ran the risk of making Semler the most popular man in Germany. 126

The Americans were aware of the delicate balance of class forces in West Germany. The halt called to the initial democratic radicalism of the American military government, which sought to completely eradicate National Socialism from a naive, 'Progressivist' vantage- point, was not motivated solely by concern over immediate economic interests involved in, say, German heavy industry, but reflected a more fundamental concern over the ability of the present ruling stratum in Germany to hold the line. It was Dulles's conviction that the full restoration of German sovereignty was necessary to allow Adenauer to stay in power. Only in this way could the attraction of Polish border concessions made by the USSR and the promise of German reunification be resisted. 127 The resentment on the part of German leaders, even those who were favourable to American influence, on being treated as 'a totally beaten adversary' is brought out by Grewe, the chief negotiator on the issue of restoring sovereignty, in his memoirs and reproduced the fundamental hesitations of the Goerdeler group with respect to the unconditional surrender issue. 128 American policy therefore had to steer a middle course between bolstering the hegemony of the German bourgeoisie and inserting it in a wider Atlantic framework. In 1949, this was brought out by the Peters berg Agreement, which bound West Germany to the process of integration in Western Europe by making her accept the International Ruhr Authority in exchange for quasi- sovereign membership of the OEEC. 119

In Italy, the liberal current in the Christian Democratic party was a product of the incorporation of the pre-Fascist Liberal Party membership disaffected by their leadership's support for Mussolini. Still, it remained until the Marshall offensive before the liberal tendency in the DC could rise to prominence. At the DC Congress in November 1947, the centrist coalition with the PSDI, PRI and PLI was adopted, paving the way for the De Gasperi/Einaudi government. 130

In the other countries, liberals in non-Liberal parties likewise reinforced their position. In the Netherlands, their new prominence was reflected in the appointment of the Catholic, J.R.M. van den Brink, linked to AKU and the Amsterdamse Bank, to the post of Economic Affairs in the same cabinet in which Stikker became Foreign Secretary for the Liberal party. In Belgium, Paul van Zeeland was the seminal figure in this respect.

At this point the question may arise whether the liberals sub- scribing to the Atlantic Union or Euratlantic concept were a new 'comprador' bourgeoisie, comparable to the Schacht group in pre- war Germany? This latter group, it will be recalled, was labelled comprador because it (a) was entirely dependent on foreign interests compensating for its backward domestic power base, and (b) hence developed a reactionary political programme. In the Europe of the Marshall Plan, things were not so simple. The bourgeoisie in Europe welcoming the introduction of American production and work methods did so because of their promise in revolutionizing productivity and living standards. As an American historian observes, the United States 'more subtly rewarded a generation of centrist "Atlantic" European leaders. . . who found the American preferences rational and humane.' 131 If they appreciated US assistance in combating the socialist challenge, they did so principally from a 'flexible', enlightened perspective, and it was the American offensive which in turn allowed them to do so.

On the other hand, there were the colonial capitalists, who did represent backward relations of production. In the face, however, of American pressures for restructuring the peripheral dependency relationship towards a neo-colonialist pattern, the ranks of colonial capital were split. One segment, composing the elements least capable of adapting to the formal independence of the colonies, gravitated to a defensive, indeed reactionary position; the other, more flexible segment, composed of the major mineral, commercial and industrial capitals operating in the colonies, took a more positive, view. In the greatly changed world situation, the new Pax Americana offered a much more viable protective shield for their activities broad than the crumbling colonial empires, and even provided fresh opportunities for expansion and geographic restructuration.

The Kennedy offensive and the new liberalism

1. Centrifugal tendencies in the 1950s

As the 1944-47 period saw the shift from universalism to Cold War, so the 1950s saw the reemergence of sphere-of-interest politics and rivalry in the context of Atlantic integration. 1950 indeed was a turning point in several respects. Interacting with a slackening of real economic expansion, trade policy lost its liberal impetus, as the

Democrats proposed peril-point clauses in trade legislation. Meanwhile, as productive capital started losing ground in the profit- distribution process from 1950 on, and rentier incomes in due course improved relatively to corporate income, the offensive international posture the United States had hitherto adopted lost part of its domestic raison d’être.

The decreasing pressures for internationalization of American capital were reciprocated by mounting obstacles to US penetration in Europe.2 Following the restoration of their hegemony through American intervention, the European bourgeoisie tended to adopt postures reflecting their prewar orientations. Although important preconditions for a fundamental restructuration of European class relations towards the corporate-liberal pattern had been created by the Marshall offensive, the narrowness of markets and the obstacles posed by exchange controls and non-convertibility constrained the export of US capital to Europe.3 The overall political climate was captured by the influential National Security Memorandum 68 when it stated that 'there are indications of a let-down of United States efforts under the pressures of the domestic budgetary situation, disillusion resulting from excessively optimistic expectations about the duration and result of our assistance programs, and doubts about the wisdom of continuing to strengthen the free nations as against preparedness measures in light of the intensity of the cold war.'4

Against this background, General Eisenhower was elected President of the United States in 1952. With the new Republican government, the shadow of Herbert Hoover again seemed cast upon the stage, waving his deflationary programme in one hand and the policy of accommodating German nationalism in the other. Domestically, bank and oil capital were reinforced as part of a general shift wards rentier forms of accumulation. George Humphrey, the chief strategist of the Cleveland Hanna group, was put in charge of the Treasury, and the abandoning of economic controls was one of the Eisenhower cabinet's first measures. Government enterprises were sold or closed down, almost up to the sale of the Tennessee valley Authority, which Eisenhower personally favoured but ruled , It as 'going too far'.5 Rentiers profited from lowered tax rates or provisions. According to an OECD study, between 1954 and 1962 no changes in the direct tax rates were made, but as Kolko writes, 'since e 1952 tax law, a rapidly growing number of special provisions have been created that apply to relatively small groups among the wealthy but add up to a cumulative trend towards legal tax 'avoidance'.6 An important provision here was the 4% dividend edit, a tax deduction introduced by the administration in 1954 to combat taxation 'injustices'.7 As part of the same movement, bank capital was structurally favoured by the 1956 Bank Holding company Act, an important step in demolishing New Deal bank legislation. The 1956 Act allowed holding companies owning one bank to own other companies as long as these were active in the financial or fiduciary sphere. In principle, the measure returned to the banks the right to operate as holdings, although it would take until the late 1960s before the functional division into money-dealing in fictitious capital was completely undone. 8

US oil companies in this period were particularly pampered. The so-called depletion allowance, a 30% tax deduction, was originally introduced to stimulate oil prospecting by small companies during World War One, and later generalized for all types of land ownership by Treasury Secretary Mellon. Its wide range of application notwithstanding, 80% of this ground rent levied on the taxpayer accrues to oil and gas companies, who are the owners of one-quarter of all privately owned land in the United States.9 Within three months of taking office, the Eisenhower administration dropped the federal claim to the US three-mile off-shore zone, leaving it to the Coastal states, which effectively meant company control. Two months later, the zone beyond the three-mile limit was placed under Federal jurisdiction, but at the same time, it was parcelled out to Private bidders for exploration. 10

Foreign policy meanwhile, became the domain of John Foster Dulles, whose Germanophiliac outlook retained the mark of his interwar experiences and interests. Discussing Soviet peace proposals in closed sessions with the Senate Foreign Relations Committee soon after taking office, Dulles argued the need for restraint. 'We need to have policies which we can live with for some time', he declared, 'rather than policies which would so exhaust US that there would be an internal collapse, . . . what Stalin talked about in "Our Strategy and Tactic ". (Stalin) said the moment for the decisive blow will come when the imperialist powers are so divided among themselves and have so exhausted themselves in a struggle beyond their power that they have fallen into virtual bankruptcy. Now, that is one of the dangers that we have got to look out for.' 11

The recognition of their basically defensive position in the light of slackening US industrial performance did not turn the ruling group into moderates. On the contrary, Dulles in particular often displayed a bellicose aggressiveness. To many the Secretary of State was the very embodiment of Amencan Cold War foreign policy at its worst. But as with Truman in 1945-46, the aggressive rhetoric and, occasionally, behaviour, only apparently contradicted the fundamentally conservative and non-universalist tendencies of the administration. This generally defensive posture, in turn, reflected the tendential regression reminiscent of the interwar years, in which an Atlantic circuit of money capital connected autarkic industrial blocs in a gradually hardening spheres-of-interest context. In the 1950s, threats had to make up for the absence of any positive plan for the world. 'Strategically, it was a defensive age', Calleo observes, 'even if the tactics were often aggressive'. 12

With respect to the periphery, the anti-communism and anti-colonialism which in the Marshall Plan had been depicted as a transcendent Free World strategy, now degenerated into rivalry as short-term considerations became the sole point of reference. At least until 1956, European colonial powers actively sought to reinforce and recapture imperial positions, encouraged by the defensive posture of the United States. In some cases, as in the Suez affair, the susceptibilities of Middle Eastern and African countries were taken into account by US policy-makers for tactical reasons. Broadly speaking, however, there was no comprehensive effort on the part of the United States to actively create viable social relations in the underdeveloped world which would secure its dependence on metropolitan capitalism in a post-colonial era.

Dulles preferred 'exerting our influence quietly' in matters concerning colonialism, rather than upsetting the status quo by grand announcements in the universalist tradition. 13 In Asia, support for dictators was justified by the immediacy of the Communist threat, which in his opinion precluded any attempt to include moderate elements in the local power structure. 'They are not the people, under normal circumstances, that we would want to support', Dulles confided in 1953, speaking of Syngman Rhee, Chiang Kai- Shek, and their fellow autocrats. 'We would be trying to get somebody else, but in times like these, in the unrest of the world today, and the divided spirit, we know that we cannot make a transition without losing control of the whole situation. Now, that is my philosophy.' 14 This philosophy also entailed a certain accommodation of European colonialism; but as the colonial powers became more and more entangled in their attempt to suppress the struggle for national independence, it became increasingly clear that imperialism might lose control of the whole situation. It would wait until the advent of the Kennedy regime before a further attempt was made to construct a viable neo-colonial order.

With respect to Germany, the relative contraction of American involvement allowed the forces working for the restoration of full sovereignty, including rearmament, to reassert their prominence. A strong Western Europe fitted into the general trend towards fiscal economy in American policy as well. The French proposal for a European Defence Community in late 1950 was the first result of American pressure to rearm the Western half of Germany. 'Out of (its) ratification', Dulles told US Senators, 'will come a substantial German force which will be the greatest shield that we could get, and. . . with that in creation we can gradually cut down our aid.'15 Hence his much publicized threat of an 'agonizing reappraisal' of American military commitments to Europe if EDC failed to be ratified, and the temporary suspension of military aid to France and Italy on account of their hesitations. As it proved impossible to press the EDC on the French, however, West German rearmament eventually was accomplished by including Italy and the Federal Republic in the group of the Brussels Treaty, renamed Western European Union, and, seven months afterward, by making Western Germany a member of NATa (May 1955).16 French concern over the renewed ascendancy of Germany, which it had initially tried to contain by launching the Pleven Plan for an EDC, was alleviated by formal WEU control of the level of German armaments.

In the sphere-of-interest configuration resulting from the loss of impetus in American policy, supranational Western European integration could make strides. The contradictory impulses towards, on the one hand, the adoption of the Fordist accumulation model implicit in the Marshall Plan, and, on the other, the tendency towards US disengagement, led to a growing discrepancy between American liberal preferences for European integration and the actual contents of the process. Between the Schuman Plan and the establishment of EEC and Euratom in 1957-58, the abortive EDC project testified to the temporary interruption of the transformation of the European class structure towards a corporate-liberal pattern and to the resurgence of the unreconstructed liberal-internationalist bourgeoisie, revealed most dramatically by the Suez affair. The EDC still represented a compromise between American Cold War entrenchment and 'classical' Franco-British imperialism (which eventually accounted for its failure); the EEC, however, represented a compromise between French and West German strategies for adjusting to the requirements of mass production and to the reorientation towards an Atlantic circuit of finance capital, albeit still from a sphere-of-interest vantage-point which eventually would propel the internationalist bourgeoisie into action.

In the early 1950s, there was another cause of anxiety for the Atlanticist bourgeoisie, and that was the thaw in the Cold War. Neutralist statements by elder statesmen and related incidents in West Germany, if often merely staged in order to activate the forces in the West working for German rearmament and sovereignty, 17 yet added to the growing impression in the United States that 'an alarming reduction in the degree of realism in the thinking about Russia'18 was in full progress in Europe. This was not limited to Germany either. In sharp contrast to the previous situation with its inspiring array of 'governments to the Americans' liking', it was noted in late 1953 that due to the conciliatory moves of Stalin's successors, 'in every Western government there were officials who acted or prepared to act as though the Soviet menace were actually on the wane'. 19

Atlantic unity under stress

In 1952, Joseph Retinger, who had brought together liberal capitalists in wartime London and had assisted in forming ELEC, contacted Paul Rijkens, President of Unilever, to discuss ways of reversing the trend to open rivalry between America and Western Europe. Rijkens took Retinger to Prince Bernhard of the Netherlands, whom they knew from their war days in London. With Paul van Zeelan than prime minister and first chairman of ELEC a plan was drawn to assemble one leading bourgeois politician and one Social Democrat from each Western European country in order to have a catalogue their criticisms of American policy in the presence of selected representatives from the other side of the Atlantic. When the proposal was sent to the United States, the 1952 election campaign in full swing, and nothing came of the plan for the moment. Yet it testifies to the importance attached to the project by its initiators that they did not want it to become a partisan issue; Eisenhower's hestion to use the idea in his campaign was firmly rejected by the Dutch Prince. 20

It took two more years before the Americans accepted the invitation to confer near Arnhem at the Bilderberg Hotel (after which the subsequent conferences would be named). The hesitant American reaction and the fact that ultimately a collaborator of Eisenhower future senator, C.D. Jackson, and W. Bedell Smith, head of the CIA, were the men who secured American participation, testify to lack of enthusiasm for Europe among the American ruling class at the time. Rather than discussing Atlantic arrangements in a positive way, the US mood was sceptical of the efforts being made in Europe to confront Communism. The American bourgeoisie in majority seemed to support the McCarthy campaign - which in raised anxieties amongst the European elite. Actually, it was 'Eisenhower's awareness of European reactions to McCarthyism wich prompted his support for the eventual Bilderberg Conference.21

The Conference was held in May 1954. It was paid for by Unilever and the CIA. Its agenda catalogued the leading topics of Atlantic discord: (a) Communism and the Soviet Union; (b) Dependent regions and overseas peoples; (c) Economic policy and economic problems; (d) European integration and the European Defence Community. According to Rijkens, a very frank discussion bordering on an open row took place. Rather than constituting an all powerful secret Atlantic directorate, Bilderberg served, at best, as environment for developing ideas in that direction, and secrecy is necessary for allowing the articulation of differences rather than keeping clear-cut projects from public knowledge. In this sense, Bilderberg functioned as the testing ground for new initiatives for antic unity.22 The presence of the Social Democrats was functional in order to orient these initiatives to the modernizing elements in the Western European class structure and insert them in a Fordist compromise from the start. 184

A few months following the first Bilderberg Conference, the rejection of EDC by France greatly widened the gulf between the NATO partners. In an attempt to reverse the tide, a Declaration of Atlantic Unity was made public on 4 October 1954. It was a symbolic and propagandistic action meant to counter a further deterioration of Atlantic relations rather than offering a practical way out of the impasse. On the American side, the signatories of the Declaration included Will Clayton, Christian Herter, Lewis Douglas, Thomas Finletter, Averill Harriman, John McCloy, Owen Young, Henry Ford II, and other magnates of Wall Street and industry. Several of these men had occupied leading posts in Democratic administrations, and the signature of Harry Truman further enhanced the Democratic coloration. Eisenhower himself was in favour of the Bilderberg initiative, but the dominant sphere-of- interest orientation in his cabinet prejudiced official support for Atlantic unity. Alone in the administration, Nelson Rockefeller favoured a more closely integrated Atlantic Union, but the concept was considered premature by Secretary Dulles, and Rockefeller's approach to Atlantic unity retained marked federalist and sphere-of- interest aspects.23

The Declaration of Atlantic Unity clearly could not reverse the centrifugal trends of the period, which after 1954 developed along two interrelated axes: NATO nuclear strategy and the approach to the imperialist periphery. As far as the military aspect was concerned, the reduction of federal expenditure by the Eisenhower administra- tion, interacting with the slack industrial performance and the general contraction of US international activism, led to an emphasis on nuclear retaliation in American strategy. A conflict over the massive retaliation doctrine in the Joint Chiefs of Staff was decided in favour of Admiral Radford in 1954, and Generals Maxwell Taylor, Ridgeway and Gavin, who advocated a more flexible strategy and a greater Army role, had to vacate their posts. In July 1956, Radford carried his approach into the realm of Atlantic relations by proposing a US troop reduction in Europe which then could be compensated for by 'a demonstrable superiority in retaliatory means'.24

The major European powers reacted to the Radford doctrine by stepping up their nuclear programmes, both to meet US competition and to underwrite their imperialist position militarily. In May 1957, Defence Minister Strauss secured parliamentary support for a policy of nuclear armament by the Federal Republic. In the same month, Britain exploded its first hydrogen bomb in the Pacific. France had been working on a nuclear capacity since World War Two, and according to subsequent American newspaper disclosures had already agreed with Germany to store German nuclear warheads on French soil.2s

De Gaulle's coup d'etat in June 1958 entailed a prompt cancellation of nuclear cooperation. After offering the Germans cooperation in the conventional field only, de Gaulle sent a memorandum to Eisenhower and Macmillan, challenging the American nuclear monopoly in NATO on the grounds that it was no longer effective. Referring explicitly to the situation in South-East Asia, de Gaulle judged the existing structure of NATO inadequate to the effective defence of the West, and in particular, to French interests. Hence he proposed to create a triumvirate within NATO consisting of the United States, Britain and France, to deal with nuclear matters. Finletter interprets de Gaulle's memorandum as 'a last desperate effort to persuade the United States to work with its allies in dealing with the problems of Southeast Asia'. To Spaak, the French President declared in 1959 that a supplementary agreement concerning Africa should be attached to the North Atlantic Treaty. 26

Rivalry in the periphery was indeed recognized as a major cause for the discord between the North Atlantic allies. 'One fact which had not been sufficiently appreciated in 1949', Spaak recalled later, 'became crystal clear in 1956: it is very difficult for Powers to act as allies in one part of the world while they are locked in violent conflict in another. '27 In the report of the Three Wise Men (Pearson, Lange and Martino: the Foreign Secretaries of Canada, Norway and Italy), submitted to the North Atlantic Council in December of that eventful year, imperialist rivalries were considered a more acute danger than socialism. 'NATO has not been destroyed, or even weakened, by the threats or attacks of its enemies', the Report stated. 'It has faltered at times through the lethargy or complacency of its members: through dissension or division between them; by putting narrow, national considerations above the collective interest. '28

As the decade moved to a close, planning for Atlantic unity clearly focussed on the two chief areas of discord. Among offensive-minded US politicians, it was increasingly recognized that the challenge of socialism was shifting from Europe to the underdeveloped periphery. 'I do feel', Chester Bowles told Senators upon his return from a UN tour in 1957, 'that the battle of the next ten years is going to be economic, basically, and political and it is going to take place in Asia and Africa. '29 In a Foreign Affairs article, John F. Kennedy articulated this impression by advocating a return to universalism, based on a flexible approach to the Soviet Union and on Atlantic cooperation in fostering economic development in the periphery. Instead of the rigid two-camp attitude, the United States should be ready to 'accept partial gains in order to undercut slowly the foundations of the Soviet order'. The demands of the national bourgeoisie in the under- developed world should be met half-way in order to stabilize an increasingly vulnerable world economy. The United States, Kennedy estimated, should 'strike a realistic balance between the legitimate appeals to national self-determination which pulsate through the uncommitted world and the gravitational pulls towards unity which grow from the technological and economic interdependence of modem states.' 30

It was former Secretary of State Acheson who in a book published in 1958 emphatically warned against American unilateralism in meeting the revolutionary challenges in the Third World. American leadership in rallying the underdeveloped world against Communism was necessary, but not enough. 'A principle which is as fundamental as it is disregarded, is that in the organization and maintenance of power, relations with states which are closest geographically and in interest and purpose are the most important', Acheson wrote. 'Primacy must be given to maintaining confidence and trust in these relations. In our case, these states are those of the Western Hemisphere and Europe. Here lies the Central Power which will support - if it is to be supported at all - a non- Communist world system. To say this is not to minimize the importance of Asia and Africa; but if the center is not solid, relations with the periphery will not supply strength.'31 The attraction exerted from a unified Atlantic bloc meanwhile would not be limited to the underdeveloped periphery: In Eastern Europe, too, its effects would be felt. But Atlantic unity was necessary to give sufficient weight to the Western position in this respect. 'Without American association with Western Europe, independent national life in Eastern Europe cannot revive'. 32

Primarily because of the nuclear controversy, an Atlantic Congress was convened in London in 1959, attended by key advocates of a more flexible nuclear strategy like Henry Kissinger. Actual discussions however centred on economic rather than military matters, thus bringing out the spread of an awareness that the challenge of Communism had come to reside particularly in the area of rival development models for the newly independent nations in the periphery. Summarizing the contents of the Atlantic Congress Report adopted at the Conference, .Szent-Miklosy says that a central element was the recognition that economic welfare had to be exported beyond the Atlantic area. The Report recommended economic expansion and further trade liberalization, which would require a combined development of European economic integration and Atlantic integration. 'The attainment of internal strength, as well as the development of the newly emerging nations, must be viewed with a sense of urgency because of the Communist countries and their shift in emphasis to the economic front in the Cold War'.33

The Suez affair, however, had destroyed the essentially Anglo-American basis for the hitherto prominent Atlantic Union concept. The ultra-imperialist assumptions underlying that concept created opportunities for the Soviet Union to challenge classical European and the new American imperialism and endangered the allegiance of if the newly Independent states in the periphery. The eventual second Declaration of Atlantic Unity which resulted from the Congress accordingly left the Atlantic Union and Euratlantic concepts behind, adopting, instead, a posture which left more room for European independence in the overall framework defined by Atlantic unity. Within the Atlantic unity movement, the pragmatic line ready to subscribe to the emerging Euramerican/Atlantic Partnership concept thus triumphed over Streit's group, which had developed a dogmatism which was no longer relevant. In 1961, the moderates merged into the Atlantic Council of the United States. 34

Of the concrete recommendations made at the London Congress, very few materialized in their originally proposed form, but several became policy by a detour. The proposal to restructure the OEEC into a new Organization of Atlantic Economic Cooperation (OAEC) was rejected by the neutral capitalist countries, (like Sweden, Switzerland), who feared an implicit association with NATO. The OECI) eventually became the compromise between these conflicting ambi- tions, retaining, however, the concern for coordinating metropolitan economic policy towards the periphery. Another idea originating from the London Congress was the proposal made in late 1961 by Herter, Clayton and Ball to liberalize trade and to coordinate development aid policies on the basis of an Atlantic Partnership (the 'Giant Step' programme), which, as Kennedy declared at a press conference in January 1962, had served as the basis for his Atlantic Partnership proposal. 35

Due to the formation of the EEC and the prominence of fractions of the European bourgeoisie oriented to the continent, concern for Atlantic unity gravitated from Europe to America again. While at the time of the first Bilderberg Conference, the European initiators still had had to press the United States to participate, now the Americans in the context of a new universalist offensive were recruiting the European bourgeoisie and activating the elements favourable to Atlantic unity.

State monopolism revived

In Europe, the establishment of the EEC led to the emergence of a corporatist pattern of class relations comparable to the situation immediately after the war. Then, the inclusion of Communists in governments of national unity and the prominent role of Christian Democrats and conservative nationalists had been functional in keeping the social fabric of capitalist society intact. The Marshall offensive had liberated the European capitalist class from this constraint, but in its aftermath, particularist and retrograde concepts of control reasserted themselves.

In Germany, Erhard's anti-cartel law was shipwrecked in Federal parliament in 1953 which simultaneously enacted a tax reform aimed at stimulating dividend payments. 36 In France, too, the subsiding of the American offensive saw the resurgence of protectionism and cartel practices, mocking Pinay's anti-cartel legislation of 1952.37 In Britain, the backlash against the modernization policy implicit in the Labour nationalizations took shape as a virulent campaign against the latter. Prominent in this campaign were the Iron and Steel Federation and Aims of Industry Ltd., a lobby dominated by family capitalists and headed at the time by Lord Perry of Ford, Lyle of Tate & Lyle, and J.A. Rank of the firm of the same name.38 In the Netherlands and Italy, real accumulation within certain limits was favoured by state economic policy; but in Belgium, where conservatism was strongest, rentier interests had absolute priority. 39

The failure of the EDC plan, the Suez crisis, as well as Soviet successes in space and in the Third World, contributed to a reorientation in Western Europe towards a resumption of the social and economic transformation initiated by the Marshall Plan. As Spaak explained, Nasser's decision to nationalize the Suez Canal Company had brought out the 'definite lack of esteem for the great European nations'4O and the EEC was established to shore up the power of Western Europe again. Between 1957 and the early 1960s, when the Kennedy offensive sought to reestablish Atlantic unity, the European states passed through a phase of accelerated restructuration in the direction of a Fordist mass-market mode of accumulation; due to the absence of active American involvement, however, the liberalism this entailed was restricted by the sphere-of-interest configuration prevailing in the North Atlantic area. As an autonomous European initiative, the formation of the EEC put American hegemony to the test. This time, moreover, the epicentre of the restructuration of class relations lay well within the capitalist class; the Communists no longer were part of the intricate web of com- promises necessary to make the transition.

The need to keep the working class under control while allowing the necessary 'euthanasia' of subordinate class fractions associated with pre-war patterns of capital accumulation and colonial enterprise again led to an essentially temporary nationalism and corporatism, meant to shore up the legitimacy of the various governments and cement transitional inter-bourgeois class alliances needed to combat both the working class and the reactionary imperialists. In all of Western Europe, the unity of the bourgeoisie necessary for raising the rate of exploitation and accumulation of capital in order to allow its insertion into the emerging Atlantic circuit of finance capital was most easily achieved by appealing to nationalism. As Simon Clarke has written, "Nationalist" policies with regard to particular capitals tend to improve the terms on which "national" capitals are integrated into the world circuit of capital rather than to resist that integration'. 41

The most dramatic example of such a process of transitional nationalism was Gaullism, which George Catlin, the British advocate of Atlantic Unity, still feared in 1969 might engender 'a great chauvinist counter-revolution against the entire internationalist endeavour built up since 1914'. The centralization of the government structure in France, accompanied by a devaluation of the role of Parliament and a gerrymandering operation inflating the countryside vote, made the formation of a unitary ruling-class party possible. The Gaullist UNR profited most from the new two-ballot system by offering the catch-all government ticket in the countryside. The liberal parties, Radicals and UDSR, went down in the process, and the Left was seriously reduced. In the Radical Party, the breakthrough of Mendes-France and the group of Servan-Schreiber, who triumphed over Mayer (expelled from the party in 1955) and also outmanoeuvred Edgar Faure, who was linked to the Boussac textile interests, reflected the rise of a corporate-liberal concept. But the Radicals lacked the dramatic outsider position of de Gaulle, and Mendes-France hardly made a Bonapartist candidate. Only the Christian Democrat MRP was able to survive the first, corporatist phase of the de Gaulle regime lasting until 1962. Within the Gaullist party, a liberal tendency headed by Chaban-Delmas (who incidentally had been a Radical deputy from 1946 to 1951) function to capture part of the liberal vote for the UNR and its successors.

For the French bourgeoisie, the reinforcement of executive versus parliamentary power was rational because it allowed French capital to obtain direct access to the government in its effort to secure an independent basis for capital accumulation in metropolitan France compensating for the loss of its empire. The state-monpoly tendency in the bourgeoisie was prominent in advocating this shift of power. Leon Noel, director of Rhone-Poulenc and Esso Standard, in his booklet Our Last Chance of 1956 had argued against the impediments which the existing parliamentary system in France posed in the way of an active economic policy beneficial to capital accumulation. Under de Gaulle, Noel became president of the stitutional Council. 43

Claude traces Gaullism straight back to the state monopolism of the 1930s represented by Mercier and Tardieu. As a concept of control in the circumstances of 1958, it combined authoritarian and nationalism with the need to restructure French capital and the class structure in which it operated to the requirements of the new Fordist accumulation pattern. The most prominent supporter of the Gaullist concept of control in the French bourgeoisie capital were Rothschild - through Roger Frey (RPF treasurer and from 1959 on, minister in various departments) and Georges Pompidou—and Paribas - through Emmanuel Monick (its president from 1959 to 1962, who in 1945 already had co-authored a book with Debré recommending the installation in France of a 'Replican Monarch').44 Gaullism was also supported by the steel industry and the Indochine group, but from a different point of view the Indochine bankers, supported American hegemony first of all, yet rallied to de Gaulle because his government created the conditions for raising the rate of exploitation in France. Their orientation towards the Atlantic economy gave them a new interest in the competitivity of the French economy, but it took until the Kennedy Offensive before their political leader, Valery Giscard d'Estaing, would be appointed to the key Ministry of Finance.

The alliance of all fractions of the bourgeoisie except the die-hard colonialists was essential. Although the basic concept of control underlying the Gaullist experiment was designed around the needs of big capital, accommodation was also made to the situation of small capital. One example was Pinay, the representative of small capital, who led the Gaullist government until 1960. In 1959, a tax reform meant to reduce 'the excessive burden on incomes other than wages and salaries', a tax credit on dividends and a rise in the corporate profit tax combined to prop up the position of farmers and small capital in the profit-distribution process. Their income share improved in 1960, for the first time in a decade, and again in 1962, and so did rentier incomes.45 These examples testify to how the need for intra-bourgeois compromise paid dividends to a declining class at the price of helping to create the conditions of its further demise in a subsequent stage. In the other countries, the initial EEC period likewise witnessed the political resurgence of small capital. Small capital represented a powerful political factor within Christian Democracy, and it was largely within the Christian parties (in the Netherlands, three separate parties at the time) that the class compromise between small and big capital, complemented by a corporatist approach to labour, actually took shape. The protectionist and otherwise regionalist aspects of the EEC in its early stages, on the other hand, tended to alienate the liberals and Liberal parties.

In West Germany, the arch-liberal Erhard had argued strongly against the supranational approach to European integration. 'The best form of European integration that I can imagine does not reston the creation of new offices and forms of administration or expanding bureaucracies,' he wrote later, 'but rests first of all on the re-establishment of a free international order, which is expressed best and completely by the free convertibility of currencies. Convertibility of currency self-evidently includes full freedom and the free flow of commodities, services, and capital'.46 The liberal Free Democrats voted against ratification of the EEC and Euratom treaties because of their protectionist character; in 1957, the party already had left the second Adenauer government. The changes in the German class structure in the meantime had led to a crisis in the FOP. As American influence receded, the militant free-world ideology degenerated into reactionary nationalism, in which the former Nazi general, Von Manteuffel, played a role of his own. In 1956 this led to a conflict over the role of former Nazis in the party, and the election of a new leadership behind E. Mende and Walter Scheel, both committed to the corporate-liberal synthesis and ready to align the party more closely to the positions of the 'reformed' SPO of Willy Brandt. 47

In Italy, the Liberal PLI and the modernizing liberal party PRI both were excluded from the government in the period 1958-62. In the Netherlands and Belgium, the Liberal parties did participate in the government during this period, but the conservative orientation represented by the Christian Democrats (in the Netherlands more particularly by the Catholic party KVP) was hegemonic. In both countries, the renewal of the alliance between Christian Democrats and Liberals following the ratification of the EEC and Euratom treaties was preceded by exclusively Christian Democratic governments (the Beel cabinet of 1958-59 in the Netherlands and the Eyskens II cabinet in the second half of 1958 in Belgium).

Britain remained outside the EEC, but not outside the process of restructuration towards a corporate-liberal synthesis. When Eden resigned in 1957, Butler was widely expected to takeover, but to strike a balance with the financial interests and the upper-class imperialists, Macmillan, heir to the publishing firm and married to a daughter of the highest aristocracy, prevailed, and with blessing of The Times and of Churchill himself. 48 Butler instead got the Home Office in the Macmillan cabinet, in which Sandys, Churchill's son-in-law and proponent of European Movement, became Secretary of Defence.

The transition Britain was about to undergo was made palatable to the British bourgeoisie by a careful policy of influencing the profit-distribution process to the benefit of strata that were at the same time cut down to size in structural terms. In 1957, the Parker Tribunal exposed the behind-the-scenes policy-making of the merchant bank to community of the City. It thus contributed to transferring the powers for conducting economic policy to the government, but Macmillan's cabinet compensated the groups involved by strongly favouring rentier incomes, which emerged as 'the most rapidly growing sector of personal income since 1957'.49 The Rent Act of 1957 brought windfall profits to landlords, and the City itself was accommodated by the raising of the bank rate in order to prop up the pound. Macmillan, who according to Bulmer-Thomas ‘found it useful to assume the pose of aristocratic grandeur to balance the essential liberalism of his views',so personally intervened whenever fractional interests threatened to block the smooth transistion towards a corporate-liberal class compromise on which he intended to base the reorientation of British capitalism. In March 1957, he forced the engineering federation EEF to give in to trade-union demands; and when the Chancellor of the Exchequer, Thorneycroft, wanted to intensify the deflationary policy embarked upon in 1957, he again intervened and replaced Thorneycroft by Heathcoata Amory, who changed economic policy to one of raising purchasing power.

At the level of the Atlantic economy, the establishment of the EEC was accompanied by a shift from commercial to financial American penetration. The European Payments Union of 1950 enlarged the purchasing power of the member states and thus favoured trade in the first place. American exports to Europe benefited from it, while jollar investments were seriously hampered. Internally, EPU was modified several times in order to reinforce the gold or dollar content of the periodical settlements among the participant states.51

In December 1958, the European Monetary Agreement, originally signed in 1955, finally came into effect. Its purpose was to maintain European monetary cooperation after the restoration of convertibility of the major currencies (achieved on 28 December). Yet numerous obstacles remained and in mid 1960 the IMF still had to declare that 'time was running out on (the) supposedly temporary post-war currency restrictions' and to urge further liberalization. 52 In September 1957, Britain had limited the use of sterling for financing foreign trade to sterling-area trade. This prompted London- based banks to use US dollars for financing those transactions for which the use of the pound no longer was allowed. This combination of convertibility and restrictions acted as a spur to the development of a foreign currency money and capital market in Europe, the 'Eurodollar' market, which eventually would develop into the pivot of the post-Atlantic world economy. 53

The major difference between the European Monetary Agreement and the European Payments Union in terms of liberalizing the flow of capital in an Atlantic context was that mutual credit through the clearing union was eliminated and that all settlements were to be made in US dollars. The EPU, after having encouraged American commercial expansion towards Europe when the European currencies still functioned as counterpart to the dollar, by the late 1950s had turned into an obstacle to the direct role of the dollar as an international means of payment, and to direct American investment. 54 The shift from commercial to financial penetration was confirmed by the formation of the EEC. The new Common Market dramatically changed American prospects for expansion in this respect. This was recognized by American capitalists, and one instance of how they reacted may be briefly cited as an illustration. At a conference of the American Management Association in February 1958, a number of prominent EEC officials and American businessmen were gathered to inform those present about their chances in dealing with a united Western Europe. In his contribution to the conference, George Ball, a Lehman partner and advocate of Atlantic Partnership, who had close ties with Monnet and the existing ECSC establishment, explained the nature of the change by pointing to the deteriorated trade position of American capital. The OEEC, Ball explained, had taken measures with the aim of liberalizing dollar imports from1955 on, but these had only materialized for raw materials, seleted foodstuffs, and a restricted number of capital goods items. Now the Common Market External Tariff was added to the handicaps already existing. The tariff was the average of the various national tariffs which hitherto had been operative. But tariffs had been highest in countries to which the USA exported relatively little, and low in the case of countries like the Netherlands and Germany, with which the USA had extensive trade relations. On balance, therefore, the enlargement of the European market implied a worse situation for US exports.

'There is only one way in which this problem may be minimized, Ball argued. 'If Congress should pass a sufficiently liberal Trade Agreements Act, the US Government will negotiate, not with individual European nations, but with the Community as a whole. Through such negotiations it may be able to effect substantial reductions in the external tariff on items that are important to American business.'55 In the meantime, there was only one category of American firms for which the negative effect of the external tariff was offset by the advantages of the enlarged European market: firms owning production subsidiaries within the EEC. Accordingly, the advice which Ball offered to American capitalists was to follow their example and reap the fruits of the first harvest. 'An American firm planning to exploit the Common Market may well lose an opportunity if it does not move quickly. '56

Eventually, it was Ball himself who as Under-Secretary of State would help execute the trade liberalization he recommended. Liberalization was intended to allow the intra-company division of labour to assume Atlantic dimensions and thus overcome the compartmentalization still hampering the full development of an Atlantic circuit of finance capital. For the moment, however lack of American liberalizing initiatives tended to work in favor the regional consolidation of the modernizing state-monopoly tendency in Europe and to its bolstering by the massive wave of tariff-hopping US direct investment. 57

French-German rapprochement in the early 1960s was meal have been the culminating point in the sphere-of-interest policies pursued by the state-monopolistic European leadership. In a; fact, the conclusion of the Franco-German treaty on 22 January 1963, one week after the French veto on British EEC membership, no longer reflected the real relationship of forces prevailing at the time. Corporate liberals, profoundly aware that Atlantic integration remained essential to the continued growth of European finance capital, were alarmed that the Franco-German Treaty might be interpreted as a renunciation of Atlantic unity. In March 1963, a declaration was made public in which Abs, Siemens, Overbeck of Mannesmann, Thyssen director Birrenbach, the German employers' organizations BDI and BDA, and the association of German bank capital expressed concern over the anti-Atlantic element in the Treaty, together with Atlanticist politicans from all parties: Brentano, Mende, Erler, Brandt, and Heuss.58 These men rather than the group around Adenauer which had concluded the Treaty with France, represented the new centre of power in West Germany. This was not lost on the Americans. 'As Adenauer's tenure comes to a close, de Gaulle's influence on German policy is likely to decline', State Department adviser Robert Bowie wrote in Foreign Affairs. 'The successors of the Chancellor. . . do not seem inclined to lend themselves to de Gaulle's purposes. Their handling of the Franco-German treaty is an encouraging sign.'59

2. Kennedy's grand design

The 1960-65 period would see the third American offensive of the type analysed in this study. The activist turn of US foreign policy, sustained by a half-decade of exceptionally high domestic growth and a concomitant reassertion of the corporate-liberal synthesis in American class relations, acted as a spur to corresponding social transformations in Western Europe and gave them a markedly liberal bent. If Kennedy's name most appropriately identifies the new offensive, this does not mean, however, that the new President or his administration actually effected the change. Kennedy rather fitted into a wider trend towards activism provoked by the forma- tion of the EEC, the rise of Third World nationalism, and the suc- cesses of the Soviet Union.

In 1958 the first signs of a reversal of the protectionist tendency in American trade policy became apparent, although the ensuing negotiations with the EEC over mutual tariff reductions were still hampered by the very limited tariff-cutting authority Congress had granted the Executive in the 1958 renewal of the Trade Agreements Act.60 In domestic economic policy, the Eisenhower administration likewise seemed to explore untried paths when, in response to the crisis developing from January 1960 onwards, it stepped up military and government purchases, thus accelerating countercyclical forces and stimulating industrial production.61

More fundamentally, after half a decade of slow growth and unimaginative policies, social tensions were inexorably building up. The generation born in the war years was reaching maturity and the civil rights movement was gathering force in the South. Fron several quarters, proposals for a social-imperialist articulation of domestic reform and a foreign-policy offensive were forthcoming. On the eve of the election, Whitney Griswold, a veteran of th Council on Foreign Relations, argued that the remedy for the un favourable international position of the United States lay in th domestic realm, and more particularly in what he called 'unfinished social and economic business', 'One way to strengthen our foreign policy', Griswold wrote, 'is to get on with that business'. 62 A few years before, the social-imperialist imperative had begun formulated in an influential report co-authored by W . W . Rostow. In a chauvinist tone heralding the future excesses of the new leadership, the report stated that 'The United States is now within sight, solutions to the range of issues which have dominated political life since 1865. The farm problem, the status of big business in a democratic society, the status and responsibilities of organized labour, the avoidance of extreme cyclical unemployment, social equity for the Negro, the provision of equal education opportunity, the equital distribution of income - none of all these great issues is resolved; but a national consensus on them exists within which' are clearly moving forward as a nation.' The authors urged the authorities to undertake foreign involvement all the more vigorously, because with so many accomplishments at home, 'we run' danger of becoming a bore to ourselves and the world'.63 Rostow himself was to playa crucial role in averting this danger, 'A classic example of the militarized liberal'64, Rostow was to become prominent among those 'New Mandarins' criticized by Noam Chomsky, whose 'high mood of confidence and self-righteousn and 'keen sense of control over events' would lead the United States into the Vietnam War and keep it there until it came out on knees.65

Although an early supporter of Senator McCarthy, Kennedy the late 1950s had compiled a liberal record which made him an adequate executor of any social-imperialist programme. In closing weeks of the Presidential campaign, Kennedy's brother Robert was able to obtain the release of Black leader Martin Luther King, imprisoned for four months for a traffic offence. Duly publicized, this even implied a commitment to the emancipation of the black population after the election as well. With respect to organized labour, Kennedy campaigned for a 'repeal of the anti-labor excesses which have been written into our labor laws'.66 To his domestic reform program, the new President added the concept of meeting the socialist challenge by a flexible, but basically offensive approach outlined in his 1957 Foreign Affairs article. Kennedy, Williams writes, 'persistently reiterated the classic goals of the old Progressive Movement: reform at home to improve and save the system coupled with the necessary and righteous extension of American power abroad'. 67

These goals, updated to fit the particular requirements of the early 1960s, were reflected in the composition of the Kennedy cabinet. The Secretary of Labour, lawyer Arthur Goldberg, not only had a background in the CIA mass-production trade-union movement, but also supported its Atlantic extrapolation through his director- ship of the American Committee on a United Europe (ACUE). The appointment of the labour-friendly soap manufacturer Mennen Williams as Assistant Secretary of State for African Affairs also had the aspect of mobilizing organized labour for expansion abroad. With Under-Secretary Bowles, whose millions had been earned in the advertising business and whose previous government career likewise had been consistently devoted to smooth relations with organized labour, Williams was the main advocate of an offensive programme of support for moderate nationalism in the Third World, irrespective of the short-term consequences for Atlantic relations. 68

At the same time, Kennedy was keen to secure the support of the traditional East Coast centres of Atlanticism. Following his narrow victory, he turned to Robert Lovett, who had been Assistant Secretary of State and Secretary of Defence at the time of the Marshall Plan and the Korean War respectively. Lovett, the son of the general counsel to Harriman's Union Pacific, and married to the daughter of Brown Bros. senior partner James Brown, was a 'power broker who carried the proxies for the great law firms and financial institutions' and as such was the counterweight to the less solidly established liberals like Bowles and Adlai Stevenson.69 Lovett gave Kennedy a list of 'right people' for key cabinet posts. The choice of Ford executive McNamara, who had served under Lovett in World War Two, at Defence, did not literally represent the penetrationinto the Kennedy cabinet, but was still highly significant in other aspects. First, in the light of the shift to productive capital in the accumulation pattern of the early 1960s, Detroit was decisive in the competition with the EEC and in the confrontation with the socialist world. Secondly, McNamara represented the technocratic element associated with the new prominence of the rationalization of production. McNamara had been one of a team of 'Whiz Kids’ at Ford which rehabilitated the company after having lagged behind General Motors since the late 1920s. Under Henry Ford II, the company once again became a pioneer of social organization, s~ the pace of the new technocratic arrogance that would in due course spill over to the international policies pursued by the Kennedy administration. Hence, McNamara was not a 'Ford' man in the capital-group sense, but very much so in a 'Fordist' sense, although the Atlantic orientation of Henry Ford II in this respect may be mentioned as well. 70

For the handling of the intricate problem of the declining dollar Kennedy chose Douglas Dillon as Secretary of the Treasury from Lovett's list after David Rockefeller (and Lovett himself) had turned down the offer. The new prominence of West Germany in EEC and its projected role in an Atlantic Partnership help explain the presence of Dillon, Read and Rockefeller-group representatives to the Kennedy cabinet, and accounts for the element of cont with the previous administration. Although the universalist concetp guiding the Kennedy policy differed from the sphere-of-interest concept of the Eisenhower administration, the power equation between the United States and West Germany had not changed. Kennedy was averse to German nuclear ambitions, and the American activism in this respect tendentially undermine position of the proponents of a German Alleingang like Strauss. Isolated by the pervasive Atlanticist trend, they were replaced by proven Atlanticists in 1962-63. Making American influence live in Germany, however, required that the new weight of the German economy in the North Atlantic context was reck one in the choice of cabinet personnel as well.

The relative decline of Britain, both in economic power and in terms of its role in Atlantic unity, contrasted to the ascendancy of West Germany in both respects. It also sheds light on the promenence of Chase men (Dillon, too, was a director of Chase Manhattan) in the Kennedy administration where otherwise Morgan men might have been expected to predominate. (The Chase Manhattan Bank, incidentally, had risen to the first place among US banks in the 1950s, whereas its rival, the Morgan Bank, was in trouble after having merged with the Guaranty Trust in 1959) Kennedy and Lovett obviously thought that Dillon's experience in negotiating with the European states on trade liberalization was an asset in handling the precarious relations with the Atlantic allies on this score.71

Dean Rusk, a Southerner and President of the Rockefeller Foundation, was selected as Secretary of State. Rusk, according to Halberstam, was expected to be a low-profile Secretary of State, allowing Kennedy and his advisors to give foreign relations a greater personal imprint. Under-Secretary Bowles, however, became the target of attack from the traditional East Coast establishment looking over the shoulder of 'low profile' Secretary Rusk. By mid 1961, Bowles had become concerned over US policy with respect to Cuba and South-East Asia, and in a memorandum of June of that year he presented a synthesis of his ideas about a better course. In this memorandum, he argued the need to drop the militarist elements in US foreign policy and adopt a consensus-seeking policy instead. Bowles's recommendations to outflank rather than frontally attack Castro and the Soviet Union were in line with Kennedy's own preferences, but his rejection of colonialist Portugal and racist South Africa as Free World allies was not compatible with American imperialist interests. The most critical passage in Bowles's memo- randum concerned Germany. Although he repeated the familiar argument on an Atlantic community, he openly contemplated the possibility of allowing Germany to unite on its own terms, become a neutral, and even associate itself with the Soviet Union. 12

The memorandum did not fail to mobilize his opponents, and in the press stories began to appear suggesting Bowles's dismissal. In November 1961, in spite of Kennedy's personal assurances, Bowles was replaced by George Ball. Ball, too, opposed the militarist stand in South-East Asia, but mainly because 'he feared. . . that it was going to divert America from its prime concern in the world, which was the European alliance'. 73 Also in November, Averell Harriman became Assistant Secretary of Far Eastern Affairs. In the spring of 1963, he would take George McGhee's post as Under-Secretary of State for Political Affairs.

Thus by 1963 a cabinet well qualified for supervising the expan- sion of real capital, for dealing with the working class, and for guiding the policy of Atlantic Partnership along a path compatible with the interests of the major economic interests involved, had definitely established itself. Its support in the traditional East Coast power-centres and in the industrial Mid west seemed secure. The was one section missing from the traditional universalist class coalition, however, and that was the South.

In this region, important changes both in terms of class structure and in political outlook had taken place between the Marshall offensive period and the Kennedy years. By the early 1960s, traditional free traders in the cotton and textile industries had joined the traditional protectionists, small oil and gas drillers and coal mining. Gradually, the small-town and rural conservatism of the traditional Democratic homeland, with its strong attachment to the wide English-speaking Atlantic connection, gave way to the radical rightism that grew popular in the expanding and industrialialization in Southern cities and was sponsored in particular by the new right. Their hatred of 'socialist' state intervention and of taxes for expensive foreign adventures had put a stamp on Southern thinking. By 1962', Lerche writes, 'the South had earned - and was apparently quite proud of - the distinction of being the most anti-foreign region of the United States'. 74

The centrepiece of Kennedy's Atlantic Partnership strategy 1962 Trade Expansion Act, could no longer depend on the votes of Southern Democrats. Although the Kennedy offensive functioned to mobilize what remained of support for internationalism, the liberalization programme was burdened by an oil quota system drafted by oil Senators Robert Kerr and Lyndon Johnson (now Vice-President) to which was added a voluntary quota system the cotton-textile industry established in two stages in 1961 and 1962, and compensatory tariff protection for the glass and lumber industries.75

Kennedy's concern over the weakness of his coalition had prompted him to seek the confidence of the New York leagal and banking establishment, but also led him to reach for support amongst the formally pro-Nixon camp. In October 1961 McCone, a new rich and ultra-conservative shipbuilder from California, was appointed head of the CIA. McCone had been Secretary of the Air Force under Truman, chairman of the Energy Commission under Eisenhower, and had directorships in California banking and later also joined the ITT board. Kennedy chose McCone, according to Hillsman, 'to make the conservatives in business, in industry, the military, and Congress feel that their foreign and defense policy interests would be represented.

On the other hand, the recruitment of support from the new rich did not negate the liberal element in the Kennedy administration. Prominent among those continuing to keep the President and his 'leftist' associates under fire was Texas oil millionaire H.L. Hunt. Of Hunt, Lundberg writes that 'the violence of the diatribes in his subsidized radio programs - carried to 331 . . . stations - led many observers to see them as having at least helped nurture the mood for the assassination of President Kennedy'. Of ]ohnson, on the other hand, Hunt in 1964 said that he 'wouldn't mind seeing him in there for three terms'. 77 If in the meantime the Vietnam war had not been decided upon by the remaining liberals in Washington, this wish might well have been fulfilled.

'Liberalism' at home, embodied in such programmes as the 'War on Poverty' which particularly infuriated conservatives, was in fact necessary to allow the offensive turn of foreign policy. The outward thrust of the Kennedy policy was based firmly in domestic reforms and expansionary measures, even if it was often left to his successor to win final congressional approval, In his own lifetime, Kennedy succeeded in having passed an improved minimum wage, low-cost housing projects and urban renewal, as well as a $900 million public works programme. 78

Employment was still recovering from the 1958 and 1959/60 recessions when Kennedy came to power. At first, the new administration refrained from substantial state intervention and seemed to continue the passive attitude of its predecessor, allowing unemployment to rise again in 1961. By 1962, however, capital accumulation accelerated and employment opportunities improved accordingly. Early in the year, the administration intervened in the labour relations area by establishing wage-price controls. These 'guide- posts' were part of a general activist turn in the Kennedy administration's economic policy. As usual, controls were particularly effective in restraining the trend of wages only. Price policies, as part of the reassertion of the Fordist emphasis in capital accumulation, were intended to favour finished consumer products industries over basic industries like steel, with which the Kennedy administration fought a pitched battle. 79 The steep rise in the US Index of Consumer Research, measuring consumer optimism, from 1960 through.1965, as well as its counterpart in actual expenditure and the production trends for automobiles and household appliances (underpinned by sustained investment in fixed capital), corroborated the administration's policies.80

The Atlantic partnership concept

By 1960, both at the elite and the popular levels, the interest in Atlantic unity was again on the rise in the United States. In Foreign Affairs all aspects of the eventual Kennedy offensive were discussed in detail from 1959 on, while propagandistic activities included the choice of Atlantic federation as the debating topic in American high schools for the scholastic year 1960-61.84 In the Presidential election, both candidates had to formulate a position on the issue of Atlantic unity. Nelson Rockefeller in June 1960 proposed a North Atlantic Confederation, and this was reiterated in a joint statement by Rockefeller and Nixon in July. Rockefeller's position, however, was not typical of the Republican party at the time: Nixon in' fact had been forced to adopt the internationalist stance at Rockefeller's prodding, much to the dismay of Eisenhower (who felt that the Rockefeller dictate 'seemed like a repudiation of his eight years in office') and conservative Republican leader Goldwater. 82 The offensive contents of Atlantic federal unity envisaged by Rockefeller - i.e. that it should serve as the launching ground for a 'worldwide union of the free'83 - had a much longer tradition in the Democratic Party. At the outset of the Presidential campaign of 1960, the Democrats adopted a platform which promised 'a broader partnership' in the Atlantic Community, transcending NATO.

To Roosevelt, Atlantic unity had been the precondition for American universalism to be brought to bear on the British Empire and peacefully shift imperialist hegemony to the United States; to the architects of the Marshall offensive, Atlantic unity meant the contraction of the previously projected global dimensions of this transition to the US-dominated Free World, pitted against the Soviet orbit. Faced with new challenges in the underdeveloped world, Kennedy again took up the universalist concept. But to accommodate Western European ambitions, and more specifically, to allow the ongoing process of class formation in the area to sustain the modernizing, corporate-liberal thrust which already was an aspect of the formation of the EEC, rather than simply reactivate commercial liberalism, the US offensive sought to enlist active Western European support for its Grand Design on a more equitable, 'ultra-imperialist' basis. This was the Atlantic Partnership concept.

If Atlantic unity was to be reemphasized, the most urgently needed revision of policy had to involve defence and, more particularly, the nuclear field. At the December 1960 NATO ministerial meeting, Secretary Herter, following earlier suggestions by General Norstad, NATO commander in Europe, proposed the formation of a seaborne NATO deterrent consisting of submarine and surface ships armed with Polaris missiles. '(Herter) called it a concept rather than a proposal because the Eisenhower administration was in its last weeks. . . and it would be for the Kennedy administration to make the proposal, if any. '84 Herter's 'concept' was a last-ditch attempt to satisfy West German demands, taking British and French nuclear capacities for granted. Strauss had visited the United States and discussed Polaris missiles with Secretary of Defense Thomas Gates in June. In December 1960, Stikker, who was about to become Secretary-General of NATO, in a private letter to former Secretary of State Acheson warned that if the NATO nuclear force proposal was not put into effect, the Germans would go it alone. Stikker knew what he was talking about, since the Norstad plan had first been discussed, with Spaak, Adenauer, and the general present, in Stikker's lake resort in Italy.85

Kennedy's position on the Norstad/Herter legacy, renamed Multilateral Force (MLF), was the one formulated by H. Van Buren Cleveland when he wrote that 'the MLF made sense in terms of American interests precisely because it was not a step toward the sharing of nuclear control, but rather a way of channelling Europe's - and especially Germany's - nuclear interests and energies away from the development of independent nuclear forces.'86 The American aim was to reconstruct a world configuration of forces in which the United States again commanded a central, mediating position and as far as the attitude towards a military role for Germany was concerned, there was even the hint of a re- emergence of the wartime coalition between the Soviet Union and the United States, spurred on by German nuclear ambitions. In an Izvestia interview, Kennedy declared his opposition to a West German nuclear capability, and his refusal to allow a military reaction to the construction of the Berlin Wall likewise reflected a determination not to activate German militarism. Comparing the new American attitude with the policies of the previous period still adhered to by men like Adenauer, Kennedy's National Security Assistant, McGeorge Bundy, claimed that 'among the allies. . ., we are the moderates'. 87

The first partner the United States turned to in the new Atlantic offensive was Great Britain. Here, as we have seen, Harold Macmillan's rise in the Conservative Party corresponded to the break- through of the corporate-liberal synthesis as the hegemonic concept for British capitalism; a trend that was reinforced in 1960 with the appointment of Edward Heath as Lord Privy Seal with Foreign Office responsibilities. Macmillan now embarked upon a full-scale policy reorientation towards the EEC, and it became Heath's task to bring British policy in line with the thrust towards Atlantic and liberal European unity emanating from the United States. In August 1961, the House of Commons approved a motion supporting Britain's application for EEC membership.88

This fitted the profile of a British role in Atlantic Partnership as it was envisaged by the American administration. In the joint statement made public following Kennedy's first meeting with Macmillan in April 1961, there was not a trace of the former Anglo- Saxon chauvinism, the 'fraternity of English-speaking peoples' or the special relationship. 'We have talked as partners', Kennedy and Macmillan let it be known, 'but with a full awareness of the rights and interests of the other nations with whom we are closely associated.'89 In 1962, the Kennedy administration withdrew the American offer, made by its predecessor, to supply the British with Skybolt air-to-ground missiles. This left the United Kingdom without a delivery system for its nuclear bombs, since a British ballistic missile had failed to get off the ground. Instead, in December 1962, Kennedy and Macmillan concluded an agreement at Nassau by which Britain acquired three nuclear submarines plus Polaris missiles. This force, including the nuclear warheads, was subsequently placed under NATO, (read American) command. On in a national emergency, were the British entitled to use this force by themselves.90 In the communiqué issued after the Nassau agreement, in which Kennedy also for the last time emphasized the need for Britain's admission to the EEC, there were no references the Anglo-American fraternal relations either. 91

Still, the revival of interest in Atlantic unity, which according to Beloff was 'the most striking feature of the discussion' during the first year-and-a-half of the Kennedy administration, inevitable worked to reactivate the 'orthodox' protagonists of Atlantic Union as well. Streit's Union Now was republished in combination with an autobiographical account, and in the course of 1961, enthusiast about the future of Atlantic unity seemed to leave Kennedy's careful calculations behind. In Foreign Affairs, the chairman of the Senate Foreign Relations Committee, Fulbright, drew the picture of Great Britain, Canada, and the United States 'moving toward full participation' in European integration in order to establish the 'inner community' of a prospective world system. 92

In early 1962, therefore, the administration elaborated its concept of Atlantic unity in greater detail. 'It is not our intent to join the European Common Market', Secretary of State Rusk declared in an address on February 22. '. . . We look to a partnership between the United States and an increasingly unified Europe. The organs of Atlantic cooperation which are at hand - in NATO and the DECO - are the active instruments of that partnership'.93 The Partnership concept had already been emphasized the previous month in a speech by the President on the Trade Expansion programme. 'An integrated Western Europe, joined in trading partnership with the United States, will further shift the world balance of power to the side of Freedom', Kennedy stated before Congress. Whatever reticence might have existed on the degree to which Atlantic unity was to be formalized, it was abandoned in the debate over its projected economic foundation, the proposed Trade Expansion Act. Requiring for its Congressional approval 'an unparalleled campaign to sell (the administration's) ideas', and eventually burdened by the escape clauses already referred to, the Act granted Kennedy negotiating authority 'greater than ever before and incomparably greater than that under which the Dillon Round negotiators were struggling'. 94

Significantly, one of the provisions of the Act aimed at completely liberalizing the market for technologically advanced equipment. Under the so-called 'Dominant Supplier Provision', the President was authorized to reduce to zero the tariff on products in which 80% of capitalist world trade was accounted for by the exports of the United States and the EEC combined, assuming British membership. This provision by its Atlantic demarcation aimed at the establishment of an integrated circuit of finance capital, including the intra-company division of labour aspect, at the North Atlantic level. As far as the American side was concerned, 'the passage of the Trade Expansion Act of 1962 represent( ed) in many ways a halt and partial reversal of the protectionist trend of the 1950's'.95

George Ball, Under-Secretary of State and one of the architects of the Trade Expansion programme, in April outlined the notion of an Atlantic Partnership more explicitly. In late 1961, together with Christian Herter and Will Clayton, Ball had proposed to make an Atlantic Partnership the basis for trade liberalization and the co- ordination of development aid. Now he repeated the advice. Ball stressed the value of the newly-formed DECO for coordinating economic policy between the North Atlantic states and for jointly organizing their intervention in the underdeveloped world via aid programmes. These two goals replaced the trade liberalization objective advanced by the original OEEC and reflected the structural growth of state intervention as well as the projected widening of the international circuit of finance capital beyond the North Atlantic area.96 On 4 July, finally, the President made his famous statement that the United States was 'ready for a "Declaration of Interdependence" , and was 'prepared to discuss with a United Europe the ways and means of forming a concrete Atlantic partnership. '97

Concentrating the decisive military assets in American hands in the meantime was a crucial aspect of the Partnership concept. Both in defence spending and in the actual application of military force abroad, the Kennedy offensive reached unprecedented level of peace-time standards. The US defence budget for the first time since the Korean War broke the $50 billion ceiling in 1962 (measure 1960 dollars); more than one-third of all US armed intervention abroad in the period 1946-75 fell in the 1961-65 offensive.98 While the nuclear role of Western Europe was to be trimmed, a major sales drive was launched to supply the European armies with advanced weapons. Strangely, the contours of an emerging Atlantic military industrial complex were thrown into relief by the establishment of the World Wildlife Fund in 1961 under the sponsorship of Prince Bernhard of the Netherlands. Next to the Dutch Prince, which Inspector-General of the Dutch armed forces was in a position to influence arms purchases, such renowned 'friends of the an world' as the directors of Northrop and Lockheed, (and Lockheed agent for Europe, Fred Meuser) joined the new organization. Hence forward, this dimension of the Atlantic bond would increasingly conflict with the civilian-economic dimension expressed in the rise of a corporate-liberal bourgeoisie, interested in utilizing military research for establishing a technologically advanced infrastructure for supporting an autonomous internationalization of capital. Whereas the bourgeoisie associated with the latter tendency responded positively to the Partnership policy and even looked beyond it, the Atlantic liberals involved in US arms deals with Europe perforce remained committed to a much more subordinate Atlantic Union concept, and as Sampson writes, 'their weakness reflected in corruption and in increasingly "Latin American" attitudes'. 99

The reassertion of the American nuclear monopoly, and the exponential proliferation of advanced conventional arms sales underlay the announcement by Secretary McNamara in June 1962 of a fundamental change in US military strategy. Henceforward, only Soviet military sites would be targeted in an American nuclear strike; enemy cities were to serve as hostages to keep the Soviet Union from retaliating. Commenting on the new strategy of 'flexible response', RAND analyst Malcolm Hoag wrote that 'independent nuclear options (had) become anachronisms.' 100

Relations with France rapidly deteriorated as a consequence. From de Gaulle's 1958 memorandum and his refusal to have France participate in an integrated NATO tactical air force in 1959, tensions had developed in several stages. Ten days after McNamara had outlined the doctrine of graduated deterrence at a NATO meeting in Athens in May 1962, the French President gave a press conference in which he announced the formation of an independent Force de Frappe. Two days later, Kennedy declared that independent deterrents were un- desirable. That autumn, an American offer to supply Polaris- equipped submarines was withdrawn. Following the Cuban missile crisis, de Gaulle publicly complained about not having been consulted by the American leadership. From there, the crisis in US- French relations spilled over to the apparently non-military problem of British admission to the EEC, of which in French eyes, after the reintegration of the British nuclear force in NATO, only the economic disadvantages remained.l0l

In a sense, Kennedy's Partnership strategy was effectively thwarted by the French decision to veto British EEC membership the following January. De Gaulle had well understood that militarily, as Dean Acheson's article in Foreign Affairs that month stated in both its title and its content: 'The Practice of Partnership' would first of all mean a return to the American nuclear monopoly and hence, a controlling position for the United States in setting the parameters of international politics.102 Speaking in Frankfurt in June 1%3, Kennedy conceded that 'the Atlantic Community will not soon become a single overarching superstate. But practical steps towards a stronger common purpose are well within our grasp'. The future of the West, he maintained, 'lies in Atlantic partnership'.ID3 One month later, he once again outlined the connection between Atlantic unity and American universalism which the EEC had failed to appreciate. 'In time', he told an Italian audience, 'the unity of the West can lead to the unity of East and West'. 104

3. The imperialist imperative

The unity of East and West was still far away, however, and the Kennedy offensive hardly succeeded in overcoming the Cold War or avoiding confrontation with the Soviet Union. With respect to the socialist countries, the period even saw an upsurge of economic warfare against the Soviet Union and Eastern Europe. In the 1950s, the embargo imposed in the Marshall offensive gradually lost its effectiveness as revisions of the COCOM list of strategic goods failed to keep up with expanding trade between Western European and Eastern European states. In 1956, in order to capitalize on centrifugal tendencies in the Soviet orbit, Poland was even accorded preferential treatment by the United States an exempted from a number of COCOM restrictions. Although th Kennedy administration was inspired by Roosevelt's universalists and from this vantage-point sought to renew the approach of under mining the Soviet orbit of planned economies by conciliator policies, the alarmist tone of the new President's campaign and initial policy statements cut across such a project. In 1961, Congress curtailed Presidential discretion with respect to Poland and Y ugoslavia. Through a 1962 amendment to the Export Control Act of 1949, the list of goods which by their military significance were considered harmful to the national security of the United States if exported to socialist countries was extended to cover goods of economic significance. The same year also brought 'a more important. . . and enduring limitation on the President's East-West trade policy making powers'. 105

It was not until 1963 that the Kennedy administration was to brake this wave of economic warfare. The announcement of the Soviet- American wheat deal heralded a gradual normalization, to which the 1964 hearings on US East-West trade policy by the Senate further contributed. By this time, however, the impetus of the Kennedy offensive was spending itself, and further economic detente would be part of the process towards renewed contraction rather than expansion of American influence.

Redistribution in the periphery

By their capacity to generalize the particular interests of the states involved to a transcendent 'Western' interest, as well as by its fee trade aspect, the Atlantic unity offensives in the era of Atlantic integration always functioned as modes of imperialist redistribution to the benefit of the United States. The mobilization of European liberals and Social Democrats behind the American call for unity allowed US capital to penetrate into the European colonies a spheres-of-influence by holding out the prospect of and general reinforcement of capitalism, both in the metropolitan and in the peripheral areas. In line with the thrust of universalism, and crucial with respect to mobilizing Social Democrats in particular, an attempt was made to base imperialist dominance more firmly in the local class structure in the periphery. In the Kennedy offensive, even more than in the Roosevelt or Marshall periods, the Americans probed beyond established colonial rule or military dictatorships for moderate nationalist, middle-class groupings in the underdeveloped world.

This policy at the same time required a firm approach to those Third World states which were beyond imperialist manipulation. Embargoes like those imposed against Eastern Europe therefore were used to isolate bridgeheads of socialist revolution in the periphery. Cuba was subjected to an economic embargo from 1959 on; to which, in 1963, the Foreign Assistance Act added sanctions against non-obliging third countries. In 1961, North Vietnam, too, was put under a virtual economic embargo by the United States. 106 The positive counterweight to these measures was the establishment of the Peace Corps, which fitted into the tradition of Point Four, and the Alliance for Progress for Latin America.

Meanwhile, Africa and Asia remained target areas for American expansion, and prominent Kennedy men argued the need to link the quest for Atlantic unity with the resolution of remaining inter- imperialist rivalries in these areas. As Kennedy's eventual UN ambassador, Adlai Stevenson, warned in 1960, if the existing compartmentalization of the European and Atlantic economy would not be broken down, 'frictions will be spread to Africa as a last divisive legacy of colonialism.'107

By 1960, rapid decolonization allowed the Americans to lay their proposals before the political representatives of the newly emerging states directly. The United Nations offered an excellent arena for the promulgation of the principles of American universalism and for their absorption by Third World leaders eager to take part in the organization of a world of sovereign states along the outlines of the Atlantic Charter and the United Nations Declaration. American policy accordingly sought to create a stable basis for agreement between the 'First New Nation' and its more recent counterparts. As Kennedy's Assistant Secretary for International Organization Affairs, Harlan Cleveland, put it in 1961, American strategy was to 'help bind together the nations committed to the (UN) Charter into an international society' and to 'mobilize the moderate elements of the Assembly'. 108

In the colonial mother-countries still clinging to their overseas possessions and dependencies, the rapid improvement of US- Third World relations caused grave concern. In his letter to Preside Kennedy of 13 February 1961, Spaak, explaining his resignation Secretary-General of NATO, put the question squarely. 'Does the United States attach more importance to the UN than to NATO? In other words, is it ready, in order to win the support or the friendsh of the non-aligned countries, to go so far as to sacrifice the interests or to hurt the feelings of its NATO allies?' Referring to Suez and Algeria, Congo and Portugese Africa as cases in point, Spaak went on to conclude that 'even if it is decided that NATO is not to have executive powers in the economic sphere, ought nevertheless remain the place where Western policy vis â vis the underdeveloped countries is laid down.' 109

The special case in which the Belgian now as foreign minister, was to face the consequences of the new American strategy was the Congo, where the United States operated 'regardless of the legitimate interests of its NATO partners' according to Spaak's view. At one time, the dream of swift decolonization, which dated back to the Roosevelt era, still inspired the policies of the State Department', wrote in retrospect. 110 In fact, it had taken several new appointments, notably Mennen Williams's, to bring home the change attitude in this respect as far as Africa was concerned, and even tht the new forces ran upon powerful vested interests.

In October 1962, Bowles, who had been made Kennedy's special adviser upon his removal from the State Department, visited the Congo. He discovered that an American mission, which had left before he arrived, was establishing a close relationship with Tshombe, the stooge of the foreign mining interests and self- appointed leader of the mineral-rich Katanga province. Believing that African policy thus was still dictated by the Department European Bureau, 'which was itself influenced by the Britisl French and Belgian financiers who owned the copper mines in Katanga', Bowles intervened directly with Kennedy on the ground that American policy towards black Africa would be wrecked by sticking to the reactionary course.111 Eventually, Kennedy personal decision was required before the United States backed UN action in the Congo, and Pentagon and State Department resistan, was overcome.

Four years of factional struggles ensued, in which the popul left-wing leader Lumumba was murdered on American order while UN troops threw out the Russians and reestablished national unity. Various attempts to establish a moderate pro-Western leadership acceptable to American and European interests were made, but no stable ruling group emerged. When the UN troops left, Adoula, one of those tried in the years before and backed by the Belgian government on account of neo-colonialist calculations, assumed the government. Soon Tshombe took power again, but by then the ultra-imperialist approach to Third World disturbances was well on the wane, and the Americans now secured their interests by putting Colonel Mobutu in the saddle in 1965.112

In Asia, the Americans intervened when the Dutch refused to cede New Guinea, which they had retained at Indonesia's independence in 1949, to Sukarno. Under Eisenhower, the State Department, as with the Congo, had acquiesced in this colonial arrangement, and in 1958 Secretary Dulles assured the Dutch foreign minister, Luns, that the Netherlands could count on American support in the event of hostilities over the island. 113 As late as 1954, Dulles in closed session of the Senate Foreign Relations Committee had declared that in his opinion independence had been given to Indonesia prematurely. 114

Kennedy reversed American policy, strongly suggesting a solu- tion accommodating Indonesian aspirations. In late 1961, he appointed Averell Harriman to Far Eastern Affairs in order to get the pro-European conservatives in the State Department under control; and in a letter to the Dutch Prime Minister in April 1961, he warned that moderate elements would be eliminated if it came to a con- frontation. In that case, 'the entire free world position in Asia would be seriously damaged'. lIS

The Congo and New Guinea affairs, testifying also to the role of bureaucratic resistance to Kennedy's Grand Design, of course pale in significance compared to the developments in Vietnam. The mili- tarized liberals of the Kennedy administration as early as 1961 re- commended the introduction of regular US troops to deal with Vietnamese insurgency. General 'Big' Minh, the 'moderate nationa list' alternative to Ngo Dinh Diem who was assassinated after several American requests to resign, was able to stay in power for only two months. The American assumption of the global police role that the European powers had relinquished in the 1956-1965 period, paved the way for a resumption of European economic initiatives in the Third World at a later stage. In the meantime, the Indo-China war would contribute greatly to the loss of American hegemony over Europe, and even precipitated the crisis of corporate liberalism as such. 212

The role of the AFL-CIO

The redistributive aspect of the Kennedy offensive and its strong universalist accent made the Southern Hemisphere the major target for American imperialism. In the area of shaping labour relations the emphasis was likewise on the underdeveloped regions. 'From an economic standpoint', Cox writes of this period, 'official policy promulgated by agencies such as ILO, the Organisation for Economic Co-operation and Development (OECO), and the League Nations Special Fund viewed the improvement of the quality of labor, mainly through occupational training, as a "preinvestement” condition for economic development. . .From a political stand point', the struggle for the ideological allegiance of labor in less developed countries escalated. Somewhat more subtle were efforts to export models of industrial relations systems to these countries through bilateral aid programs and through intergovernmental agencies concerned in this field of policy.' 116

The American trade-union leadership was active in both dimensions, but the weight accorded to either the political dimensions combating Communism or the economic dimension varied for each of the two main traditions combined into the AFL-CIO. It of the merger of 1955, differences between the AFL and the CIO had not been fully overcome. Abroad, the CIO tended to adopt amounted to an offensive position: this had been the case Marshall era already, when Victor Reuther of the United Auto Workers (UAW) had been the principal CIO envoy in Europe. At the time, he and his brother Walter had led the struggle against the anti-Communist hardliners in the AFL leadership. In their attitude towards Communism, the Reuther brothers were generally closer to the Kennedy and early Johnson administrations than to the AFL.117

In 1961, as part of the Alliance for Progress, the American Institute for Free Labor Development (AIFLD) was established in order to aid the development of stable local class structures capable of averting inherently instable military dictatorships. The AFL, however, interpreted their mission as intended to prevent progressive governments from taking or holding power. Walter Reuther's 1966 accusation that the AFL-CIO worked with the CIA was based in particular AIFLD experience. 118

In this respect, the Kennedy offensive brought a repeat preformance of the Marshall episode, in spite of its more consistantly universalist platform. Again, the specific AFL contribution to expanded trade-union activities abroad fitted into this oil much easier than would have been the case had the Kennedy policy lived up to its lofty declarations of intent. The conflict with the UA W accordingly was postponed to a juncture in which the full consequences of American activism abroad became visible, and when the gradual contraction of US foreign involvement allowed a certain thaw in East-West relations.

By then, the aggressive anti-Communism of the AFL had lost touch with the realities of the American international position, which in the eyes of both allies and opponents no longer allowed the self-righteousness of the preceding period. The walk-out of the American trade-union representatives at the June 1966 ILO Con- ference to protest the election of a Polish chairman provided the occasion for Reuther's attack. His action was rebuffed at a special meeting of the AFL-CIO Executive Council, but it was the overture to departure of the UAW from the federation. 119

The meridian of Atlanticism

1. The consolidation of corporate liberalism

The Kennedy offensive was the last episode of Atlantic unil context of Atlantic integration. The Marshall Plan had mobilized the European liberals and terminated the experiment with national reconstruction based on a broad class truce. In the subsequent the period, contraction of American involvement in Europe produced a contradictory array of policies which in one way or another European independence. Behind the essentially transition restructuration of the vestiges of the state-monopoly tendency, like protectionism and nationalism, this independence, however, served to mobilize the forces of modernization, especially after the reactionary imperialist option had to be abandoned after Suez. When the Kennedy administration launched its Atlantic offensive, the restructuration of class relations had been reached at which, the for both American and the Western European bourgeoisie, a concept of Atlantic Partnership, striking a balance between American money and European aspirations, represented an adequate expressions of their combined interests.

Lerner and Gorden, who between 1955 and 1965 conducted five opinion surveys among business and bureaucratic elite panels in Britain, France, and West Germany on the issue of Atlantic relations found 1961 to be the watershed year in terms of European acceptance of American hegemony and of the mode of accumulation onwhich it was based. 'Europe moved from a phase of anxiety in the first postwar decade, under the impact of "Americanization' into a phase of accelerated growth. . . Our survey shows that by 1961, as the visible benefits became apparent midway through the second decade, the European elites entered a phase of acceptance appreciation of American practices was consolidated which unprecedented acceptance of American policies among the opinion leaders and decision makers of postwar Europe.' 1 The conversion of the mainstream Western European bourgeoisie to Fordism, neo-colonialism, and other' American practices' at this juncture, however - and this was crucial with respect to overall Atlantic relations - 'reposed upon a solid basis of confidence in America's power and purpose in world affairs.'2

At a subsequent stage, 'America's power and purpose' became a liability to the corporate-liberal bourgeoisie in Europe, and a series of rival international concepts, like the Ostpolitik and the New International Economic Order, would be developed instead, reciprocated by Trilateralism emanating from the United States. In 1960-1965, however, the thrust towards the consolidation of corporate liberalism in Europe, accelerated by the renewed American offensive, was still respectful of American hegemony and remained with the coordinates of Atlantic integration, both at the working class and the bourgeois levels.

Social democracy and the 'new working class'

In the course of the 1950s there was a considerable waning of American influence in European trade-union affairs. As anti- Communism lost its immediate urgency to the European trade- union leadership, AFL-CIO influence within the ICFTU decreased proportionately. 3 Moreover, the commitment of effort on the part of the American unions themselves faltered in the context of a general contraction of US involvement abroad. In January 1954 Senator Hubert Humphrey, in a discussion of Communist influence in the Western European labour movement, complained that not enough was being done by the US unions. Citing France and Italy (and India) as cases in point, Humphrey told Secretary Dulles that he 'happen(ed) to know that the CIO and AFL put hundreds of thousands of dollars in that effort' but that today, they seemed to have 'run out of energy'. Dulles could only confirm Humphrey's observation.4 Similarly, foreign unions dependent on American funds, like the French Force Ouvrier declined in national influence during this period.'

At the same time, however, that US trade-union influence was contracting, the adoption of American production techniques and forms of work organization was producing new differentiations within the European working class - a trend that was accelerated during the Kennedy offensive. The notion of a 'new working class' became the standard label for describing this process of the restructuration of the European working class as a consequence of Americanization and Fordism. The idea was given a paradigmatic formulation in Serge Mallet's well-known book, Nouvelle classe ouvriere (1963) - a collection of case studies of which the first, on the French Caltex refinery, was dated 1958.6 In production processes of this type, characterized by a high organic composition of capital, specifically Western European restructuring of the occupation; hierarchy took place, resulting in an unusually large category of middle-level technicians. In the United States in the late 1960s, professional engineers substantially outnumbered middle-level technicians, but in Western Europe, 2 to 4 technicians worked alongside every professional. This was reflected in the fact that the discussion of the 'new working class' was a specifically European concern; in the United States (aside from a small intellectual current in the student movement), the theoretical discussion of modern forms of labour aristocracies remained centred on skilled craftsmen.

Capital reacted to the rise of technical labour by introducing management techniques benefiting the level of education and training of the new workers. Since neither traditional authoritarianism nor Fordist paternalism were adequate for dealing with self-conscious workers handling advanced production processes, a degree of app- rently autonomous socialization of production was allowed to develop. In reality, workshop autonomy, job rotation, and other devices tended to subordinate workers to capital anew, under the conditions of fully automated production (most widespread in th chemical and electrical-machinery industries). Neo-fordism, - as Palloix has called this further stage of subordination (which he moreover associates with a specific international division of labour therefore represented both an apparent leap forward for the 'new workers' autonomy and a renewed appropriation by capital of the informal relations among these workers. 8

In the United States, where the number of new worker-technicians was limited and the mobility between social classes was relatively high, the recomposition of the working class did not significantly affect working-class politics in the 1960s. In Western Europe, on the other hand, the proportion of new workers was greater, and had a more salient impact on the more sharply defined class structures. The rise of the new labour processes and the spread of technocratic ideology nurtured a new current within the workers movements, Social Democracy in particular. (Even in West German) engineers and technicians, unlike the United States, were overwhelmingly oriented to the left-liberal and social-democratic part (the political spectrum. 9) Ideologically this new tendency represented an amalgam of state-socialist tradition with the productive-capital concept of control in the context of the ascendancy of international finance capital. It resulted in the organizational breakthrough of a distinctly corporate-liberal element in European Social Democracy, most prominently represented by Willy Brandt and François Mitterrand.

In Germany, the rise of Brandt coincided with a rapprochement with German capital. As the future President Heinemann noted in 1954, the SOP in 1918 had made peace with the Western political system; next, the party would have to make peace with the Western economic system. 10 The 1959 Godesberg Programme did just that. It allowed a further penetration of capitalist ideology and actual capitalists into the SPD. Whereas before, only some firms in the food and retail industry had entertained relations with the party, in the early 1960s prominent capitalists like Deist of the Bochum steel-workers and Moller, the insurance director, declared themselves socialists or close to socialism. 11

As Braunmmuhl has shown in her biographical sketch of Brandt 12, his technocratic internationalism and, hence, loyalty to the offensive configuration of Atlantic capitalism, had been a constant theme in his politics. While Brandt's star rose through the various incidents at the Cold War frontline at Berlin, it was Kennedy himself who perceptively understood the meaning of Brandt's attitude for his eventual strategy of Atlantic Partnership. In his seminal 1957 article in Foreign Affairs, Kennedy wrote that' American policy (had) let itself be lashed too tightly to a single German government and party'. Declaring, somewhat prematurely, that 'the age of Adenauer is over', Kennedy argued that 'the fidelity to the West of the Socialist opposition is unquestionable, and yet sometimes our statements and actions seem almost to equate them with the puppet regime in East Germany.' Significantly, Kennedy traced the rise of the Brandt tendency in the SPD to more fundamental changes in European society, warning that 'in all of Europe a new generation is coming to power, and it is dangerous to become alienated from them'. 13

These changes also affected Atlantic trade-union relations. From 1960 on, when the SPD overtly attuned its policy to the NATO line, there was a marked improvement of relations between the AFL-CIO and the SPD which extended to relations with the DGB. This amelioration of the Atlantic climate at the labour level was further enhanced by the erection of the Berlin Wall in August 1961.14 In 1961, however, Brandt, then Mayor of West Berlin and SPD candidate for the Chancellorship, made clear that his Atlantic allegiance long-term stability of a humanized capitalist order. 'A Weste weakness is revealed in the fact that the highest degree of integration was achieved by a large number of nations is in the field of defence” (Brandt wrote). 'An elementary striving for security provisions stronger than the recognition that effective union is necessary in the economic and political fields. . . (the North Atlantic Alliance) might be strengthened as a means of cooperation and integration'. 15

As we shall see below, however, the actual partners of the United States in Germany during the Kennedy offensive were the liberal elements: Erhard, Friedrich, and others. Only during the second half of the 1960s were the German Socialists admitted into the government. Brandt, as Minister of Foreign Affairs, in this function was able to take up the Stresemann policy of expansion into the East, which dovetailed with the interests of German capital and represented a reemergence of the Mitteleuropa strategy of interwar vintage.

In the Netherlands, the Socialist Party (PvdA) likewise in 1959 adopted a new party programme. This programme converted the anti-capitalism of the previous programme (dating from 1947) to a corporate-liberal approach, in which capitalism was treated as a residue from an earlier era and the 'new workers' were expressingly catered to. The Socialists only briefly participated in a Centre-Left coalition in 1965-66. The modernizing generation within Social Democracy in this period emerged in the form of a 'New Left” tendency, combining elements of detente policy with technocratic tenets. The Socialist Party leadership had suspended party subsidies to its student organization, considered too far to the left, but soon found itself challenged by a host of new groups from the membership. From the broad array of student and democratization movements, a technocratic tendency eventually was able to take over the PvdA.16

In Belgium the combination of Atlanticism and technocracy became hegemonic within Social Democracy during the Kennedy offensive. It was embodied by Spaak and Spinoy respectively. . combination of the two policy lines provided the key ingredient in the government of the Christian Democrat Lefevre which entered the stage in 1961 after the belated reorientation to metropolitan Fordism and the Atlantic circuit of capital which the loss of the Congo finally imposed on the Belgian economy. Spaak, who had just left his post as Secretary-General of NATO, 'was the political exponent of Atlanticism in Belgian politics'. 17 Spinoy, on the other hand, 'could boast unconditional support of the Flemish Socialists in parliament and of the Flemish trade-union leadership. In fact, Spinoy was a functional complement to the ruling duo Lefevre- Spaak. Spinoy represented the hold on the Ministry of Economic Affairs by the technocratic and pragmatically thinking generation in the Belgian Socialist Party.' 18 Although this was not the first time the Belgian Socialists participated in the government, at no earlier occasion had the Atlantic dimension combined so clearly with the simultaneous penetration of the technocracy associated with the new industries prominent in recently industrialized Flanders.

As far as the British Labour movement was concerned, the adoption of perspectives associated with corporate liberalism likewise was accompanied by the rise of a new generation in the leadership headed by Hugh Gaitskell. The permeability of the Labour Party to the policies espoused by Gaitskell derived from a perennial susceptibility of the Labour Party to modernization and to the idealism of the American offensives. Labour policy, Nairn notes, had been shaped in the course of a gradual transition from the Empire to the Commonwealth, and the Grand Design of the Kennedy offensive with respect to the newly emerging nations fitted well into the set of concepts developed by Labour in this process. 19

The impact of the Fordist mode of accumulation on class consciousness among British workers was corroborated by the influential work of Anthony Crosland, The Future of Socialism (1956). Inspired by his discussions with the red-baiting American journalist Daniel Bell, whom he knew from the CIA-sponsored Congress for Cultural Freedom (CCF) and the New Leader, Crosland adopted Bell's ideas on the irrelevance of class struggle ideology to the modem living conditions of the working class. Crosland's ideas, in turn, were adopted by Gaitskell, who also had close links with the New Leader and the CCF, and who actually had been a participant (with Crosland, Bell, Denis Healey, and Rita Hinden) in the 1955 CCF Conference in Milan at which the 'end of ideology' thesis was extensively debated.20

The conflict between the old generation of reformist socialists and the new one of corporate liberals in the Labour Party came to a head in 1959. The day after Labour's election defeat, Crosland, Roy Jenkins, and Douglas Jay met at Gaitskell's house and agreed that a break with the socialist heritage of the Party had become mandatory. Within a week Jay wrote an article demanding the abandonment of the clause referring to 'common ownership of the means of production' in the Labour Party programme. Socialist Commentary in early 1960 commissioned a public opinion survey (which the Labour Party had not been able to pay for itself) to show that the nationalization demand indeed was a liability to the Party. However, at the Party conference of 1960, Gaitskell's attempt to delete the nationalization plank ('clause four') met with unexpected resistance from the trade unions; on another issue, that of defence policy, the Campaign for Nuclear Disarmament succeeded in having its demands adopted by the conference. With Gaitskell challenged on all sides, the Labour right wing went over to the attack. In October 1960, 25,000 copies of a pro-Gaitskell pamphlet were distributed by a committee chaired by Fabian General Secretary William Rodgers. Generous support from anonymous sources allowed Rodgers to set up office and establish the Campaign for Democratic Socialism, which" challenged the Labour Party majority and the unions with an unprecedented and successful propaganda campaign. Anti-nuclear senti- ment was channelled into opposition against an independent British deterrent, thus underwriting Kennedy's interpretation of an MLF.21

With loyalty to NATO restored, the relation to the EEC remained a source of contention within the right wing itself. When Gaitskell in 1962 united the Party in opposition to Britain's application for EEC membership by mobilizing nationalist sentiment, he alienated the Rodgers group, and the pro-Marketeers turned to Roy Jenkins instead.22 In October 1964, the general election brought Labour to power. Its election manifesto had pledged renegotiation of the Nassau/Polaris agreement and reiterated the Party's opposition to independent nuclear deterrents or a Norstad MLF. Embarking on a policy of tripartite corporatism, formalized in the National Economic Development Council of 1961 and accepted by the TUC in 1962-63, the Atlanticist Labour leadership of Gaitskell, Callaghan, George Brown and notably, Harold Wilson, yet failed to mobilize the working class behind corporate liberalism. As Middlemas writes, 'The compromise embodied in Harold Wilson's attempt to break out of the vicious old circle of debate about socialism into the new painless world of technology and intervention via industrial regeneration was not completed'.23 The NATO allegiance of the Wilson government was embodied by Denis Healey as Secretary of Defence. Besides other activities referred to already, Healey in 1958 following a Bilderberg discussion with Shepard Stone of the Ford Foundation participated in setting up the Institute of Strategic Studies in London as a NATO think tank.

In Italy, the Kennedy offensive likewise coincided with the entry into the government of the (majority) Socialists of Nenni, who had formerly been excluded. The opening to the left was motivated by a wish to secure the allegiance of the non-Communist trade unions to a policy of consolidation of the 'miraculously' developed economy. A pro-Atlantic position on the part of the Socialists was made a sine qua non of government participation.24 The existence of a Socialist minority party which was the product of the Marshall offensive (the PSDI) put this party in the better position in the 1963 elections and its gains compared favourably to a slight percentage loss of the PSI. The real breakthrough of a new generation in the Italian Socialist Party rejecting Marxism and oriented to corporate liberalism was of a later date.

This was also the case in France, where the equivalent of the Godesberg Programme was adopted by the new Parti Socialiste (PS) in 1972. Although the new working class had politically manifested itself before - in the CFDT and in the radical left party PSUC of which significantly, Mendes-France had become a member as well) - it failed to live up to the vanguard role it had been prophesized to perform in the May 1968 revolt.25

As Farhi writes, the alliance between the big bourgeoisie and small capital in Southern Europe as a consequence of a relatively undeveloped capitalism postponed the rapprochement between finance capital and the new workers along American and Northern European lines. This prevented the crystallization of a modem Social Democratic party capable of developing a partnership with finance capital, and left the mass of the workers to strong Communist parties.26 Mitterrand in France, and to some extent, Craxi in Italy, (like Papandreou in Greece, Gonzales in Spain, or Soares in Portugal) are in the process of both modernizing Social Democracy in the Godesberg sense and breaking the hold of the Communists over the workers in their respective countries. Although this process no longer can be directly associated with the American Atlantic offensives, it still represents an instance of the international extra- polation of the original New Deal synthesis. Its immediate centre, however, is Northwestern Europe; its Roosevelt is Willy Brandt and the Socialist International; and its universalist concept is the New International Economic Order.

European liberals and the perils of partnership

The Kennedy offensive also created the conditions in which the liberals and Liberal parries in Europe were able to recover lost ground in national politics. This renewed prominence was a function of the reassertion of Atlanticism and the corollary decline of ‘Euronational’ options, but also reflected the underlying changes class formation. In some aspects, the new liberalism was rather clc to its former self, as it expressed a resurgence of the money-capi concept elicited by the specific opportunities American industrial expansion held out to internationally-oriented European commercial and bank capital. But then, the Liberal parties and tendency were also subject to the restructuring towards corporate liberalism spurred on by the American offensive. To the extent this was the case, their Atlanticism tended to be attuned much more to the Partnership arrangement.

In Italy, the Liberal Party (PLI) profited from the Centre-Left coalition inspired by the Kennedy offensive only in a negative way. The PLI, because of its association with Fascism, had lost the bulk of its electoral support to the DC after the war. As far as specific fractions of the capitalist class were concerned, the PLI in the 1950s organized the private and private-family capitalists sticking to an orthodox liberal concept. When a Centre-Left solution of the blocked political situation in Italy began being contemplated in the DC, Confindustria, the employers' organization, took its distance from the party and supported the PLI. In 1963, this support contributed to the electoral success of the PLI, which was able to mobilize conservative voters disaffected by the Centre-Left strategy PLI by the DC under Fanfani; the party scored a post-war high of7%. 27

The Fanfani policy aimed at securing the hegemony of the corporate-liberal fraction in Italy and was congruent in key respects with the Atlantic Partnership concept. Its main bulwark in the capitalist class was the advanced Torino group of Fiat and Olivetti. In the 1950s, FIAT concentrated upon developing the domestic market, in which it enjoyed a virtual monopoly. As Valletta, FIAT head in this period and chairman of CEPES, testified, the basic market is the domestic market'. By the early 1960s, however, FIAT was realigning its strategy to combine domestic accumulation, internationalization (the linchpin of adopting the Atlantic Partnership perspective). According to Sampson, it was Kennedy himself who suggested to Valletta the idea of cooperation with the Soviet Union that ultimately resulted in the construction of the Togliattgrad car works. Valletta's successor, Agnelli, was prominent in the neo-liberal party PRI and favoured a conciliatory, offensive approach to the working class (the corporation had a tradition of accommodating its skilled workers). For his part, Olivetti, who died in 1960, even claimed to have built a 'new kind of enterprise going beyond socialism and capitalism.' His attempt in 1959 to establish an American foothold by acquiring Underwood, however, proved too ambitious.28 In 1964, Aurelio Peccei of FIAT, who later became known as the founder of the Club of Rome and sponsor of the New International Economic Order concept, was put at the head of Olivetti. 29

Through its support for Fanfani and the dynamic state sector seeking to replace the sterile and defensive rightwing bloc of the 1950s, the Torino group collided with a reactionary industry coalition composed of Pirelli, Falck, Pesenti (Italcementi) , Confindustria, and the electricity holdings fearing nationalization. Scorning the PLI, therefore, the corporate-liberals of the Torino group supported the small PRI. The Secretary-General of the PRI, La Malfa, became Minister of the Budget in the Centre-Left coalition and introduced the economic planning legislation intended to consolidate the rapid capital accumulation of the previous 'miracle' period. The inclusion of the Socialists was also meant to serve this purpose, but when La Malfa decided on a sharp deflationary turn of economic policy in 1964, the PSL considerably harmed its relations with the trade unions. 30

In France, the situation was much complicated by the rise of Gaullism and the further strengthening of presidential powers in 1962. The policy of compromise with small capital initially had reinforced the right-wing liberals of Premier Pinay's Independent Party, CNIP. De Gaulle's policy of rejecting American hegemony and the emphasis on the French nuclear strike force led to Pinay's dismissal as Premier in January 1960, but this was not the last crisis caused by the President's apparently anti-American policy. When in May 1962, de Gaulle again lashed out against the United States in his press conference on the French nuclear force, the CNIP members in the one-month old Pompidou government were instructed to vacate their government posts. Unlike the MRP ministers, the Independents refused to follow the instruction of their party however. Giscard d'Estaing, De Broglie, and Jacquinon representing the upper layer of the bourgeoisie and, more generally, the most international fraction of French big capital by their decision to stay, broke with the fraction of small capital organized in the CNIP.31

This episode marked a crucial development in class and party formation in France, reflecting the underlying shift towards the hegemony of the corporate-liberal synthesis. Pinay's Independents, representing small capital and the middle classes were associated with 'the discredited Fourth Republic and with the values of what was rapidly becoming an obsolete, rurally oriented society'.32 Giscard's Independents on the other hand represented the fraction of French capital keyed to the liberalization of the international economy spurred on by the American offensive and domestically were able to mobilize the younger and more urban bourgeoisie. 33

As Minister of Finance in a cabinet led by another banker (Rothschild director, Georges Pompidou), Giscard was in a key position to take the necessary measures for reinforcing the French franc at the expense of French industrial capital. Domestically, a liberal deflationary policy was launched in September 1963. Next, in 1964 Giscard proposed a plan for creating extra monetary liquidity to deal with Atlantic currency problems, to be distributed in proportion to the gold holdings of the various participating countries. This plan was undermined both by the opposition of the United States and by de Gaulle's hard line on a return to the gold standard. The latter’s concern, highlighted by the President's February 1965 press conference on the subject, shows that Giscard's policy was tied to the specific circumstances characterized by the American offensive, to which the liberal Giscard was much more responsive than the nationalist entourage of de Gaulle.

When the American offensive subsided and the climate for working out Atlantic arrangements deteriorated due to American policy in Vietnam, Giscard in January 1966 was removed from his post; 'partly', according to Davidson and Weil, 'because of the apparent failure of his domestic anti-inflation program, but part was also because of his suspected readiness to work for an agreement with the United States'. His successor, Debre, geared French monetary policy back to the gold standard doctrine favoured by the Gaullists.34

Still in the period of Atlantic unity, Giscard's group participated in an attempt to create a single liberal party out of the various scattered factions. In this moment 'vital to their class' in Gramsci's sense, the Radical Socalists of Servan-Schreiber, lecanuet's Centre, and Giscard's Republicains Independents between 1963 and 1965 tried to form a unified liberal party capable of attaining itself to the changed circumstances of the new presidential system, economic rationalization, and decolonization. Conflicts within the constituent parties, a well as the results of the elections in the late 1960s, terminated the undertaking. Only in 1972, did the Centre and the Radical Socialist join forces as a new party, the Rejonnateurs. Servan-Schreiber' party, which carried on the tradition of Mendes-France's modernizing Radical Party, in its following resembled the adherents of Giscard's Independents, but the big capitalists supporting it (notably the Schlumberger group), like Mendes-France and Servan-Schreiber themselves, traditionally had preferred a partnership policy to the all-out liberalism of the Atlantic Union tendency. The Centre, finally, inherited a corporatist tendency from the Christian Democrat MRP. Its president, Lecanuet, who had been the last president of the MRP before it was dissolved in 1966, was a pronounced Atlanticist. 35

At the organizational level, therefore, the unified Liberal party did not materialize, and neither did the Liberal parties attain a good election result in 1962. The impact of the Kennedy offensive in the relatively insulated political system of Gaullist France remained limited to the temporary prominence of GIS card following his break with Pinay. But because of his apparent loyalty to de Gaulle - which in Giscard's case rested upon an appreciation of the strong executive established in 1962 rather than on his support for the policy of national independence - Giscard lost the support of the outright Atlanticists and liberal Europeanists, who turned to Pinay instead.

The most prominent representative of the Atlantic Partnership or Euramerican concept in France was Jean Monnet. 1962 was Monnet's year of triumph, in which he thought the partnership of equals between the United States and the EEC, by which the Soviet Union could be effectively checked, was actually materializing. In Monnet's view, this would entail European military autonomy as well. 'Equal partnership must also apply to the responsibilities of .. common defence', he wrote in an Italian newspaper in April 1963. 'It requires, amongst other things, the organization of a European atomic force including Britain and in partnership with the United States.'36

Monnet's concern over a European defence role fitted narrowly into his concern for the modernization of French industry, but also reflected his concept of making the Americans support French initiatives towards channelling West German ambitions into supra-national arrangements, a tradition established by Briand. The establishment of a corporate-liberal synthesis in Western Europe as a bulwark against socialism was Monnet's ultimate ambition, setting him apart from his former associate, Pleven, who tended to shrink from upsetting traditional economic arrangements in France. 37

The web of economic interests in which Monnet and his associates were active is particularly revealing. Himself associated in the late 1920s with Blair and the Bank of America, Monnet's eventual network in private finance comprised the Lazard Freres, Lehman, and Goldmann, Sachs groups in New York, which after the war increasingly gravitated to the Rockefeller orbit. Pierre Uri, Monnet's right-hand man, was European director of Lehman Bros. Lehman partner George Ball, the architect of the Partnership policy, had close relations with Monnet due to his activities as legal counsel of the ECSC and the French delegation to the Schuman Plan negotiations. Robert Marjolin, one of Monnet's assistants in the First Modernization Plan, a proponent of Keynesian ism and a member 01 the Socialist Party, subsequently joined the Chase Manhattan board. 38

The views espoused by Monnet and the corporate-liberal bourgeoisie increasingly challenged the Gaullist Euronational concept that they so far had travelled along with. Lerner and Gorden found that the French elite panels they interviewed showed a rising appreciation of Atlantic integration, to the point of becoming opposed the Gaullist policy in the post-1965 period. In 1965, Pinay was offered enormous sums of money if he was willing to run against de Gaull as a Europeanist and liberal candidate. French capitalists, according to a poll held at the time by the magazine La Vie Franfaise among the presidents of the top-100 major French companies, were almost evenly split between de Gaulle and Lecanuet, who eventual accepted the offer Pinay turned down. 39

All along, the Americans were attempting to intervene directly in French politics. In a conversation in December 1960, recorded by Alphand,' Couve de Murville complained that 'it was indecent of the Americans to pay French politicans and parties', of which he claimed to have proof. Alphand suggested that Couve see Allen Dulles, the head of the CIA, to discuss the matter. But, as Couve told him, it was Dulles who made the payments.40

It would take until the 1968 crisis, and the further maturation corporate liberalism and the accumulation pattern on which reposed, before the majority of the French big bourgeoisie came toaccept the need for a more flexible political system, capable of digesting serious social challenges more smoothly than Gaull one-party rule. In June 1968, family outsider Edmond de Rothschild in Le Monde argued for the need of a third force between Right and Left in France. His support for Poher's candidacy against Pompidou the confidant of the main Rothschild branch at the Rue Laffitte, in the Presidential elections of 1969 did not bring the desired result however .41

In West Germany, the resurgence of Atlantic liberalism contributed to a reentry of the liberal Free Democrats into the government. In the spring of1961, some time before the elections, newspapers under the influence of industry began to stress the need to draw the FOP back into government, even if the Christian Democrats secured an absolute majority in the upcoming elections. This was motivated by the need to balance the labour wing of the COU.42

The 1961 elections were a victory for the renewed FOP. After the decline in the 1950s, the party, in which the corporate liberals meanwhile had secured hegemony, won 12.8% of the vote: its best performance before and since. One of the leaders of the modernists who now dominated the party, future Federal President and eventual chairman of the Bilderberg Conference, Walter Scheel, became Minister of Economic Cooperation, a post which significantly had been left vacant after FOP Chairman Blucher had vacated it in 1956.

In the course of its re-entry into the government, a significant episode took place which brought out the shift from small capital to the big bourgeoisie within the FOP, and in this respect may be compared to developments leading to the split between Pinay's and Giscard's Independents in France. In the new government, the post of Minister of Finance went to H.. Starke, the general manager of the Chamber of Commerce in Bayreuth, a small town in Bavaria. Starke represented the tendency in the small and medium bourgeoisie that tended to interpret the anti-cartel and liberal line pursued by the Minister of Economic Affairs, Ludwig Erhard, as an anti-monopolistic policy.

The real thrust of capital accumulation in this period, however, was towards concentration and internationalization of the strongest capitals, in spite of such apparently 'populist' instances of liberalism as the lowering of property taxes or the re-privatization of Volkswagen in 1961. The freedom of the big banks was consolidated by the new bank law in 1961, and within the corporate structure, the smaller owners' interests were seriously prejudiced. Under the Nazi law which remained valid until 1956, changing the legal status of companies and special tax provisions encouraged the majority owners to proceed with consolidating their hold on the companies in their orbit. A court decision in 1962 terminated resistance of the small shareholders.43

Starke's appointment at the key Ministry of Finance, therefore, was intolerable to the upper layer of the bourgeoisie, who in the prevailing circumstances were reinforcing their position and who were led by Otto Friedrich, the informal leader of the Atlantic Union tendency in the German bourgeoisie. Friedrich instead favoured the appointment of R.Dahlghln, the president of the Economic Affairs Committee in the Bundestag and a fellow director of his in the Phoenix rubber company, partly owned by the American Fireston concern. Friedrich's preferences prevailed and in December 1962 troublesome Starke was removed from his post and succeeded by Bahlgrun.44 Blessed with the prominence of the liberals and the hegemony of the big owner's point of view, bank capital and retail interests fared particularly well in the profit-distribution process from 1963 on.

In Belgium, the fate of the liberal Party in the Kennedy offensive resembled that of the Italian PLI. Here, too, the modernizir elements in the bourgeoisie acted through the Christian Democr and Socialist parties to capitalize upon the opportunities offered I the combined effects of the penetration of American methods production and actual American investment. The left ovre-Spa government, which ruled from 1961 to 1965, and the short-lived Harmel-Spinoy cabinet which held power until February 1966, were the vehicles for this strategy. They launched a full-scale attack on the backward, rentier-dominated structure of the Belgian economy. The tax system was radically altered and a system of advance payments was introduced facilitating tax control of rentier incomes, while at the same time diminishing the dependence of the Belgian state on the traditional financial interests. Also due to the loss of the Congo, rentier incomes declined in the Kennedy offensive period in Belgium. 45

The liberal Party by default was pushed to the right, but its electoral success in the 1965 and 1968 elections (after which it declined again) was primarily based on its ability to capitalize upon processes of rationalization and deconfessionalization characteristic of the period, notably in Flanders. Its success in penetrating formally Christian and working-class sanctuaries in this region (to which end the party abandoned its anti-clerical posture and renamed itself the Progress Party (PVV/PLP) in 1961), did not extend to Wallonia.The conservative element in the party here was dominant. Still in 1974, the Walloon and Brussels liberals drew 75 to 80% of their votes from the small bourgeoisie; whereas in Flanders, almost half of Liberal voters were workers. 46

In Britain, the marginal position of the liberal Party prevented it from adequately expressing the modalities of class formation. Yet the liberal effect of the Kennedy offensive was again noticeable, as it had been in 1950. The 1959 general election went to Macmillan, but 'what was more surprising was the spectacle of a modest Liberal revival'.47 The Liberals put up the greatest number of candidates since 1950, and on the average increased their vote in the districts where a Liberal candidate stood, resulting in an increase of their seats in Parliament from six to nine. The Macmillan cabinet meanwhile resorted to deflation again in 1960. Rentier interests still were strong, and 1961 brought renewed measures to defend their cherished pound against impingement by expansive policies. By now, such expansion immediately threatened the balance of payments, since the failure to modernize British industrial capacity translated rising demand straight into growing imports for which no competitive exports compensated. When an expansive policy was tried again by the new Chancellor of the Exchequer, Maudling, in 1962, it led to a new balance of payments crisis, forcing the Wilson government to make a deflationary turn again soon after its assumption of power in 1964.48

The Dutch Liberals, finally, had already entered the government in 1959, but the De Quay cabinet was of a marked conservative and narrowly Europeanist orientation except for the Atlanticist Ministry of Foreign Affairs. Still in 1960 and 1961, the government resorted to credit restrictions to put a brake on industrial expansion; the corporatist mechanisms of collective bargaining were abandoned from 1959 on. In the Defence Ministry, which was held by the Liberal Party VVD, the two tendencies, Atlantic and European, confronted one another, and following a serious conflict the Europeanist sphere- of-interest line triumphed. The initial minister, Unilever director Sydney van den Bergh, in the struggle over the choice of a new fighter plane then in progress seemed willing to contemplate the Northrop Freedom Fighter on the basis of a direct transaction with the Americans. Others in the Defence Department, however, were more responsive to the plan of the German Minister of Defence Strauss to produce Lockheed Starfighters through a German- Belgian-Dutch consortium. Strauss estimated that the Lockheed deal would allow German industry to develop a modern arms manufacturing capacity which fitted into his strategy for a European nuclear force. Rumoured contributions to the CSU party treasury in this case may have helped to underscore this preference, since a choice for the likewise available Dassault Mirage was attractive to Strauss from this very vantage point, too. 49 After Van den Bergh had sent the Dutch air force chief Schaper to California to find out about the Northrop plane, a scandal involving the Minister's private life was sensationalized in the French and German press which led to his fall. His successor Visser, the secretary of the Dutch employers organization, had worked with the Germans during World War Two and was more inclined to yield to West German pressures. Following discussions with Strauss in December, 1959, the De Quay cabinet decided to buy the Starfighter. 50

With the formation of the Marijnen cabinet in 1963, based on the same parties, liberalism was reinforced, with the Atlantic aspect particularly prominent. At the Defence Ministry, Visser was replaced by the Catholic navy officer and former state secretary " P .J. S. de Jong, who subscribed to the Atlanticist tradition of the Dutch Navy. The MLF plan, which hitherto had been rejected, now was endorsed by the Dutch government as a means to strengthen Atlantic integration and prevent other countries from achieving nuclear independence. 51 The Atlanticist turn in the Netherlands in 1963 was in part relayed through Germany; the formation of the Erhard government notably 'raised the hopes of the free-traders'.52 When in 1965, a conflict over the liberalization of the media brought down the government, the Liberal Party did not return in the next cabinet.

In all European countries, the Liberal parties were directly affected by the Kennedy offensive and the processes of class formation which it sought to guide by its Atlantic Partnership policy. In Germany an France, the growth of the FDP and RI both expressed the rise of modernizing technocracy and the predominance of the Atlantic fraction of the bourgeoisie. In Belgian Flanders, the Liberal Part also showed signs of developing in this direction, but in Wallonia, its middle-class constituency made for a conservative orientation of the party. The corporate-liberal impulses developing in the class structure accordingly were translated into actual policy by a Christian Democrat/Socialist coalition. In Italy, a similar pattern occurred, while the Liberal party PLI was forced into the conservative position demanded by a constituency of the lesser bourgeoisie, a Centre-Left coalition undertook to modernize the country's economic structures. The PRI, which in some respects approximated the profile, the renewed FDP in Germany or the British Liberals, had a negligible: following in the country, however (about 1 %). In the Netherlands the Liberal Party VVD was a conservative party, comparable to the PLI.

The Christian Democrat response

Within Christian Democracy, the liberal tendency again won the upper hand in this period. In Germany, NATO allegiance was the major factor, and the renewed adherence to American leadership was of importance also for the shift in the position of Dutch Christian Democracy. In Italy, the restructuration of class relations to fit the Fordist accumulation pattern was the major factor, and this dimension was also decisive in Belgian Christian Democracy. Hence, the course of events in the two trendsetting countries of Germany and Italy can illustrate the larger pattern of events.

In Germany, Erhard's position within the CDU was reinforced again from 1960 on. Having lost considerable prestige as direct American intervention in German affairs dimpled, Erhard at the close of the 1950s had several serious clashes with Adenauer on economic policy. His effectiveness was prejudiced by the fact that Berg, the conservative leader of the organization of German industry, had privileged access to the Chancellor in these matters. Only in March 1961, did Erhard, the then Minister of Finance Etzel, and the President of the Bundesbank (and Schacht's former collaborator) Blessing, succeed in convincing Adenauer of the im- mediate necessity to embark on a policy of deflation and revaluation of the Deutschmark. After this success for the Liberals, on which Berg was not consulted in advance, the Atlantic turn within the CDU was accomplished in several steps.

In November, the Christian Democrat Schroder, the director of Klockner steelworks, at the insistence of the FDP became the new Foreign Minister in the coalition government. Schroder's Atlanticism not only had been reinforced by the record sales of his company in the United States, but also because of his conciliatory policy towards Eastern Europe and the Soviet Union, which dovetailed with Kennedy's offensive approach. Within the CDU, it was Schroder who, together with Erhard and Thyssen director Birrenbach led the opposition against the Paris treaty with France.s3

In December 1962 the Der Spiegel case against Strauss, which arose out of a confrontation between the new American and the existing West German strategic doctrines, led to the dismissal of the Bavarian advocate of German nuclear capability. Polls held immediately afterward showed that Strauss's fall was strongly approved of by Left and Liberal voters, but CDU/CSU voters, and notably the Catholics among them, were still divided and confused. Der Spiegel role in the reaffirmation of the Atlantic alliance and liberal democracy, moreover, cost it the advertising accounts of the traditional.ly continentalist Hoechst chemical concern and of the Boscb Ail electrical engeneering company. 54

In the course of 1963, Kennedy's appearance at the Berlin Wall, which underlined the American guarantee, reinforced the Atlanticists' position. In October, Erhard succeeded Adenauer as Chancellor. Although Adenauer as chairmain of the CDU continued to attack the liberal Atlantic turn, and Schroder in particular (whom he reproached for spoiling the relation with France by dropping thc demand for a reorganization ofNATO);55 the trend towards renewed acceptance of Atlantic integration was not reversed.

In Italy, during the 1950s, the combined weight of the small middle class, and notably, the small farmers' organization, Coldiretti, had provided the conservative capitalists organized in the Confindustria and the landed interests in the Confagricultura allied with them with a sufficient following to keep the DC to the Right once the liberalizing impulses of the Marshall offensive had subsided. 56 Parallel to the split in the employers' front, however, which led to a separate organization (Intersind) regrouping the dynamic public industries in 1957, a modernizing tendency developed in the DC. This tendency, represented by Gronchi, Matte, Vanoni and Fanfani, sought to put into practice a concept of control based on the reconciliation of big capital and the organized working class. In contrast to the German situation, modernization of social relations in Italy required an opening to the Left, and the traditionally 'Mediterranean' and 'Third Worldist' outlook of the Fanfarani group gave it excellent credentials among Social Democrats in particular. Among the Italian Communists, who began taking the distance from the Soviet Union from 1956 on, this strategy eventually evoked a certain sympathy as well, although for the time being, Fanfani's aim, as he publicly confirmed, was still to 'woo the Socialists away from the Communists'. 57

Rather than taking the Atlantic dimension as their point of departure, the Italian Christian Democrats gave priority to consideration of domestic stability during the transition to the new phase policital development necessary for controlling the restructuration of existing class alliances. At the DC Congress of January 1962, which the decision to attempt an opening to the Left was made guarantees as to the maintenance of capitalist relations of production and imperialist allegiance had to be explicitly added so as not create the impression that a transition to socialism was being prepared. 58 The forces supporting the Centre-Left solution had been mentioned already. Confindustria, sticking to the undiluted capitalist viewpoint and close at the time to the PLI, opposed the arrangement, which contributed to the sharp decline of the organization's influence in the 1960s.59 Contrary to the markedly Atlantic Union orientation which prevailed in Germany and the Netherlands during the Kennedy offensive, the Italian episode had a distinct Atlantic Partnership, and even 'Gaullist' quality, which was brought out by such instances as FIAT's Togliattigrad project, and by agreements with France in which the Italians supported French industrial innovations (like SECAM colour television) and military prototypes (notably the Mirage fighter plane and the AMX 30 tank).60

2. The emergence of Atlantic Fordism

The American offensive was in full swing when Kennedy was assassinated in late 1963. For at least two more years, American policy remained geared to the offensive configuration of social imperialism and the internationalization of finance capital. Until his own election in November 1964, Lyndon Johnson, who took Kennedy's place, 'was. . . thought of, and was acting, as the care-taker of the Kennedy Administration'.61 Johnson was inherently more willing to follow a moderate foreign policy, but he was propelled by the forces set in motion during the previous two years and felt obliged, among other things, to escalate the US military presence in Vietnam which the Kennedy cabinet had decided just before the President's fatal visit to Dallas.

Domestic reform still was being framed in the expanding context of economic growth and commitment abroad, and Barry Goldwater's conservative alternative was particularly inopportune in 1964, the year of the Civil Rights Act. In the course of the election campaign, Johnson obtained a congressional mandate 'to take all necessary steps, including the use of armed force' in South-East Asia in the Tonkin resolution of August 1964. Once again, a 'peace' candidate drawing on a legitimacy won by social reform obtained a mandate for entering a foreign war. The Tonkin resolution was 'signed by Congress in an atmosphere of urgency that seemed at the time to preclude debate', Senator Fulbright, who accomplished the feat, wrote in retrospect.62

Popular consensus was only consolidated when, following his landslide victory, the architect of Tonkin announced his Great Society Program in the State of the Union address of January 1965.

Promising further measures in line with the anti-poverty program promulgated one year earlier, the President thus rewarded the working-class and black voters who had turned out massively to vote for the Democratic ticket. A limited medical insurance programme, educational and regional measures, as well as a softening of immigration laws meant to accommodate ‘ethnic’ groups, was duly enacted. 63

These measures were not just calculated tricks to obtain a free hand in Vietnam. They were designed to satisfy rising popular aspirations, and were made possible by continued economic expansion. But whatever the degree of honest compassion with the poor and underprivileged on the part of those who devised and administered the new social legislation, its function was to reinforce the legitimacy of the Executive in serving the interests of American capitalism, and these in turn could only be served in a context of international expansion. Vietnam was seen as the test of US willingness to support its interests in the periphery at large, apart from the importance of South-East Asia proper as a source of tin, tungsten and rubber.

The social-imperialist mechanism connecting domestic reform with self-righteous expansion was always in one way or another consciously articulated by the top leadership. In the case of Lyndon Johnson, the basic idea was presented to him when he sought expert advice on a grand conception befitting his new responsibilities. The historian and later special consultant to the President, Eric Goldman in a private meeting on 4 December 1963, explained to Johnson that mounting social tensions were threatening the effectiveness of both domestic and foreign policy. Encouraged by the President, Goldman went on to point out that 'faced with such situations, past Presidents had drawn the country together by calling upon the doctrine of national interest. . . and (emphasizing) the Office oft Presidency as "the steward" of the needs and aspirations of the general population.' Referring to Theodore Roosevelt as a proponent of this strategy, Goldman stressed that 'it was important to do this. . . because a too sharply divided nation was an immobilized nation, incapable of carrying out a coherent foreign policy or meeting the demands of the domestic scene. A President who effectively identified himself with the national interest was in a position to lead away from the stale, obstructive emotions associated with past divisions. . . towards the kind of attitudes that met changed circumstances'.64

Historical awareness of the social-imperialist mechanism, of course, could not by itself control the objective processes it sought to grasp, which were operative irrespective of the degree of consciousness on the part of the actors in them. By 1965-66, both the optimism and economic boom had spent themselves, and the contradictions of the attempt to overcome domestic class struggle by a mixture of reform and expansionary policies came to the surface. The emancipation struggle of the black population, in particular, threatened to push beyond the limits envisaged by liberal reform. With Black Power rising behind the peaceful figure of Reverend King, 'white backlash took on a new meaning as well'.65 The countermobilization of the white middle class also affected the attitude towards the war in Vietnam. Support for American intervention there shifted from the optimistic idealism of the New Mandarins to a more vitriolic and reactionary nationalism.

As long as domestic economic expansion lasted, the corporatist truce dictated by near-full employment remained intact. The guide- posts programme reached a high-water mark in 1964, the year of the Tonkin resolution, when it was given a more prominent place in the economic policy of the Johnson Administration. 'The year 1964 was perhaps the heyday of the guideposts', Mills writes, 'in which they experienced an unusual degree of overt presidential support'.66 Union support for the Vietnam war developed in line with the general expansion of the American economy. As unemployment went down and war orders began pouring in, the unions in this respect probably spoke for a majority of American workers. 'The war was far away and jobs were a reality’. 67

American economic policy with respect to the profit distribution process in the Kennedy offensive at first seemed to stick very much to the balanced budget philosophy of the 1950s. The emphasis was on incremental tax measures rather than on stimulating industrial production by expansive budget policy, incidental injections apart. Under Johnson, a major tax revision was enacted. By that time, the profit share of manufacturing, industrial share prices, and overall corporate income were already moving upwards, so that the mean- ing of the tax cut lay primarily in the profit-distribution sphere rather than in making Kennedy’s campaign pledge to ‘get the nation moving again’ come true.68 The 1964 tax cut reduced effective corporate tax by introducing new depreciation schedules and a 7% investment tax credit. This contributed to sustaining the current rate of investment, and in terms of profit distribution the benefits accrued particularly to corporations. Dividends, on the other hand, profited from the 1964 tax cut only with considerable delay.69

The expansion of the American economy interacting with the Kennedy offensive simultaneously was extrapolated to the Atlantic level through foreign investment. In the Marshall offensive, the export of 'public' capital, i.e., the US government-to-government loans and assistance programmes, had accounted for a negative balance for the USA in the Atlantic economy; now, various forms of investment in Europe produced a comparable negative balance.

The wave of American investment in Europe causing the negative balance was composed of several elements. First, there was a jump in portfolio investments, from $1.8 billion in 1957 to $5.4 billion in 1964, at which level they remained, roughly speaking, for the rest of the decade.70 US direct manufacturing investment in Western Europe grew from $2.1 billion to $6.5 in the same years, but in 1969 had reached $12.2 billion already.7! In the initial phase of the Kennedy offensive, American capital moved mainly to 'other Europe’ which may be roughly equated with the EFT countries (with a strong over-representation of Britain), whereas by 1963-64, the continental EEC share in incoming US direct investment was relatively enlarged. In terms of capital fractions, the rise of US direct investment in Europe in this period notably concerned productive capital. As far as European investment was concerned, a comparable movement towards the internationalization of productive capital to the United States became visible only from 1968 onwards. It took until 1973 before Western European productive investment in the United States reached the level of the hitherto predominant European direct investment in American bank, insurance and oil ventures.72

The Kennedy and Johnson administrations attempted to stem the outward flow of capital in order to prevent the deterioration of the US balance of payments and protect the integrity of the American domestic economy and the social-imperialist compromise worked out in its context, but their measures only served to accelerate the internationalization process. The Interest Equalization Tax of 1963, meant to prevent US money capital being used for internationalization of production, led to the creation of the 'Euro-capital' market; the 'voluntary balance of payments program' launched in 1%5 and, notably, its conversion to an obligatory programme in 1968 further swelled the Euro-capital (and Euro-money) markets.73 Together with US bankers' concern to prop up their domestic competitive position as 'world-wide' institutions, internationalization of bank capital in response to these developments led to a synchronization of the international circuits of money and productive capital as international finance capital. By then, a truly Atlantic capital seemed imminent, not only involving an intra-company division of labour in the context of a reintegration at the Atlantic level of the circuits of commodity, money, and productive capital, but also engendering a commensurate format of labour relations and profit distribution.

An Atlantic format of labour relations

In the same period, a form of 'company feudalism' specifically associated with the international spread of American industry, but restricted in its positive effects to the better-off workers, developed in the context of the ICFTU. In November 1964, at the Automotive Department meeting of the International Metalworkers Federation in Frankfurt, a decision was taken to establish World Corporation Councils. This form of organization represented an extension of the corporatism practiced by the International Trade Secretariats, and was an initiative of Walter Reuther of the UAW.74 From 1966 on, WCCs were formed in the automobile, chemical and, rubber industries, practically all in the North Atlantic area. The WCC's tend to push up the wage level in the European affiliates of US companies and accordingly caused frictions between American and European trade unionists as long as the latter stuck to their national bargaining strategy.7S

The WCC's fostered the crystallization of a privileged fraction of workers. The Michelin wcc stated the purpose of its organization was protecting the interests of the 'long serving workers' in prosperous parts of the world'. 76 The flow of benefits increasingly became a two-way affair, benefiting American employees of internationalized firms as well, but all the same remained confined to privileged workers in the Atlantic area. 'By holding out the posibility of international trade unionism', a trade-union leader wrote 'the ITSs and WCCs have simultaneously held back the development of stronger forms of working-class organisation and smoothed the way for the further growth of the Transnational Corporations.’77 Pointing out the selective solidarity of the WCC's, Etty and Tudyka in their study quote a UAW pamphlet stating that the WCC's at insurance for the strong and at the same time the best hope of strength for the weak'. 78

However, the Kennedy offensive stopped far short of the full internationalization of US industrial relations, and by the late' Atlantic unity at the late 1960s level of the comprehensive international union organizations was breaking down. As we shall see in the next chapter, in line with the brief hegemony of an independent-spirited corporate-liberal bourgeoisie in Europe, the Fordist compromise would be recast in a European framework, in which the German co-determination tradition would become the frame of reference European trade-union organization.

The flow of portfolio capital

The acceleration of the internationalization of American capital after the establishment of the EEC affected the various segments of the bourgeoisie associated with it differently. Interacting with different forms of foreign investment and national differences in profitability the prominence of either rentier or real capital in the American economy may be tentatively associated with particular concepts of Atlantic unity through the profit-distribution process.

The rate of profit realized by American capital in Europe was the rate of profit of European capital or slightly above it. This r profit was well above the rate attained by American firms operating in the United States during the 1950s. Under these circumstances, the internationalizing manufacturing ventures tended to gravitate to the critical mass of interests clamouring for a strong dollar, like banks, oil companies, owners of savings, and portfolio investors with interests abroad.

In the early 1960s, domestic operations became more important again as a consequence of expansion under the Kennedy offensive. The rate of profit of American manufacturing at home rose above the profit rate on all US foreign direct investment, and approximated the rate attained by American capital in Europe. Although direct investment in Europe kept on increasing, US industrial capital gained a new interest in domestic production and internationalization through commodity exports. The expansion of the military budget, and the Vietnam War, all played their part in this respect.

After the European recession of 1966-67, rates of return on American capital in the area improved significantly, and restored, in terms of economic policy coalitions, the situation of the late 1950s. 79 This time, however, American direct investors in Europe represented a much more important fraction of aggregate US foreign investment. Whereas, in the 1950s European holdings only accounted for about 5% of all profits made through foreign direct investment; by 1970 it had risen to almost 15% .80 In contrast to the general rate of profit in the United States, profit rates of major American multinationals, which had fallen from their war levels except for the late 1950s, after 1965 again stabilized or even, in the case of General Motors, increased.81

For American portfolio investors in Europe, the rate of return varied greatly for different countries. During the period 1951-69, the mean rate of return on common stock owned by US investors was 17.1% for investments made in Germany, 10.6% in Italy, 9.7% in the Netherlands, 8.6% in France, 6.2% in Britain, and 3.6% in Belgium (portfolio investments in US companies brought a mean rate of return of 11.5% to American investors).82 As to the actual firms invested in, chemical companies were most important as far as Germany was concerned. 25% of the capital of the successor companies of the IG Farben combine (BASF-Bayer-Hoechst) at the beginning of the 1950s was owned by foreigners, notably Swiss and American investors (who also owned 12% of Bayer). 87 The most important investment object in Italy was Montecatini, a renowned 'blue chip' on the New York Stock Exchange. Philips, KLM, Royal Dutch/Shell (one of the first major European concerns to be introduced at the New York Stock Exchange in 1954) were the favourite shares as far as Dutch capital was concerned. For France, it was Péchiney, while Unilever and British Motors were favourites in Britain.84 Significantly, in the early 1960s a restructuration of American portfolio investment in Europe began, corresponding to the level of development reached by European capital in terms of Americanization and the growth of finance capital. As Fortune reported in 1962, 'the more sophisticated investors in Western Europe have recently been turning their attention to banks, insurance companies, and companies that serve the consumer market."85 German and Dutch insurance companies, German banks, and Dutch Robeco investment company, Belgian Gevaert, and French Perrier were prominent in the new wave.

The list of high-return countries for portfolio investors was quite different from the list of high-return countries for direct investors. Taking two years, 1957 and 1963, as examples (one at the outset an one at the high tide of American direct investment in Europe), the picture for non-distributed profits on American direct investment yields almost the opposite result in rank-order. For 1957, Belgium heads the list with 30.4%, followed by Britain, France, West Germany, the Netherlands, and Italy. For 1963, the percentages have fallen, but the rank order was only changed for Germany, now third instead of France, which is fourth. 86 With due caution, then, it can be argued that in periods of prominence of rentier capital in the United States, the portfolio investors in Europe were part of the critical mass of interests willing to accommodate German ambitions and tendencies towards continental European unification and autarky. In the offensive periods characterized by corporate and industrial reinforcement in the United States, on the other hand, the activist perspective of the direct investors contributed to the orientation towards Great Britain and towards offensive Atlantic unity in American foreign policy. Although evidently not sufficient to e plain these orientations, the international dimension of the profit distribution process of American capitalism does identify sources interest supporting one or the other orientation.

Among the European countries with important portfolio investment in the United States, Great Britain and the Netherlands WI the most prominent. During the war, foreign ownership of American stock declined at least relatively. From the 5% to 7% of American corporate stock owned by foreigners in 1937, only 2% remained in 1954.87 From the late 1950s on, portfolio investment in the United States increased again. The United States and Great Britain in the period 1960--1975 were the main portfolio capital importers; Switzerland, Belgium and Luxemburg, and Italy were the main portfolio exporters. For West Germany and the Netherlands, the export and import of this form of capital were roughly in balance.88

The actual flow of portfolio capital from Western Europe to the United States cannot be identified for the individual countries, since much of it went through intermediaries in Switzerland, Luxemburg, or London. Confining ourselves to the countries under review, a 1967 IMF study trying to locate the domicile of foreign stock and bond owners in the Atlantic area found that, relative to population, Belgium and the Netherlands were the largest foreign portfolio investors; in terms of portfolio capital export in the period 1962- 1974, also divided per head of the population, Belgium/Luxemburg and the Netherlands again headed the list. In both cases, Italy followed at a distance, while Switzerland was on top when all European countries are taken into account.89 These results should not come as a surprise since the share of national income accruing to rentiers (dividends, rent and interest) in 1967 for the Netherlands was 16.4%, for Belgium 10.9%, and for Italy 9.0%. French and German rentier incomes, on the other hand, accounted for only 4.3% and 2.8%. The British percentage was in between: 7.5%.

To the degree that rentier incomes in Europe were related to American corporate expansion, rentiers in these countries were part of the critical mass of interests supporting Atlantic unity policies in their respective countries. In the late 1950s and again from 1962 to 1965, European investors made large investments in dollar bonds (floated, incidentally, by European public authorities), showing their preference for dollar holdings.90 A straight-forward coincidence between the actual increase of European rentier incomes and American corporate expansion can be noted only in the case of Germany, but this does not by itself invalidate the hypothesis of the different profit preferences underlying different orientations to Atlantic unity.

3. Vietnam and de Gaulle

While the processes of internationalization and equalization of accumulation conditions for international capital were still developing, their original driving forces in the American class structure showed signs of slackening. By mid 1965, the combined effects of war expenditure and Great Society programmes began having an inflationary impact. The corporatist guideposts, having bee renewed by the Johnson administration for 1965, were now undermined by industrial expansion and an exhaustion of the labour supply. Wage increases in excess of the guide-posts were wrested from the employers, and by 1967-68, the guide-posts for all practical purposes were abandoned.91

Support for American activism abroad correspondingly suffered At the AFL-CIO convention in December 1965, a clause on the peaceful ending of the Vietnam War was adopted to accommodate union opposition against the war, of which Walter Reuther and Emil Mazey of the VA W had made themselves the spokesmen. Meany and the rest of the leadership rejected the clause, but it was included nevertheless at the request of Vice-President Humphrey. Humphrey intimated that the Johnson administration would not like to see an open controversy on the convention floor destroy the image of solid trade-union support for its Indo-China policy. In 1966, a conflict related to foreign policy erupted within the AFL-CIO when Reuther publicly accused the organization of working with the CIA.92 Although it would take several more years before a distinct trade-union opposition to the war developed, the class truce underlying the Kennedy offensive and enforced by the corporatist guidposts programme was broken. As before, the effectiveness of the controls in terms of labour peace lasted as long as the offensive remained more or less proportionally intertwined with domestic reform, but greatly diminished when the self-confident optimism underlying both gave way to reactionary countertendencies.

As far as the relations between fractions of capital were concerned productive capital started losing ground to money capital from 1966 on. In due course, the liberal format of trade policy was abandoned. By 1967 protectionist pressures were stronger than in the 1950s: the Johnson administration's 1968 effort to extend the Trade Agreements Act met with a host of protectionist bills. In the ensuing legislative battle, most of these were defeated, but the extension proposal went down as well. 93 Meanwhile, friction with Europe was increasing as a result of divergent interests in the sphere of international monetary relations, dramatized by the growth of American investment and the application of extraterritorial jurisdiction by the United States. As the President of the International Chamber of Commerce, IBM chief Thomas Watson, observed in 1967, 'the great international wave that created the Kennedy Round and raised us to where we are is beginning to break itself on the rocks of s quarrels.'94

European unwillingness to follow the dictates of American policy in the economic sphere was bolstered by growing popular revulsion against the war in Vietnam. From the vantage-point of the Western European corporate-liberal bourgeoisie, the Atlantic Partnership concept was becoming detrimental to long-term interests of im- perialism by tying the Europeans too closely to an American policy rejected at home as well as in the Third World. Henry Kissinger, in a 1965 book, recognized the element of revenge in the recalcitrance of Western Europe with respect to American leadership. 'Some European leaders', he wrote, 'are now repeating the American argument of the fifties: that the larger interests of the free world are sometimes served by allowing for differing, occasionally even competing, Western approaches to the emerging nations. '95

In this perspective, it was not surprising to discover France in the front row of the restive European allies. Having been duped and replaced by the Americans in Vietnam when still entrapped in its colonial past, de Gaulle's Fifth Republic now was part of a Western Europe reconquering a world position on a modern industrial basis. Moreover, in that context, France was the only continental power of consequence able to freely express its ambitions to playa military role of adequate dimensions. The existing structure ofNA TO, which the French President himself had tried in vain to change in 1958, was a serious obstacle in this respect. As one of the General's generals noted in 1966, 'the military organization of NATO has become vir- tually a body without a head. . . because the major subordinate commands, entrusted to American generals and admirals, have tended to become independent of the inter-Allied hierarchy while depending directly on the Pentagon in their capacity as commanders of American forces.'96 In May 1966, de Gaulle cancelled French military obligations under the NATO Treaty. In a letter to President Johnson, he reassured the American leader that France would renew the signature to the Treaty when it expired in 1969. The basic allegiance to the capitalist world accordingly was not in doubt; the disagreement was on the actual use of military force by the partners of the alliance, and hence, French non-cooperation remained con- fined to concrete command arrangements established in 1949-50.97

Reacting to de Gaulle's letter in October 1966, President Johnson made it understood, if we accept Finletter's rendition, 'that the hopes for a "big alliance" which would concern itself with worldwide matters would have to wait for the day when the crisis in Southeast Asia was settled'. 98 The contrast with the Atlantic and universalist euphoria of 1961-62 could not have been more explicit.

The crisis of Atlantic integration

1. Europe versus America

In spite of the various setbacks to Atlantic integration, an imaginative optimism as to the eventual full de-nationalization of capital remained strong throughout the 1960s. George Ball in two articles in Atlantic Community Quarterly in 1967 and 1968 argued the need to overcome national legal constraints imposed on internationally operating companies by creating a commensurate legal sphere through international law. In the same period, Carl Gerstacker was making his famous wish about locating the Dow Chemical headquarters on an island owned by no nation and 'pay any natives handsomely to move elsewhere'.1 But in the real world of the North Atlantic area, the national states, or the natives for that matter were not so amenable. The reality of capital as a totality of competing individual capitals, and their concrete existence as class relations within specific spatial confines, worked against the unifying trend.

Enjoying new prestige on account of its economic prosperity and its domestic and international reformism, Western Europe compared favourably in world opinion to a militarist United States applying unrestrained violence in Indo-China. In the emerging climate of detente with the Soviet Union, the internationalization of capital from Europe, which in the course of two decades had been transformed from a commercial parasitism on the spread of American capital to a major process in its own right, increasingly could be supported by the European states irrespective of American preferences.

Taking its distance from the excesses of American imperialism however, implied that the European bourgeoisie also had to restructure the basis of its hegemony at home. As in the immediate postwar years and again in the 1950s (albeit now commanding an economic structure nearly matching the American one), the bourgeoisie in the various Western European countries was forced to formulate its concept of control in less transcendent terms, articulating national rather than international interests and aspirations. More particularly, American hegemony itself, and the entire structure of Atlantic integration developed in its context, lost its effectiveness as an expression of a presupposed general interest. The emancipation of West Germany, formalized in 1968 by the transfer of the Allied right of intervention to the Federal Republic by the Emergency Law, moreover removed a linchpin of the supranational European component of Atlantic integration. Helmut Schmidt asserted the new sense of Germany sovereignty when he wrote that 'Dreams of "Atlantic Union Now" or "Instant Europe" must give way to expectations more closely geared to realities: wider and deeper cooperation, without necessarily institutional perfection.'2

The tendency towards a more pragmatic approach to Atlantic and European relations, abandoning the supranationalism of the previous era (and dramatized in that respect by the 1965-66 crisis of the EEC), was noticeable in the other countries as well. Here, too, it was a corollary of the primacy that economic issues had assumed over international political and military arrangements. 3 For the Americans, acceptance of the new international posture of Western Europe ran against the ingrained perception of Europe as part of a US-led Atlantic system: 'Looking back over the statements of leading State Department officials', Senator Frank Church wrote upon his return from a fact-finding tour of Europe in 1966, 'one is struck by the fact that they seem to hold out for Europe no alternative between our form of unity or chaos, no awareness that European sentiment may have shifted towards a different arrangement, that what might have been achieved in the vision of such men as Jean Monnet when Europe lay prostrate after the war may no longer represent a practical possibility.'4 New attempts at ultra- imperialist collusion would be made in due course, but the old framework was definitively abandoned.

Le defi Americaine

The tendency of the internationalization of European capital to acquire increasing autonomy was augmented by state intervention intended to raise the level of concentration and centralization of capital. In Germany in 1966, the Grand Coalition ofcDu-csu and SPD replaced the Christian-Democrat/Liberal coalition of Chancellor Erhard. In the fall of Erhard, there was already an aspect of removing the comprador Atlantic Union tendency considered too subservient to the United States. 3 The new government reste on a broad national class compromise and symbolically included Franz Josef Strauss, now as financial specialist but still committed to attending nuclear status for the Federal Republic (he did not shrink from comparing the 1967 non-proliferation treaty to Versailles)6, - as well Willy Brandt, who within a few years would launch the peaceful opening towards the East. Meanwhile, within the labour movement, the DGB parted ways with the AFL-CIO in 1966 when it decided to disregard the 1955 ICFTU decision to refrain from contact with trade unions in socialist countries. 7

Steps towards a more active state intervention had been taken already in the final stages of the Erhard government, but it wasn’t until the first major postwar crisis hit the West German econmy in 1966, that a systematic intervention in the economy was launched under the aegis of the Grand Coalition. In 1967, a change in the German Constitution reorganized federal and state finances in order to allow their subordination to a coherent economic policy. The Stabilization Law of 1%7 provided the legal framework for active intervention. Karl Schiller was put in charge of its exection as Minister of Economic Affairs, coordinating with Strauss at the Ministry of Finance. A Nazi since 1933, Schiller in his doctoral dissertation of 1940 had argued the advantages of an orderly agricultural world market against a liberal one. In 1946, he became a Professor of Economics, a Keynesian, and a member of the SDP. In the context of European self-assertion at the close of the era of Atlantic integration, Schiller's state-monopolistic background and brought beliefs fitted the prevailing international configuration and b him thejob.8

In an immediate reaction to the crisis, the new government headed by Chancellor Kiesinger) launched an investment programme of DM 7.1 billion, together with a strict anti-cartel policy aimed at reinforcing the centralization of capital in the same way that US anti-cartellegislation in the Progressive Era had done.For the first time since the promulgation of the emaciated Erhard Law of 1957, fines were dealt to cartel law offenders in 1967.9 Other countries also introduced measures to accelerate the formation of multinational companies capable of standing up to their Americarian counterparts. This was the period whenJ.J. Servan-Schreiber atered the continent that the 'only real federalism in Europe on the idustrial level' resided in American companies reorganizing their subsidiaries on a European basis. 10

But the American challenge was taken up primarily along national lines. In Britain, the Industrial Reorganization Corporation (IRC) was established in 1966. Given the relatively low level of concentration of British capital, mergers were much more numerous than in continental Europe, and had been since the Macmillan period. Now that the state was actively engaged in speeding up the process, a new wave of mergers, in which 10% of all British capital assets changed hands, was set loose in 1967-68. When the Heath government in 1970 abolished the IRC to economize on its costly successes, British companies had re-established themselves firmly among the leading world corporations. 11

In France, a policy of selective accumulation was continued when Giscard in 1966 was replaced by Oebre. A special tax deduction to stimulate the modernization of equipment was introduced in the same year. In the Fifth Plan for 1966-70, the concentration and centralization of French capital was one of the principal goals. 12

In Italy, the major chemical company, Montecatini, was re- organized with an eye to a more active international role. The production structure reflecting the autarkic and protectionist tradi- tions of Montecatini, subscribed to by the original owners and by president Carlo Faina, no longer was adequate for an international strategy. Montecatini by this time sold half of its output abroad and 35% outside Europe. In 1965, a coalition of corporate-liberal elements, working through the second man, G. Macerata, and not informing Faina, engineered a merger with the electricity holding, Edison. The owners of Edison in this way secured a foothold in an expanding private company after the nationalization of the electri- city holdings by the Centre-Left government of Fanfani. 13 This example illustrates the subordination of state intervention to private capital accumulation; wherever major private interests were prejudiced, public action was corrected promptly. A notorious example was in the case of the Italian energy monopoly ENI and its independent-minded head, Mattei, whose mysterious death in 1962 cleared the way for the agreement with ESSO concluded a year later. 14

In the Netherlands, the Centre-Left Cals cabinet of 1965 did not survive the challenge posed to the oil companies on the issue of North Sea oil exploitation. It was brought down by Norbert Schmelzer, the future Foreign Secretary, whose allegiance to the oil companies (it was revealed later that he was on the payroll of Gulf Oil) in this case proved stronger than his party loyalty. The sub- sequent governments, however, continued to support the reinforcement of industrial capital, and the formation of AKZO out of AKU and the chemical company KZO may be mentioned in this respect.

In Belgium, 'mini-Gaullism' under Van den Boeynants hardly reversed the passive role of Belgian capital in the internationalization process, of which only the 'denationalized' holdings like Empain were excepted. After the merger ofGJvaert, the photographic firm, with the German Agfa in 1964, this plriod saw the sale of the Belgian rayon monopoly Fabelta to AKZO in 1969.

The centralization of public funds and energies necessary to weld together the strongest capitals into viable international firms, and the corresponding elevation of the rate of exploitation, everywhere required renewed compromises along national lines. Thus the national counterpoint to the imminent Atlantic circuit of capital was strengthened. The need to mobilize the entire spectrum of nationa1 capitalist interests - expressed in the profit-distribution process as an across-the-board reinforcement of all forms of profit incomc (except for Belgian small capital: cf. the Appendix) - inevitable galvanized retrograde elements as well, which in turn hampered the envisaged rationalization process.

In Belgium, a fiscal reform made the collection of the 20% dividend and interest tax dependent on its being declared by the rentiers;15 in Italy, the nonproductive ruling strata of the South likewise reinforced themselves as parasites on the productive economy of the North in spite of the modernization attempts undertaken, sometimes with US capital involved, in the 1950s. (A related problem in Italy was the diminishing dynamism of the state sector. Led by progressive Catholics like Mattei, the state sector had played a crucial role in the transformation of the Italian economy and class structure. As the once all-powerful position of the Christian Democratic Party came under fire, however, government banks and industrial firms increasingly became part of the defence-line, and the intensity of political struggles over appointments in them increaed to the detriment of efficient management. 16)

In Britain, on the other hand, successive measures prejudicing rentier incomes (repealed only in 1979 by Mrs. Thatcher) tended to favour the active segment of the lesser bourgeoisie (represented in the income distribution data as 'households' entrepreneurial income') instead. 17

The mobilization of backward elements and the concomitant reassertion of retrograde concepts of control produced specific contradictions, notably in France, where after the modernization spurt under Giscard the full weight of authoritarian nationalism sought to re-impose itself. The explosion of May 1968, ten years after de Gaulle had come to power, should be considered in this light as well.

On the other hand, this episode had a wider significance in that it marked a grounds well of popular aspirations elicited by the changes implied by a new mode of accumulation. 1968-69 in all of Western Europe saw the working class the most combative since Liberation. But whereas in the strongest economy, West Germany, the wage slice of income for the first time since the war declined, 18 in the Southern European countries the consummation of the break- through ofFordism through these class struggles worked to enhance the position of the working class to a level befitting the more complex productive and consumptive function ascribed to it by the new mode of accumulation.

Coinciding with the crisis of Atlantic solidarity, this synchroniza- tion of the reproduction conditions of the working classes of the various countries further contributed to the specific European format, as well as the eventual co-determinationist content, of the response to their militancy. In 1969, when the AFL-CIO left the ICFTU on account of European trade unions' contacts with Eastern Euro- pean counterparts, the ICFTU EEC unions formed the European Free Trade Union Congress (ECFTU). In 1973, this organization was expanded to include unions from Western European non-EEC countries and renamed the European Trade Union Congress (ETUC). Between the two dates, the adjective 'Free' was dropped as a conse- quence of the detente with Eastern Europe, achieved by Pompidou and Brandt. The concept on which the ETUC was formed still was firmly capitalist, only the Atlantic Free World concept was exchanged for the co-determination tradition of the German DGB. This corporatist approach in the early 1970s became the criterion by which WFTU unions were admitted to the ETUC. CGIL admission (over DGB opposition) coincided with its agreement with FIAT on union participation in investment decisions. This step was applauded as 'Mitbestimmung a la FIAT' by sympathetic West German observers, but was criticized by the Italian non-Communist Left as a form of complicity with capital. The CGIL's participation in the WCCs also worked to pave its way into the ETUCI9 Also in 1973, the French CFDT was admitted into the ETUC. The CGT, however, which stuck to its traditional militant line of action, was not admitted in spite of its application.

The 'European' option in the circumstances could not but present itself as a possible solution to some other common problems of the Western European bourgeoisie. In his comments on Servan- Schreiber's Deft americain, Louis Armand, a prominent leader from the French state sector who briefly had served as the first president of Euratom, argued that Europe should unite, not in the 1950's scense of a closed bloc, but 'a la carte', to develop new technologies to reconquer a world position.20 Nuclear energy obviously was such a new technology, with an obviously important military dimension. For a time, Britain, although still outside the EEC, in this respect played an important role as a catalyst.

Britain in this area held some of the keys to a European answer to the American challenge, and the prospective pay-offs of its technological leverage probably were crucial considerations in the renewed attempt to join the EEC. At a time when the number of new orders for nuclear reactors was still sharply rising, Britain possessed the technology of both gas diffusion and the ultra-centrifuge methods of enriching uranium. This gave it the opportunity to add critical weight to either the French plans for defining nuclear integration in Europe on the basis of gas diffusion, or to join (as it eventually did in 1970) the' Atlantic axis' linking Britain, the Netherlands, and West Germany in the ultra-centrifuge project, with General Electic (US) in the background. In a 1969 article, Edward Heath, who eventually was to perform the feat of British entry in 1972, argued that a British-French nuclear deterrent might be formed which 'could be held in trust for Europe'. Emphasizing his distance from the United States by contrasting the American idealist tradition with British realism, Heath had some warm words for Strauss's nuclear plans and also referred to the willingness to contemplate the common deterrent (which the Tory leader had proposed as early as 1966) on the part of the recently established government of Presiden Pompidou.21 Events however showed that in this case, the crisis of Atlantic integration was not compensated for by Western European unity. 22

In fact, the general tendency towards disintegration along national lines proved the strongest also in cases where a 'European' approach apparently prevailed. One such area concerned the organization of a European neo-colonial preserve. The development aid programmes of the EEC through the European Development Fund in practice served to perpetuate the former national empires, of which the cost was socialized among the EEC member states while the benefits continued to accrue to the original overseers, notably France. The contraction of US international involvement, which include by two-thirds drop in American development aid to the Third World states associated with the EEC between 1962 and 1972, only countributed to the renewed pertinence of the original bonds.23

Within the established EEC domain, agricultural policy had been elevated to the supranational level in 1967 as national tariffs were eliminated. Several ambitious plans were launched to rationalize European agriculture, aimed at lowering food prices and setting free the hidden labour surplus on the land; both as a complement to the policy of enhanced industrial accumulation. The new agricultural policy, however, was jeopardized when the German mark re- valuated and the French franc devaluated in 1969, and a solution was found in artificial exchange rates for agricultural products which proliferated as monetary disorder increased. Soon, not even a semblance of a common agricultural market was left except for giant common surpluses produced at supported prices. From a class point of view, this was still rational since farmers everywhere constituted a key factor in the conservative bourgeois blocs supporting the inter- nationalization policy domestically.24 At the EEC Summit in The Hague in 1969, the French demand for artificial exchange rates was conceded in exchange for French leniency with respect to the admission of Britain, Ireland, and Denmark, crucial to the sphere- of-inteterest strategy pursued by Schiller. For Pompidou, as a close collaborator commented later, the envisaged economic union also implied the independence of the European continent. 25

The new dynamic of European integration, and its redefined conditions (of which the abandoning of supranationality, the price of French 'reentry' in 1966, was the most important), was capably exploited by the Heath government (elected in 1970) to break the domestic stalemate in British politics and provide the British ruling class with a new international concept. Redefining the national interest rather than remaining within the previous coordinates, Heath succeeded in temporarily restoring bourgeois unity by the bold turn towards Europe: giving the ruling class, as Nairn writes in a perceptive analysis of this juncture, 'new political élan and a desper- ately needed sense of achievement and purpose'. 'What the European question provid.ed was the perfect catalyst for such unity, subjec- tively. Hard-pressed, in the middle of the game, the ruling class simply changed the rules to make quite sure they stayed on top. '26

However the European strategy, and the Heath policy for that matter, proved valuable only for a short time. The integrative trend, amplified in 1973 with renewed federalist emphasis, culminated in late 1974, when the Belgian Prime Minister, Tindemans, was com- missioned to write a report on the issue. When the Tindemans Report, recommending a common economic, foreign and defence policy, was published a year later, Europeanism had spent itself and the report fell in a void. Only the direct elections for the European Parliament, harmless in themselves but useful for legitimizing the assertion of the international interest in national economic po! even a possible strong-arm policy, or in case of an emergency in one of the member states, were endorsed. 27

Another dimension, further transcending the regional confines which a new international concept of control was projected, was the area of East-West detente. If the new Europe hardly caused concern among US policy-makers, the Ostpolitik of Pompidou and Brandt did so all the more. The Third Force projections of de Gaulled had been rejected by the Atlanticist bourgeoisie, for one thing, because they were thought to weaken the Western European spirit of resistance against the Soviet Union. When the detente policy was continued by Pompidou and Brandt, confusion within the American ruling class was manifest - adding to a more general uncertainty about the position of the capitalist system now that the United States was bogged down in Vietnam and was unable to shape the course of events.

The Ostpolitik had been cautiously embarked upon in 1967, but entered a new phase when Brandt, at the head of a Socialist-Liberal coalition, assumed power as Chancellor in 1969. In his concept of rapprochement with the East, Brandt inherited the Kennedy approach. As Braunmuhl writes, the fact that the states of Eastern Europe had maintained themselves for a quarter of a century could not remain without consequences for anti-Communist ideology. Taking the long-term view, instead, Brandt proceeded from the assumption that sooner or later, the imperatives of modern production (rather than an 'awakening' of Eastern Europe to Social Democracy), established by long-term cooperation agreements between East and West, would force 'normalcy' upon the socialist states.

Whereas in Kennedy's view, however, 'slowly undercutting the foundations of the Soviet order' was to be achieved through unity, for Brandt an enlarged and vigorous Western European Unity was the preferred means.29 Since this option presupposed an economic emphasis of East-West relations if the Western side was to retain the initiative, Brandt took up the heritage of Stresemam (and also was awarded a Nobel peace prize for it). Stresemann had settled the issue of Germany's Western borders in order to gain a free hand in the East; Brandt in the changed circumstances had to settle the issue of West Germany's Eastern borders to do the same.

Although never really abandoning their mistrust of Brandt, the fraction of German capital which in the inter-war years had attempted to develop a 'Middle-European' strategy for expansion (the IG-Farben complex, the electrical firms, and the autonomous internationalist element in heavy industry Krupp, GHH, Mannesmann) were prominent in expanded trade with the Eastern European countries, and their representatives accompanied the Chancellor and other cabinet members to Moscow in 1970 and 1971.30

Among the 'old German hands' in the American policy-making elite, concern over economic advantages which in this way might accrue to their European rivals at a critical juncture for American capitalism mixed with a more basic anxiety that the wider interests of imperialism could be jeopardized by Brandt's policy. As the conditions for coordinating foreign policy in an Atlantic framework deteriorated, the Western European countries might be induced to jump to any commercial opportunity and eventually succumb to neutralism. McCloy in 1970 declared that a 'race to Moscow' between Paris and Bonn was already in full progress. 31

One of the policy strategists who was able to project the Brandt policy in the wider context of a renewed, global offensive was Zbigniew Brzezinski - David Rockefeller's international adviser who eventually would assist in working out the Trilateral concept for inter-imperialist relations as an alternative to the Nixon policy. In 1966, Brzezinski had argued that the quest for autonomy by the Western European countries should be made part of a new offensive, in which the reunification of Europe was the ultimate objective. He argued that the reintegration of Eastern Europe into the world market would compensate in the long run for the temporary disinte- gration of the Atlantic alliance. Moreover, the attraction radiating from a European Community showing a willingness to cooperate with the East would be incomparably greater that that of a troubled Atlantic partnership based essentially on the division of Europe. 32 'The proper course for Washington', he recommended in 1970, '. . . . is not to warn the West Germans against moving too fast, thereby making it easier for the Christian Democrats to oppose Brandt. . . but to take an active part in shaping the initiative on the East-West front'. 33

Common to the yet disparate strategic initiatives undertaken in 1969-71 was their departure from the conceptual basis on which bourgeois hegemony in Europe had so far been based: American supremacy, Atlantic integration, and the Cold War, as well as a passive attitude towards American neo-colonialist penetration in the formerly European periphery. Significantly, the two European leaders who at this juncture cleared the way for new policies and concepts, Brandt and Heath, in 1977 would undersign a proposal - named after Brandt - which synthesized their international concept and extended its basic elements (i.e., reduced arms spending anI international integration and reconciliation) to the Third World. The Brandt Report was an obvious attempt to meet the aspirations of the underdeveloped states for a New International Economic Order and at the same time foster the internationalization of European capital.

2. Nixon's new order

In the United States, the disintegration of the Pax Americana showed itself on the home front in a crisis of the social-imperialist consensus which soon left the confines of the cyclical oscillations between offensive and defensive configurations of the corporate-liberal synthesis. Backlash against anti-war and subcultural protest, on top of fear and hatred of the black liberation movement, mobilized segments of the white middle class behind new leaders appearing on the fringes of the established bipartisan political order. In the support of George Wallace, the ultra-conservative, racist governor Alabama, the traditional party allegiances were dropped in favour of his stand on the issues mentioned.

As far as international relations were concerned, both the frustration over American impotence in Vietnam and the burgeoning anti-war movement fostered an awareness among the ruling class that the corporate-liberal concept of control had to be trimmed of some of its international implications. 'One lesson of the last fifteen years most conspicuous in the Vietnam War', Nixon's later UN ambassador Charles Yost wrote in October 1968, 'is that the capacity of even the strongest power to intervene effectively in other states has been eroded by time, space and history'.34 A few months later, Nixon inaugurated his Presidency with an express reference to the need to cut back on missionary idealism. 'America has suffered from a fever of words, from inflated rhetoric that promises more than it can deliver', he declared in his Inaugural Address of January 1969. 'After a period of confrontation, we are entering an era of negotiation. Let all nations know that during this Administration our lines of communication will be open. '35

In the tradition of Eisenhower, Nixon presided over a calculated demobilization of public opinion as far as America's mission in the world was concerned. He sought to consolidate a domestic, and basically defensive, alliance of the bourgeoisie rather than preserving the offensive configuration of the Kennedy period. Still the administration was well-stacked with prominent corporate-liberal figures. With established corporate lawyers William Rogers and Elliott Richardson at the State Department, David Kennedy of the Continental Illinois Bank at the Treasury, Morgan director George slhultz at the Labour Department, as well as lesser figures trusted by billionaire aristocracy like Melvin Laird at Defence - Nixon seemed assured of sufficient Establishment backing. The continuation of stable ruling-class influence in the Executive was also enhanced by the support given Nixon by renowned internationalists like Arthur Watson of IBM, who had turned away from the Johnson regime in protest against the enforcement of the balance-of- payments programme (Nixon made him Ambassador to France).

However, as domestic labour unrest grew and international problems accumulated without a comprehensive American response, the pressures increased from the less established and more iconoclastic elements in the administration for a fundamental refor- mulation of policy. With respect to labour, Nixon's appointment of Jim Hodgson of Lockheed to the Labour Department after George S{hultz's brief incumbency aimed at consolidating the last bulwark of capital-labour agreement, the defence industries. 36 Special counsel Charles Colson, lawyer of the Teamsters Union and Grumman Aerospace, carried proxies from the same quarters.

The reactionary law-and-order entourage of Nixon, headed by the President's law partner John Mitchell as Attorney General, with Vice-President Agnew as cheer-leader, was reinforced dramatically when former Texas governor John Connally, a New Right convert from the Democratic Party and a lawyer with extensive relations to Texas oil and construction companies, replaced David Kennedy at the Treasury in 1970. Connally; together with Ralston Purina manager Earl Butz, who became Secretary of Agriculture in 1971; Peter J.Peterson, chairman of Bell & Howell, who headed the cabinet-level Council on International Economic Policy (and became Secretary of Commerce in 1973); and Henry Kissinger, the National Security Adviser who bypassed Secretary Rogers on all major issues and replaced him in 1973; supervised the turn to American unilateralism terminating the era of Atlantic integration.

Kissinger's balance-of-power approach to international relations (reflecting the preoccupations of his patron, Nelson Rockefeller) was particularly appropriate in the defensive situation which the United States had been forced to assume. On the other hand, the state-centred diplomatic paradigm that Kissinger adhered to dimmed his perception of global interdependencies and the many-layered class conflicts running through them. Only with respect to East-West relations was his outlook, placing inter-state conflict and diplomacy over transnational relations, temporarily useful for the overall interests of capitalism. On both the North-South an inter-imperialist axes it collided with the powerful forces, eventually swept Nixon from the scene in spite of his laslide victory in 1972.

The first element of the new American foreign policy, détante, was pursued from the start of the Nixon period. Congressional hearings in 1968-69 linked export interests with the more transcendent goal of influencing the internal development of the socialist countries. The new Export Administration Act of 1969 removed the 1962 amendment extending the embargo to civilian goods in an attempt to catch up with the growth of Western European trade with Eastern Europe (which in the last ten years had more than tripled to a level 20-times the value of US trade with that area in 1967-69).37 For Kissinger, expanding trade with the socialist countries was seen as the means to obtain leverage on the Soviet Union and China with respect to Vietnam; Nixon's trips to the two countries in the election year 1972 were accompanied by a simultaneous show of force in Vietnam in order to demonstrate US strength. The subordination of the Sino-Soviet split to American diplomacy clearly appealed to the internationalist bourgeoisie, but the underwriting of the Soviet- European agreement on postwar borders in Helsinki in 1972 was criticized as weakness. 38

The second dimension of the new foreign policy concern the economy and, more particularly, the rapidly deteriorating trade balance. In 1970, the Nixon administration embarked upon an expansionist policy meant to bolster the productive element in the capitalist class and mollify organized labour. Both corporate and small capital incomes improved relatively, and even the dramatic decline of productive capital in the profit-distribution process was temporarily reversed. Its price, however, was rampant inflation as the fiscal and monetary brakes suddenly were released. With the exchange rate of the dollar fixed, inflation quickly spread across the Atlantic.

The unilateralism underlying this policy, although not yet fully unfolded, caused grave concern in the traditional East Coast centres of Atlanticism. The New York Times warned early in 1971 ‘that a return to protectionism, capital controls, unilaterally fixed exchange rates and all that would be a tragedy for the industrial nation of the West, both economically and politically'.39 In May, the West German government stopped supporting the dollar. With the mark floating upward, Connally and Federal Reserve Chairman Burns flew to Munich to address a bankers' meeting and exhort the European states to assume a greater part of 'world responsibilities'. European reactions, however, were sceptical and the West German Minister of Economic Affairs Schiller ostentatiously stayed away from the meeting.

In August, the Nixon administration unilaterally decided to suspend gold convertibility of the dollar. It also introduced a 10% surcharge on imports. These measures, which bluntly terminated the era in which the United States assumed responsibility for capi- talism as a whole, and thus may be seen as the single most important date marking the end of Atlantic integration under American hegemony, were crucial in mobilizing the internationalist elements on both sides of the Atlantic. Of the remaining internationalists in the Nixon administration, Assistant Secretary of State Tresize, Ambassador to the EEC Schaetzel, and C. Fred Bergsten, assistant to Kissinger, left their posts in protest against the Nixon policy. 40

The apparent unwillingness to mend Atlantic relations made the Nixon measures all the more detrimental to Western unity. At a meeting of the Group of Ten in London in September, Time reported that Connally 'put on a rare show of obstinacy'. Confronting the European finance ministers with proposals 'too arrogant to be believed', the United States was apparently ready to risk a trade war with the rest of the world.41 Since the capitalist countries had a common interest in preventing a collapse of world financial order, however, an agreement was reached in December 1971 at the Smith- sonian Institution in Washington, which introduced the system of flexible exchange rates that lasted until 1973.

Following Nixon's spectacular trips to Peking and Moscow and his landslide re-election in 1972, relations with Western Europe, which at this juncture passed through a brief period of renewed self-confidence, further deteriorated. As was revealed afterward, Kissinger and Peterson in 1972 worked out a strategy of linkages to force Western Europe into compliance with US preferences in international trade. By threatening to withdraw the American nuclear guarantee, Kissinger and Peterson thus expected to create disunity and provoke old rivalries between West Germany and France, un- dermining European unity and power.42 On 23 April 1973, Kissinger at a meeting of newspaper editors in New York inaugurated the 'Year of Europe' and announced Nixon's intention to work out a new Atlantic Charter before the end of the year. On this occasion, Kissinger outlined his concept of the United States as the power with global interests and responsibilities, while Western Europe was merely a regional power. Afterwards, he apologized for a statement in which he called into question the legitimacy of the Western European governments, but relations with the European states were damaged beyond repair. In May, Pompidou and Heath rejected the offer to meet with Nixon in the framework of a conference of Atlantic leaders as 'premature'.43

The Nixon/Kissinger/Connally policy destroyed the Atlantic constraint and precipitated the crisis of the mode of accumulation which had developed under it. In the monetary field, the unilateral dollar policy provided the liquidity for a global restructuration of capital and at the same time put the United States at an advantage. As Parboni writes, 'The system of floating exchange rates also eliminated any need for the United States to control its own balance-of- payments deficit, no matter what its source, because it was now possible to release unlimited quantities of non-convertible dollar into international circulation'. 44

The October War in the Middle East provided the Americans with an opportunity to force compliance with the new American international concept on the part of all Western European countries except France. At the same time, it made it possible to shift a huge load of dollars from the European oil-importing states to the OPEV states, who for lack of an alternative continued to bank on American and dollar supremacy. At the time of the Marshall Plan, John D. Rockefeller had declared that to the degree Western Europe shifted from a coal to an oil economy, the Middle East valve would be turned into the control panel of Western European affairs. 45 Now this son's adviser was in a position to turn some switches on this panel. Capitalizing upon Arab anger over NATO support for Israel and the temporary boycott raising oil prices, the United States obtaine a crucial competitive advantage over Western Europe due to its lesser dependence on OPEC oil. At the same time, it augmented its financial power through the recycling of surplus dollars from Europe into the Atlantic circuit, through the Euro-dollar market or straight to United States. Of the $60 billion OPEC surplus channelled abroad almost one-third according to Wall Street bankers was deposited or invested in the United States by 1974.46

The disintegration of corporate liberalism

The crisis of Atlantic integration was ordained by objective changes in the structure of the world economy. Central to these changes was the interruption of the Atlantic extrapolation of US corporate liberalism and its tendential disintegration into its original components: liberal internationalism and state monopolism. The equalization of accumulation conditions on both sides of the Atlantic disorganized the previous complementarity between the two positions. The Atlantic economy as a distinct entity 'dividing a common fund of incremental energies between its regions in varying proportions from time to time' (Phelps-Brown), which in this sense had allowed the runaway internationalization of American Fordism, disintegrated as American hegemony was recast into a unilateralist framework and the scope of the international circuit of finance capital widened. This development entailed the breakdown of the monetary and trade arrangements established between 1944 and 1947, and, more fundamentally, of the agreement between the American and the European bourgeoisies that their class hegemony rested on the observance of these arrangements and the underlying Atlantic power equation.

The disintegration of corporate liberalism developed along two axes: (1) the loss of industrial capacity and the concomitant disorganization of reformist working-class unity in the face of creeping unemployment; and (2) the hypertrophy of ('stateless') money- capital in the international circuit of capital, interacting with a re- surgence of money-capital in the national class configurations. Both developments converged to resurrect a reactionary-liberal tendency in national politics.

The Atlantic extrapolation of the New Deal presumed wage differentials justifying the transfer of production from the United States to the Old World. At the aggregate level, these differentials narrowed quickly from the second half of the 1960s onwards. In Table 2 overleaf, gross wage costs in the Western European coun- tries are taken as percentage of US gross wage costs.

From this table, it can be seen that the aggregate wage cost differentials between the USA and some main recipient countries of US direct investment were eliminated or sharply reduced between 1970 and 1975. However, important structural changes affecting the working class took place simultaneously. The acceleration of real accumulation in Western Europe in the second half of the 1960s tended to exhaust the reserve army of labour, thus encouraging a wave of immigration of foreign workers from the Mediterranean region. By 1969, France and West Germany each had about 3 million foreign workers inside their borders, out of a total of at least 10.7 million for nine industrial countries in Northern Europe.41

The differentiation in the Western European working class which resulted from this influx of foreigners complemented the equalization of the reproduction conditions of the privileged segment of the workers in the Atlantic area through the WCCs and (more diffusely) the successive 'European' trade-union internationals modelled a the organizing principles of the German DGB and strongly under its influence. Throughout the North Atlantic area, this privileged segment of the working class, organized on a tendentially transnational 'business union' pattern and distributing benefits of transnatij company bargaining within their class, was matched by a subordinate layer of immigrant workers.

This bifurcation which brought the European countries on par with the United States, activated the entire inventory of racial prejudice, hitherto latent and largely exteriorized through social imperialism. The tendency to promote indigenous workers into jobs above their qualification level, and the corollary segregation of immigrants in low-paid manual jobs whatever their talents reinforced the existing identification of foreigners with 'dirty work' and fostered chauvinist sentiment among better-paid indigenous workers. 48

Between these two extremes, a wide range of unemployed, underemployed, and otherwise 'marginal' workers developed in response to the combined effects of deflationary policy and the growth of runaway internationalization of Western European capital. Burgeoning direct foreign investment from the continental Western European countries and other newcomers reduced the world share of Anglo-American capital in total direct foreign invest- ment from two-thirds in 1970 to one-half in 1978. This investment notably was directed at remaining pockets of cheap labour within or adjacent to the metropolitan areas. From about 1970, employment in manufacturing industries in the traditional centres decreased, while (still within the metropolitan countries) the number of workers employed in new plants created by relocating production increased; rates of exploitation in the latter were higher, and wages below, the corresponding levels in the traditional industries and areas. 49

It was Ford which in 1969 started organizing its European net work of affiliates with an eye to exploiting these differentiations, using a system of 'double-sourcing' (producing components and parts always in two different countries) in order to cut down trade- union power; European carmakers tried the same by pooling resources, while General Motors even achieved a world-wide intra- company division of labour. Fordism however suffered decisively, as cost-cutting on wages cut into the potential mass market for automobiles at the same time.50

The investment flowing into the periphery for obvious reasons did not find such a mass market either. As Lipietz shows, investment in apparently booming peripheral areas like Singapore and Hong- Kong, mostly involved the export of Taylorism rather than Fordism, and was concentrated in super-exploiting women in tex- tiles and electronics components production. Where an industrial productivity/mass market articulation seems in the offing, as in Brazil, it is constricted by the fact that the organized mass-produc- tion workers constitute but one segment of the working class, while a Taylorist secondary segment (notably women workers), and a rural subproletariat living under conditions approximating slavery , are also part of the working-class structure. Any attempt to adjust the form of bourgeois rule to the requirements of Fordism and the first category of workers would jeopardize the conditions for con- trolling the remaining two segments. Thus the social whole is chained to a vicious circle of authoritarianism and crisis. 51

The deflationary policies of the metropolitan countries, however worked to foster tendencies in the same direction. Although clearly not as extreme as in the case of Brazil, the trend is unmistakable. In most metropolitan countries the contours of a new working-class stratification are visible: (1) a privileged but too small segment of 'compromised' workers; (2) an intermediate segment of under-employed and underpaid part-time and irregularly ell workers, struggling to resist their submersion into the (3) sub-proletariat of immigrants and permanently unemployed.

The quest for a new concept of control by the metropolitan bourgeoisie, which began in the late 1960s (and in the United States notably during Nixon's New Economic Policy) not only implied an across-the-board mobilization of the bourgeoisie, but also the mobilization of both the stably employed workers and the segment actively selling their labour-power from a less secure position of part-time and irregular work. In the course of the 1970s, the basis for the new concept further cyrstallized around the introduction of new technologies in production and specific new consumer goods. While incapable of supporting a self-sustaining class compromise like Fordism because of their limited economic weight, these technologies, notably micro-electronics, yet have further shaprd the new individualism 'on the supply side', while exacerbating international rivalry along a narrow range of hoped-for industries.

3. The resurgence of money capital

The demise of the Bretton Woods system of stable exchange rates after 1971 forced the major capitalist states to subordinate every aspect of economic policy to the defence of the currency. The American turn to outright unilateralism in trade and monetary affairs in 1971 was reciprocated by an active Western European currency policy, combining regional ultra-imperialist (the European monetary 'snake') and national unilateralist elements. Uder the new conditions of imperialist rivalry and monetary instability cut-throat competition for the remaining markets was exacerbated by competitive devaluations. As Parboni has argued, Americal surpremacy henceforward rested on the fact that it could resort to such devaluations without seeing them eroded again by inflation due to more expensive imports. On the other hand, as private intenationall dollar liquidity grew explosively after 1971, involuntary credit from the rest of the world not only financed the American deficit, but all countries turned to the booming capital markets to finance their deficits now that the regime of floating exchange rates suspended the central banks' function of intervening in foreign money markets. 52

The financing rather than balancing of deficits opened enormous markets for bank capital, and eventually, for all other forms of money-capital as well. The liberation of banks from the Keynesian controls imposed on them in the 1930s on both sides of the Atlantic still was part of the unifying trend of the mid 1960s, spurred on by the Kennedy offensive. Bank capital was encouraged to insert itself into the emerging Atlantic circuit of finance capital, both in the United States and, as part of the European response to the American challenge, in the various European countries.

In 1966, French banks were freed from the rules separating banking functions. Henceforward, commercial and deposit banks, which in France existed next to a separate category of long-term and medium-term credit banks, were allowed to expand into each other's spheres of activity. 53 The position of German banks, unparalleled already given their own size, the size of their industrial and commercial holdings, and the fact that they held proxy rights for more than half of all share capital in circulation in West Germany (54% in 1967), was still further reinforced in this period. In 1967, the last major constraint imposed on German banks, the interest decree of 1965, was repealed. 54

In the United States, banks in 1968 began reconstituing themselves into one-bank holding companies in the sense of the 1956 legislation. In 1969, 34 of the top-100 US banks had taken this step. In 1970, legislation was enacted which further obliterated New Deal measures aimed at the separation of bank functions. One-bank hold- ing companies henceforward were allowed to own property outside the financial sphere (to which their holdings had still been confmed under the 1956 law). The new law, although still containing regula- tory elements, typified the accelerating insertion of national capital into the international circuit. 'The holding-company movement', Fortune wrote in 1969, 'is the latest and most dramatic evidence of a long, gradual transformation of banking from a custodial function to a competitive industry'. 55 Against the constricted role of bank capital in the Keynesian era, the bankers now again saw the liberal light on the horizon. As one US banker commented on the holding-company trend, 'One cannot help being struck by such a development, which is bringing US back to the times of the London Merchant Bankers, who established their reputation in import/export, shipping insurance, commodities, stock exchange, and by money business, : the same token brought money, business, and fame to the City.56

The actual City could not but thrive in the context of such a restoration of the conditions of its original prominence. Apprently unharmed by the 1967 devaluation, British bank capital shifted its activities to the expanding Euro-dollar market. Already constituting a would-be 'off-shore island' as far as British banking regulations were concerned, the City's foreign transactions actually boomed when the pound fell. The liberalization of bank capital culminated in a banking reform in September 1971, which allowed British banks to develop into finance capital directly, thus creating capital groups which gave the City all the assets and experience to capture the pivotal position in the emerging Atlantic circuit and to becol main financial centre of the EEC.57

In the other countries, the pattern was the same. Belgian commercial banks (separated from the holdings in the 1930s) were given the right to acquire corporate equity in this period. In the Netherlands, a law of 1965 already restricted central bank supervision of credit transactions to a limited number of credit forms. In 1967-68, credit ceilings were abolished altogether in order to allow bank capital to spread its wings. Only in Italy did it take until 1978 before the government moved to repeal the 1936 legislation on holding- company functions of the banks. 58

In the changing circumstances of the 1970s, however, the freedom accorded to bank capital led to the restoration of a separate circuit money-capital rather than to an integrated circuit of finance capital, as industrial firms, too, turned towards the financial markets, not only to protect their cash reserves from currency devaluations, but increasingly also to invest them in financial ventures as quasi-bankers. 59 The banks, eager to exploit the new possibility for financing operations through the Euro-dollar markets, formed 117 international consortia between 1969 and 1974, whereas before, only ten were in existence. 60

As Hankel explains, the financing needs of the new international circuit of money-capital, mostly in US dollars, have turned the liberally produced American currency into a scarce good, pushing up its price accordingly. Interest rates at the same time have tended to rise due to the risks of refinancing international debts. To speak of'black holes' in this connection, into which money capital disappears,61 might be misleading though, for the revenues of the soaring money economy are fairly well traceable. In the profit-distribution process of the main North Atlantic countries, bank capital, or capital engaged mainly in circulation, was able to increase its share of total profits dramatically from the very moment bank liberalization began. It has continued to bring in a high share ever since, whereas productive capital has lost weight correspondingly.

A corollary development took place at the level of rentier incomes. 'For about a quarter of a century after the Second World War, the Keynesian inflationary gas chambers were employed to carry out Keynes's recommendation for the Euthanasia of the Rentier', Morris writes. 'But starting some ten years ago, the gasping rentiers began to fight back, and in the past few years have made a comeback worthy of description as the Revenge of the Rentier. '62

Dividends and interest in the United States in 1950 amounted to a 8.1% of total personal income; in 1982, this had risen to 17.1%.63 The mass of savings also was siphoned directly to new companies in the dynamic hi-tech sectors through 'venture capital' centralized by special investment firms. Attracted by the whirlwind successes of these companies and aided by a lowering of the capital gains tax, the amount of money supplied by savers to US investment firms in 1978 already was equal to the total amount put at their disposal during the entire 1966-1977 period.64

In the course of the 1970s, the rentier perspective reasserted its hegemony throughout the North Atlantic area. Anew, aggressively orthodox liberalism pitted the propertied classes against the Keyesnesian welfare states and the mode of accumulation of which they were the complement. Interacting with the imperatives of international monetary disorder, which tendentially forces governments to apply sustained deflation,65 the 'monetarist' ruling class finds its militant liberalism corroborated by the new individualism pervad- ing the remaining 'productive' classes.

A new empire of high finance

As bank capital gravitated to a dominating position in the world economy during the 1970s, the banks turned into the nodal points of the national industrial structure as well. In some countries, like Germany and the United States, this had been the case all along, but in most other countries, the articulation of money-capital and pro- ductive-capital into finance capital did not run along national lines. It was only under the specific conditions of the new prominence of bank capital and the exacerbation of competition and rivalry that banks became real nerve centres of integrated financial groups and allowed the identification of such groups (defined as capitals joined by common policies, ownership links, and joint directorates66) with specific international concepts distinguished in this study.

It should be stressed that as banks moved into the intemat arena in force during the late 1960s, the difference in their backgrounds lost significance compared to the new equality bestowed on them by the perfect anarchy of the international money and capital markets. Bank strategy, moreover, aimed at eliminating weaknesses in regional and sectoral jurisdiction by compensatory merge cooperation agreements. 67

Yet the liberalization of the banks, inaugurating the shift to an international credit economy and enhancing the role of bankers and finance capitalists in the Atlantic network of interlocking directorates 68 extrapolated the national fractionation of bank capital to the international level. In the major bank consortia formed in Europe in 1970-71, ABECOR and EBIC, the lineages to the liberal-internationalist and the state-monopoly context, respectively, are clearly visible. In ABECOR, banks whose international spread and connections mainly took shape in the context of liberal internationalism and more particularly, in the context of the Pax Britannica and the Atlantic circuit of money-capital, have joined ranks: ABN, Baque de Bruxelles, Dresdner Bank, and Barclays (the French and Italian participants cannot be identified in these terms). In EBIC, on the other hand, banks which in the interwar years attuned to the state-monopoly tendency and henceforward tended to reproduce an outlook typically stamped by their experience within the compartmentalization of the Atlantic economy and the maintenance of exclusive spheres-of-influence, grouped together: Deutsche Bank, Midland Bank, the Banca Commerciale Italiana, AMRO, the Be Societe Generale and the French Societe Generale. Whereas the banks of the former group tended to be close to the Atlantic Union tendency in the European bourgeoisie on account of their dependence on US imperialism (expressed for instance in the banks plantation in Latin America), the EBIC banks more nearly fitted i continental European, 'Euronational' or at most, 'Atlantic Parnership' position. This pattern seems to be corroborrated if we review the available evidence on national financial group structure.

Thus in West Germany, the Dresdner Bank and the Deutshe Bank fitted the Atlantic Union and the Atlantic Partnership profiles, respectively. The Dresdner Bank in 1970 was linked by three more directors to such traditional bulwarks of Atlanticist liberalism as August Thyssen, Metallgesellschaft, and AEG. The Deutsche Bank, on the other hand, was linked (by three or more directors) to the 'autonomous' electrical concerns, Siemens and Bosch, the chemical and rayon groups ofBASF and AKZO (the Netherlands), and to Daimler Benz and Hoesch steel. Compared to this, the few atypical connections pale in significance.69 In terms of regional spread, the Atlantic and European orientations are likewise significant. On the basis of the foreign affiliates listed in the 1972-73 edition of Who Owns Whom, one finds that the sphere of interest of the Deutsche Bank outside Europe is preponderantly in Africa and Asia (21 out of28 foreign affiliates outside Europe), whereas the emphasis of the Dresdner Bank's international activity is on Latin America, where 16 of its 21 non-European foreign affiliates are to be found.

This pattern extends to the Netherlands. The ABN shares with the Dresdner Bank a distinct orientation towards Latin America, setting it apart from its rival, AMRO, which has no Latin American affiliates. In a study of Dutch financial group structure in 1962, the NHM and the Amsterdamse Bank had been still considered as one group on account of their colonial interests and relations with the much more important Royal Dutch Shell group. In 1964, they merged with the Twentse Bank and the Rotterdamse Bank, respectively. As ABN and AMRO, the original pertinence of their liberal-internationalist and the continental orientations reasserted itself. In the interlock network of 1969, Fennema found an ABN orbit composed of Heineken, KLM, Robeco investment, and a few foreign-owned firms, whereas the AMRO group combined AKZO, two big insurance firms, and state- supported heavy-industry enterprises. 70

Turning next to Britain, Henk Overbeek's analysis of joint directorates in 1976 shows that the clearing banks and S.G. Warburg (a relative outsider among the merchant banks) on the one hand, and the big industrial corporations on the other, became involved in a belated fusion into finance capital, yielding a distinct bipolarity between bank groups. 71 The groups which according to his analysis were emerging in this juncture again showed a general consistency between their historical background and current international orien- tation. The least tightly knit of these groups, with a pronounced liberal-internationalist profile, is the group with Lloyd's Bank and S.G. Warburg at its centre. In line with the other Western European banks identified as Atlanticist, Lloyd's (through its subsidiary Lloyds & Bolsa) is strongly represented in Latin America and, more generally, is a highly internationalized institution, which also applies to S.G. Warburg, one of the pioneer banks of the Euro-dollar market. Compared to Barratt Brown's findings for 1966, 0verbeek's conclusions point to a centralization of hitherto more scattered;connections centering on merchant banks like Lazards and Schroders into the orbit of Lloyd's and Warburg. The presence of Morgan Grenfell in this group further corroborates the Atlantic orientation. 72

In sharp contrast, the Midland Bank, which is at the centre of the sphere-of-interest group, lacks the international affiliations characterizing its opposite number. This group, which is much more tightly knit (particularly if the insurance companies are left out), is composed of, on the one hand, companies likewise belonging to the interwar generation in terms of their rise to prominence (BICC Dunlop, Unilever, and Rank Organization); and on the other, of a few corporations of imperial lineage like Shell and Rothmans.

In Belgium, the situation is complicated by regional division and the interpenetration with French capital. In Wallonia, which as a region was predominant in the liberal era, the Brussels holdings and their banks constituted a liberal bulwark against the Flemish upstarts who advanced notably in the interwar years. Within each region however, a cosmopolitan bank may be distinguished from a more continental European one. Basing ourselves on a recent overview,73 it is possible to assert, with due caution, that the Banque Bruxelles- Lambert in Wallonia and the Bank van Parijs en de Nederlanden, the Belgian affiliate of Paribas, in Flanders are cosmopolitan and Atlantic banks; whose respective counterparts are the Société Generale and the Kredietbank. Fortune in 1969 saw Belgian capital polarized between the semi-official Societe Generale controlling its African mineral empire and the deficitary Walloon steel industry, and the cosmopolitan Boël, Solvay, and Janssen financial aristocracy with the Bruxelle-Lambert group, but also stressed the many overlaps between them.

If the picture for Belgium is far from unequivocal, the French situation is contradictory. At first sight, the bipolarity of French capital around rival bank groups seems to conform entirely to the presumed antinomy. As Morin's comprehensive study of

1974 shows, French finance capital at the outset of the decade became polarized between the Cie. financiere de Suez et de l'Union des Mines (which in 1972 got control of the Banque de l'Indochine) and the Cie. financiere de Paris et des Pays-Bas (Paribas). With its background in French colonial enterprise, Suez and its group (S: Gobain-Pont-a-Mousson, Lorraine steel, CGE, mJin, and others constitutes the liberal-internationalist pole, while Plribas (linked to Pèchiney, northern steel, Hachette, and Schlumberger) is the sphere-of-interest counterpart of state-monopolistic lineage.

Of the characteristics setting the two banks apart, Morin contrasts the industrial orientation of Paribas, with its receptivity to state planning, to the financial outlook of Suez. Internationally, Paribas in 1972 had invested 48% of its foreign portfolio in Europe, 23% in Africa, and 16% in North America; Suez, on the other hand, has mainly invested in the formerly French periphery (49% of its foreign investments). Owned partly by a US insurance group and the British state, Suez has functioned more as a relay of foreign capital, while Paribas represents the autonomous thrust of French fmar1ce capital into the international circuit. 74

From this position, Paribas recently, however, has emerged as the more aggressively internationalist bank. Establishing links with the Bank of America (US associate of ABECOR), S.G. Warburg, and the Bruxelles-Lambert group in Belgium, Paribas has clearly embarked on a cosmopolitanism of its own, retaining its association with Lazard Freres, but breaking loose from earlier associations with Rothschild (which gravitated, instead, to the Suez alliance). Neuflize-Schlumberger-Mallet, one of the main houses of the formerly Protestant high finance, resisted being taken over by Pari bas in 1972 and passed under the influence of the Dutch ABN. 75

In Italy, the Vatican Bank (Institute for Religious Works) because of its freedom from Italian currency regulations became a key relay for the financial interests activated by the swelling international money economy. Next to its established orbit in Italy - which

centred on the Immobiliare real estate group, the Banco di Roma, and the Banco di Santo Spirito, and which interlocked with the orthodox liberal Milan group of Pesenti (Italcementi) and Falck new aggressive partners of the Vatican came to the fore. These newcomers, notably Michele Sindonh, who was on the board of a host of Italian subsidiaries of Ameritan firms besides managing his own Banca Finanziaria Privately (linked to Hambros in Britain and Continental Illinois in Chicago), and Robert Calvi of the Banco Ambrosiano, the biggest private bank in Italy, worked closely with the Vatican Bank's new manager, the American bishop Paul Marcinkus, and shared his ruthless business approach. 76

Their joint foray into international speculative finance soon assumed criminal proportions as it linked up domestically with a terroristic tendency in the liberal fraction, of which the international financier and power-broker, Lucio Gelli, was the central figure, and the masonic lodge P2 in 1981 was exposed as the main organizational centre. The impact of the new hegemony of international finance in Italy hence became marked by a wave of terrorism, which in 1970 included the murder of the conciliatory Aldo Moro and, according to a recent account, that of Pope John Paul I, before it devoured several of the financial tycoons themselves. 77

The American banks traditionally at the centre of the most powerful US financial groups and, in 1970, also at the centre of the Atlantic network of interlocking directorates, J. P. Morgan, Chase Manhatten, and Chemical Bank, owed their international position to American hegemony rather than to their own international acivities. In 1970 their foreign earnings ranged from 22% to 25% of earnings for Morgan and Chase, and 13% for Chemical Bank. In 1976, they clearly had joined the movement into the new international credit economy. By then, the profit share of their international activities was 78% for Chase, 56% for Chemical Bank, 53% for Morgan. In the process, their prominence in the Atlantic network of interlocks diminished (of the Morgan group's four entries on the 1970 list of thirteen most central firms, only the bank itself and US Steel remained in 1976/78), while competitors cropped up both from abroad and from the American hinterland. Regional American banks and financial groups generally had not achieved the degree of internationalization necessary to take advantage of the opportunities offered by the dramatic growth of the international capital markets. Therefore the California-based Bank of America and Western Bancorporation tried to compensate for the dominant position of their New York competitors by joining the European consortia from which Morgan and Chemical, and to a lesser extent Chase, largely kept aloof. The First National City Bank, which already made 40% of its profits abroad in 1970 and 72% in 1976, but was not specifically oriented to Europe, likewise was more active in the consortia than the three banks of the Atlantic 'Establishment’.79

The pertinence offinancial-group structures for international class formation, however, resides not in their stability as such, but in the coincidence of economic restructuration and political coordination. Thus, in the 1954 Declaration of Atlantic Unity, capitalists from both sides of the Atlantic elevated their joint economic interests to a common political stand. But when Nixon's policies destroyed the foundations of Atlantic integration, and the Trilateral Commission was formed in an attempt to reassert the international interests and work for an ultra-imperialist solution, it did not simply bring together the same men.

Apart from the inclusion of a Japanese membership reflecting the (still timid) integration of Japanese capital in the international network of joint directorates after 1970,80 the companies aspiring to take part in shaping the emerging world system came from both the established set of Atlantic internationalists and the sphere-of-interest groups now claiming a global role. Thus, from the United States, next to the old guard of the Atlantic economy like Chase, Exxon, Lehman Bros., Coca Cola, and Brown Bros., Harriman; were runners-up like the Bank of America, Kaiser and Bechtel from California, Continental Illinois and Sears Roebuck from Chicago, as well as Hewlett-Packard and the Wells Fargo Bank. On the Euro- pean side, the established bulwarks of liberal interntionalism like Thyssen, the Banque Lambert and the UCB of the Belgian Jannsen family, AGP insurance (Indochine/Suez), Lloyd's, S.G. Warburg, and Barclays, found themselves in the company of the former prota- gonists of the Partnership policy like Unilever, Dunlop, Shell, Otto Wolff, FIAT, Montedison, and the Kredietbank; or even of a bank group ofGaullist credentials as Paribas.81

The redeployment of the internationalist interest, however, rested on an industrial base rapidly losing its regional cohesion. As the international circuit one-sidedly developed into the direction of a unified circuit of money capital, the dividing lines among the Tri- lateral firms in terms of historical antecedents became less significant than the fact that, at least in the American case, the big mass- production industries were not on the list. Thus on the American side, the attempt to launch another round of constructive inter- nationalism lacked the essential transmission belts along which a new offensive could be fed back into domestic expansion and social imperialism. 82

Epilogue - from trilateralism to unilateralism

The eclipse of industrial capital in the profit-distribution process from 1966 to 1968 marked the beginning of the end of the era of corporate liberalism and Atlantic integration. Unlike previous, conjunctural changes in the balance of economic power, the 1970s rise in the share of bank and oil capital, together with concomitant improvements in rentier incomes, spurred the formation of a new class bloc outside the hitherto prevailing corporate-liberal area of compromise and outside the traditional regional centres of mass production industry. The domestic movement from the Northeast to the Sunbelt, as well as the international shift from densely integrated production to sub-contracting directed from the London-based Euro-currency and capital market, tendentially undermined the hegemony of corporate liberalism and fostered the forces of the New Right instead. 1

The reaction of the ruling classes in the main North Atlantic states to the crisis developing in the American economy, and passed on to the rest of the world by the Nixon policy and the oil crisis, at first consisted of a dramatic turn towards imperialist unity. In the context of runaway internationalization and the rise of money-capital a pervasive liberalism for a time sought to restore the precondition of a concerted reaction to the challenges facing the capitalist system. Capitalist unity was also spurred by the synchronization of the crisis across all the OECD economies at once. 'On the basis of the data on 1930-32, one would expect that a major shock to the system would find economies reacting almost in unison', Rosecrance and his associates write in this connection. In 1973-74, 'this is precisely what happens'. 2

At the political level, the turn towards renewed cohesion was reflected in the quick succession of changes of command between February and August 1974: Harold Wilson replaced Edward Heath; Giscard succeeded Pompidou; Helmut Schmidt replaced Brandt; and Gerald Ford was installed as Nixon's successor as part of a deal to avoid the latter's impeachment. In mid-December, Presidents Ford and Giscard met on the island of Martinique and reached agreement on a common stand against the threat to their energy supply, an issue on which Pompidou had refused to budge before. Thus the way was cleared for a conference of the American, German, French, British, Italian and Japanese leaders in November 1975 in Rambouillet near Paris.

The apparent return of the Western European states to the Atlantic fold, however, did not obliterate the fundamental trend towards unilateralism and rivalry. Real, as opposed to merely rhetorical, unity was far off, especially as long as the Republican administration in Washington remained committed to a defensive, heavy-handed reaction against nationalism and socialism. Kissinger's bellicose threats in the Middle East and his incautious support for the Greek colonels in their conflict with Turkey over Cyprus, followed by his encouragement to South Africa's intervention against the MPLA in Angola in 1975, further undermined Atlantic unity. Meanwhile, weak links in the imperialist chain were breaking. In Portugal, an eleventh-hour coordination, with the Socialist International bolstering the domestic position of Mario Soares and us planes flying in conservative Portuguese settlers from the liberated colonies, was necessary to prevent the Portuguese Revolution from consolidating itself.

The European bourgeoisie's greater tolerance toward social reform in the Third World was motivated both by the rise of Eurocommunism and by their greater dependence on imported raw materials. In Italy, Aldo Moro was the main proponent of a strategy of domestic rapprochement with Eurocommunism, linked to a foreign policy friendly to moderate Third World nationalism. His objections to Italian subordination to the Kissinger line were brought out by the Socialist state secretary, Bensi, who argued the need for direct agreements with the oil-producing nations during a visit to the United States by President Leone.3 This strategy was particularly appealing also to the French state sector and to German capital, which had failed to penetrate the international cartel of raw material multinationals, almost exclusively Anglo-American, and now could hope to capitalize on the trend towards state ownership of raw material resources in the Third World. 4

The Trilateral Commission, established in 1972-73, attempted to strike a realistic balance between American interests and European (and Japanese) aspirations in this respect, and to insert them into a common framework of imperialist cooperation. In the Ford Administration, several leading Trilateralists tried to tilt foreign policy back towards ultra-imperialism, but the presence of Kissinger blocked any dramatic turn. Jimmy Carter, 'one of those Southern governors' recommended by Averell Harriman as an ideal Democratic presidential candidate, and a member of the Trilateral Commission himself, narrowly defeated Ford in the election of November 1976. With a cabinet loaded with Trilateralists and a programme apparently well-designed to rehabilitate the social imperialist consensus at home and unity of purpose abroad American capitalism once again seemed capable of recapturing the historic initiative from socialism.

Projecting the United States as the bastion of 'human rights’(which became the new ideological motif of the Carter administration) required, however, that the ruling class purge itself of some those publicly associated with the crimes of the recent past. In Europe, meanwhile, the 'Trilateral' fraction wanted to free themselves from the compromised Atlantic cold warriors now that a conciliatory line seemed to be prevailing on the Left, constituting a challenge that would have to be met in the Centre. In the United States the Senate hearings on ITT's involvement in Nixon's anti-trust policy and the overthrow of Allende in Chile served a comparable purpose, as did several measures upgrading Congressional prerogatives at the expense of Presidential discretion. But when, after the Watergate scandal and Nixon's removal from the scene, the Senate Subcommittee on Multinational Corporations started hearings on Lockheed's bribery of leading European and Japanese statesmen, the purge spread overseas, offering an opportunity to crucify the comprador liberals who had functioned as an appendix to the Nixon-Kissinger policy.

In West Germany, the Grand Coalition already had disposed of the old American hands of Marshall Plan vintage, but Italian compliance with Kissinger's concept of American world responsibilities was still obtained from a culpable president (Leone), who had accepted Lockheed bribes under the cover name' Antelope Cobbler’. In 1977, two former defence ministers, Gui and Tanassi, were indicted by the Italian parliament as a result of the Lockheed expose. In the Netherlands, Prince Bernhard, the chairman of the Bilderberg Conferences, was stripped of his military and commercial functions. 5

The new American offensive, emphatically requested by Chancellor Schmidt, was built on peaceful confrontation with socialism and compromise within capitalism. Interacting with the thrust of the international restructuration of capital, the Carter offensive aimed at constructing ultra-imperialist consensus along the North-South axis. This view came close to the ideas propounded principally from Europe (although echoed by McNamara at the World Bank) on a New International Economic Order, which aimed at continuing detente with the socialist states and an accommodating approach to Third World nationalism. In the Carter Administration, these positions found their best representation in the attitudes of Secretary of State Vance, strategic arms negotiator Warnke, and UN ambassador Andrew Young.

Shared responsibility for expansion into the Third World clashed with the reality of competition, however. It also floundered in the face of different estimates of the danger of the Soviet presence in the, countries recently liberated from the imperialist system. Soviet military power, inflated in response to the American arms build-up and aggressiveness in the preceding era, gradually became the central issue around which imperialist unity converged, contradicting the initial position of the administration and its supporters abroad. At the same time a policy of aggressive response to any challenge to the imperialist system, whether in the Middle East or in Central America, conformed much more easily with the aggressive self- confidence of the classes associated with the movement away from the New Deal order. When in 1978-79 the brief recovery of American industrial profits gave way to an across-the-board improvement of the profit share of the financial sector, rentiers, small capital, and notably the oil companies, (which climbed from $13.8 billion in 1978 to $28 billion in 1980, while the aggregate profit figure for the us economy fell); the mounting tide of the revolt of the Right, ranging from brushfire tax revolts to the formation of the Committee on the Present Danger favouring military confrontation with the Soviet Union, increasingly isolated the conciliatory elements in the Carter administration.

Thus half-way through the Carter presidency, the attempt to obtain a viable format of inter-imperialist relations around the strategy of coopting and challenging the threats of peripheral nationalism and social revolution was abandoned. In economic policy, the replacement of the industrialist Miller at the head of the FED by the orthodox banker, Paul Volcker, who came from the Chase Manhattan bank and had served in the Nixon administration, marked the end of the policy of expansion; in foreign affairs, Brzezinski's knack for military solutions prevailed over Vance’s moderation and ultimately led to the resignation of the Secretary of State. Unable to accommodate both peripheral challenges and the aspirations of the allies in that area at the same time, American policy shifted its focus from the revolt of the Third World to the confrontation with the Soviet Union. Soviet support for the anti-imperialist liberation struggles and revolutions in Southern Africa and Ethiopia, and its 1978 invasion of Afghanistan to protect client modernizers from the Muslim tribal forces, allowed the aggressive element in the Atlantic bourgeoisie to focus attention on the East-West military relationship, which proved a much more viable format for imperialist unity.

In 1979, Atlantic military unity was once more confirmed when Carter, Giscard, Schmidt, and Callaghan (Labour's Atlanticist Foreign Secretary who had replaced Wilson as Prime Minister in 1976), summiting on the island of Guadeloupe, decided to go ahead with the installation of new American strategic nuclear missile in several Western European NATO states. Callaghan was able to attach a proposal to simultaneously start negotiations on the nuclear weapons balance with the Soviet Union in order to convince the public of NATO's good intentions, but the single olive branch did not take away widespread concern over the possible consequences of introduction of 572 new nuclear missiles.

As a result of its waverings over Iran and Nicaragua, as well as its deflationary economics, the Carter administration was swept away in 1980 by the Reagan landslide. Meanwhile, a vote of censure had brought down the Callaghan government already in 1979, and Schmidt and Giscard, too, before long were removed from the scene. Bowing to the military and monetary exigencies of the Reagan administration's hard-line unilateralism, their successors have shown themselves incapable of formulating a new comprehensive concept of control adequate to the realities of the post-Atlantic world economy while preserving a minimal degree of imperialist unity. As the passive revolution of Atlantic Fordism draws to a close, and the phantom of nuclear annihilation hovers over the Northern Hemisphere, the urgency of restoring global: imperialist unity can only increase.

Notes and references

Chapter one

1. See the quotations at the beginning of this book (p vi) for the concept and connotations of class used in this study.

2. Lenin, Differences in the European Labour Movement (1910), in Collected Works (Moscow edn) vol. 16, pp. 350-351.

3. As Marx writes, `Capital as self-expanding value encompasses not just class relations, a determined social nature resting on the existence of labour as wage labour. It is a movement, a cyclical movement through different stages, which in turn encompasses three forms of the cyclical process. Hence, it can be understood only as movement and not as a thing in rest,' Marx, Das Kapital. Kritik der politischen Okonomie, vol. 2 (F. Engels, ed.), in Marx-Engels Werke, Berlin edn, vol. 24, p. 109. The three volumes of Capital are published as vols. 23-25 of this edition, and are quoted hereafter as MEW, and volume number.

4. MEW vol. 25, p. 33.

5. Ibid., p. 285.

6. Ibid., p. 382.

7. R. Hickel, 'Kapitalfraktionen. Thesen zur Analyse der herrschenden Klasse', Kursbuch 42 (December 1975), p. 150.

8. R. Bode, 'De Nederlandse bourgeoisie tussen de twee wereldoorlogen', Cahiers voor de Politieke en Sociale Wetenschappen, vol. 2, no. 4 (December 1979) and R. Bode, Schets van de ontwikkeling van het Nederlandse kapitalisme en zijn burgerij, unpublished MA thesis, University of Amsterdam, 1978; G.W. Domhoff, The Powers That Be: Processes of Ruling Class Domination in America, New York 1979.

9. K. Polanyi, The Great Transformation: Political and Economic Origins of Our Time, Boston 1957 (1944), p. 132.

10.Ibid.

11. A.P. Thornton, Doctrines of Imperialism, New York. 1965, p. 58. On the Netherlands see J.J.C. Voorhoeve, Peace, Profits and Principles: A Study of Dutch Foreign Policy, The Hague. 1979, pp. 48-50, who discreetly passes over colonial history, however.

12. E .J. Hobsbawm, Industry and Empire, Harmondsworth 1969, p. 145, cf. p. 49.

13. E.C. Black, editor's introduction to J. Gallagher and R. Robinson, 'The Imperialism of Free Trade' (1953) in Black, ed., European Political History 181.-1870. Aspects of Liberalism, New York 1967.

14. F.X. Sutton et al., The American Business Creed, Cambridge, Mass. 1956, pp. 235-240; D.B. Truman, The Governmental Process. Political Interests and Public Opinion, 1971 (1951). The mode of accumulation typical of the liberal era has been taken as a

point of departure for several relevant analyses of historical regimes of accumulation and entrepreneurial profiles. W. Andreff in Profits et structures du capitalisme mondial (Paris 1976) distinguishes three modes of accumulation: the extensive, the intensive, and the progressive mode. In extensive accumulation, labour-intensive production in light consumer-goods industry is carried on in a liberal environment. Intensive accumulation is characteristic of heavy industry with a high organic composition of capital, prone to cartelization and state intervention. Progressive accumulation, finally, combines the previous modes of accumulation in an international context, and produces both consumer goods and capital goods. In his study, Andreff argues the persistence of these modes of accumulation in the sectoral distribution of world capital and shows the clear profit hierarchy existing between them.

The study of M. Aglietta, A Theory of Capitalist Regulation: the US Experience [London 1979 & 19761, defines the extensive mode of accumulation as the one in which the `classical' tendency of over-accumulation in heavy industry is at the root of serious cyclical crises; in the course of the New Deal, this mode of accumulation is superseded by the intensive mode, which denotes the'Fordist' accumulation dynamic in which consumer demand and state countercyclical policy tend to even out the business cycle. Aglietta's concept of an extensive mode corresponds to Andreffs first two (extensive and intensive); his intensive mode by and large denotes the same as Andreff's progressive mode.

In an Italian study by A. Martinelli, A.M. Chiesi, and N. Dalla Chiesa, I grandi imprenditori italiani. Profilo sociale della classe dirigente economica Milan 1981, four historically defined but likewise surviving entrepreneurial types are distinguished: the traditional, the supported, the private financier, and the public entrepreneurs. The first belongs to Andref's extensive mode of accumulation; the second and the fourth to the intensive one. The private financiers are the forerunners in Italy of the progres­sive mode, or Aglietta's intensive mode.

15. A. Sampson, Anatomy ofEurope, New York/Evanston 1970, pp. 135-136. In his recent book, The Money Lenders. Bankers in a Dangerous World, London 1982, Sampson further documents this assessment.

16. Sutton et al., pp. 234-235.

17. Cf. the description of the world views of the Texas oil independents in F. Lundberg, The Rich and the Super-Rich. A Study in the Power of Money Today, New York 1969, pp. 53-70.

18. R. Kuhnl, 'Waren die deutschen Faschisten Sozialisten? Analyse einer Ges­chichtsfalschung, Blatterfiir deutsche and internationale Politik 1979, 11, p. 1323.

19. R. H. Tawney, Religion and the Rise of Capitalism, New York 1952 (1926), p. 93; cf. MEW, vol. 23, p. 407.

20. MEW, vol. 25, p. 613.

21. S. Homer, A History of Interest Rates, New Brunswick, N.J. 1963, p. 81.

22. Tawney, pp. 153,179-180.

23. K.R. Minogue, The Liberal Mind, New York 1968 (1963), p. 149.

24. R. Hofstadter, The Age of Reform: From Bryant to F.D.R., New York 1955, pp. 78-79.

25. MEW, vol. 25, pp. 387, 392.

26. J. A. Hobson, Imperialism, A Study, London 1968 (1902), pp. 56-57. Note the anti-semitic bias in this passage.

27. J.M. Keynes, The General Theory of Employment, Interest and Money, London/ Basingstoke 1970 (1936), pp. 365-367.

28. R. Lekachman, The Age of Keynes, New York 1968, p. 49.

29. Ibid., p. 48; cf. Sutton et al., p. 58.

30. Keynes, General Theory, p. 106.

31. Ibid., pp. 128-129.

32. Quoted in Hofstadter, p. 309. Cf. M. Kalecki, `Political Aspects of Full Employment' (1943), in E.K. Hunt and J.G. Schwartz, eds., A Critique of Economic Theory, Harmondsworth 1972.

33. H. Ford, My Philosophy of Industry (written by F.L. Faurote), London 1929, p. 59; cf. Sutton et al., pp. 244-245.

34. Ford, Philosophy, p. 85.

35. Quoted in C. Woods, ed., Ideas That Became Big Business, Baltimore 1959, p. 43. 36. J. Pool and S. Pool, Who Financed Hitler. The Secret Funding of Hitler's Rise to Power 1919-1932, New York 1978, pp. 89-90.

37. A. Gramsci, `Americanism and Fordism' in Selections from the Prison Notebooks (Q. Hoare and G. N. Smith, eds.), New York 1978, pp. 291, 293.

38. Ibid., p. 315.

39. R. Bendix, Work and Authority in Industry: Ideologies of Management in the Course of Industrialization, New York 1963 (1956), pp. 278, 281; H. Braverman, Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century, New York/ London 1974, p. 10.

40. `Production that for structural reasons cannot, without undue economic loss, obey the rules of the market must necessarily attempt to obtain control of the market', A. Sohn-Rethel, `The Dual Economics of Transition', in R. Panzieri et al., The Labour Process and Class Strategies, London 1978, p. 32.

41. Gramsci, p. 315.

42. Cf. the excerpts in Lenin, Hefte zum Imperialismus, Werke (Berlin edn), vol. 39, and R. Opitz, ed., Europastrategien des deutschen Kapitals 1900-1945, Koln 1977.

43. Cf. G. Bakker, DuitseGeopolitiek 1919-1945. Een imperialistische ideologie, Assen 1967, p. 25.

44. F. Fried (pseudonym of F.F. Zimmermann), Das Ende des Kapitalismus, Jena 1931, p. 262.

45. Selection in Opitz, Europastrategien, pp. 598-599.

46. Cf. Bakker, Duitse Geopolitiek.

47. Quoted in Sampson, Money Lenders, p. 73. 48. Lekachman, p. 181.

49. D. Lerner and M. Gorden, Euratlantica. Changing Perspectives of the European Elites, Cambridge, Mass./London 1967, p. 71.

50. Functionalism refers to achieving supra-national integration through sector­wise internationalization, which would set in motion an autonomous logic ultimately turning national states obsolete. The concept originally was coined by David Mitrany in A Working Peace System, London 1943, a book which earned him an adviser's job at Unilever's. American bourgeois political scientists, notably Ernst Haas in The Uniting of Europe Stanford 1968 (1958), after the war more explicitly sought to allow for the interaction between the underlying trend towards economic internationalization and the necessary political intervention to achieve a supra-national ideological com­munity. The main architects of actual Western European sectoral integration thus were 'functionalists', although always with either intergovernmental (as with Spaak, cf. The Continuing Battle. Memoirs of a European 1936-66, London 1971) or federalist overtones (as with Monnet, cf. his Memoires, Paris 1976).

51. Quoted in W.A. Williams, The Tragedy of American Diplomacy, New York 1962, p. 271.

52. L.H. Shoup and W. Minter, Imperial Brain Trust. The Council on Foreign Relations and United States Foreign Policy, New York/London 1977, pp. 125-140.

53. J. R. Schaetzel, 'The Necessary Partnership', Foreign Affairs, vol. 44, no. 3 (April 1966), p. 425.

54. Lerner & Gorden, p. 71.

55. Fortune, April 1949, p. 78.

56. Lerner & Gorden, pp. 67-68.

57. Cf. '. . . A definition of finance capital simply in terms of the integration of the circuits of money capital and productive capital is a platitude. The crucial question is the particular historic form of this integration', H. W. Overbeek, 'Finance Capital and Crisis in Britain', Capital & Class 11 (Summer 1980), p. 101.

Chapter two

1. Hobsbawm, p. 139.

2. R.H. Thornton, British Shipping, Cambridge 1945 (1939), p. 76. On the destin­ation of British textiles, cf. D. S. La des, The Unbound Prometheus: Technological Change and Industrial Development in Western Europefrom 1750 to the Present, Cambridge 1972, p. 239.

3. Thornton, British Shipping, pp. 23, 26-27; S. Aaronovitch, The Ruling Class: A Study of British Finance Capital, London 1961, pp. 97-100.

4. Aaronovitch, Ruling Class, p. 82; Hobsbawm, pp. 148-149.

5. Hobsbawm, p. 150; M. Zinkin and T. Zinkin, Britain and India: Requiem for Empire, London 1964, pp. 34-35.

6. M. Simon, 'The Pattern of British Portfolio Foreign Investment, 1865-1914', in A.R. Hall, ed., The Export ofCapital from Britain 1879-1914, London 1968, pp. 24-25.

7. M. Robbins, The Railway Age, London 1962, p. 161; E. Hexner, The International Steel Cartel, Chapel Hill 1943, Appendix VI, p. 324.

8. Sampson, Money Lenders, p. 38.

9. Thornton, British Shipping, p. 92.

10. C. Quigley, Tragedy and Hope: A History of the World in Our Time, New York/London 1966, pp. 131, 132. On Rothschild, F. Morton, The Rothschilds. A Family Portrait, Greenwich, Conn., 1963, pp. 129-130.

11. Hobsbawm, pp. 132, 168.

12. T. F. Gossett, Race. The History of an Idea in America, Dallas 1963, pp. 324-333. 13. Quigley, pp. 950-951.

14. Shoup and Minter, pp. 12, 14; Quigley, p. 132.

15. Phelps-Brown, quoted in H.J. Habakkuk, 'Fluctuations in House-building in Britain and the United States in the Nineteenth Century' (1962) in A.R. Hall, ed., The Export of Capital from Britain 1879-1914, London 1968, p. 104.

16. B. Thomas, 'Migration and International Investment', (1958) in A.R. Hall, ed., The Export of Capital from Britain 1879-1914, London 1968, p. 53-54.

17. H. U. Faulkner, The Decline of Laissez-Faire 1897-1917, New York 1968 (1951), pp. 23; 86-87.

18. Ibid., p. 74.

19. J. Chamberlain, The Enterprising Americans. A Business History t!f the United States, New York 1963, pp. 166-167.

20. Ibid., p. 171.

21. O. Pastre, La strategie internationale desgroupes financiers amMcains, Paris 1979, p. 248.

22. Faulkner, p. 34; E. V. Morgan, A History of Money, Harmondsworth 1969, p. 165.

23. Fortune, August 1933, p. 81. Figures from Faulkner, p. 88.

24. R. Liefmann, Beteiligungs- and Finanzierungsgesellschaften, Jena 1923 (4th ed.), pp. 77-87. Chamberlain, pp. 194-195.

25. K.D. Bosch, De Nederlandse Beleggingen in de Verenigde Staten, Amsterdam/ Brussels, pp. 342-343. J.C. Goulden, Monopoly: The Real Story of the American Telephone and Telegraph Company, New York, rev. ed., 1970, pp. 53,60-61.

26. J. Brooks, Once in Golconda: A True Drama of Wall Street, 1920-1938, p. 50.

27. Faulkner, p. 87.

28. Liefmann, p. 77; G. Baumann, Atlantikpakt der Konzerne, Berlin 1952, p. 36.

29. Liefmann, pp. 68-87.

30. K. Pritzkoleit, Manner, Mdchte, Monopole. Hinter den Taren der westdeutschen Wirtschaft, Dusseldorf (2nd ed.) 1960, pp. 489-490.

31. K. Pritzkoleit, Das kommandierte Wunder. Deutschlands Weg im zwanzigsten Jahrhundert, Wien etc., 1959, pp. 199-203.

32. A. Vagts, Deutschland and die Vereinigten Staaten in der Weltpolitik, New York 1935, vol. 1, pp. 429-430.

33. Ibid., pp. 445-446; K. Gossweiler, Grossbanken, Industriemonopole, Stat. Okonomie and Politik des staatsmonopolistischen Kapitalismus in Deutschland 1914-1932, Berlin 1975 (1970), p. 40.

34. Liefmann, p. 402; S. A. Schuker, The End of French Predominance in Europe. The Financial Crisis of 1924 and the Adoption of the Dawes Plan, Chapel Hill 1976, p. 92 note. 35. Gossweiler, pp. 240-241.

36. Ibid., pp. 19-21; G.W.F. Hallgarten and j. Radkau, Deutsche Industrie und Politik von Bismarck bis heute, Frankfurt/Koln 1974, p. 73.

37. Bosch, pp. 326-327.

38. Bode, 'De Nederlandse bourgeoisie', p. 32; J.J.C. Voorhoeve, Peace, Profits and Principles. A Study of Dutch Foreign Policy, The Hague et. 1979, p. 108.

39. Bosch, p. 352

40. Ibid., pp. 409-413.

41. H. Blumenthal, France and the United States. Their Diplomatic Relations, 1789­1914, Chapel Hill 1970, p. 162.

42. E. Beau de Lomenie, 'La Haute Banque', Le Crapouillot 16 (1952), pp. 22-25; H. Claude, Histoire, realite et destin d'un monopole: la banque de Paris et des Pays-Bas et son groupe (1872-1968), Paris 1968, p. 21.

43. Quoted in G.L. Ridgeway, Merchants of Peace. Twenty Years of Business Diplomacy through the International Chamber of Commerce 1919-1938, New York 1938, p. 32.

44. Liefmann, p. 181.

45. Biographie Nationale (Brussels), vol. XL, suppl. 12, Heineman, Dannie-N.; A. Mommen, De teloorgang van de Belgische bourgeoisie, Leuven 1982, p.62.

46. R. A. Webster, Industrial Imperialism in Italy 1908-1915, Berkeley 1975, pp. 123-124, cf. 64-66. The distinction made by Martinelli and his associates between 'supported entrepreneurs' and 'private financiers' is particularly relevant here, cf. Martinelli, Chiesi, Dalla Chiesa, p. 53.

47. J. Peterson, 'Fascismus and Industrie in Italien 1919-1929', Gesellschaft 7 (1976), p. 150.

Chapter three

1. Cf. Lenin on Rhodes's concern in this respect, in Imperialism, the Highest Stage of Notes

Capitalism (1917) in Collected Works, (Moscow edn) vol. 22, p. 257. For Germany, H.-U. Wehler has taken the notion of `social imperialism' as his point of departure. Cf. H.-U. Wehler, `Industrial Growth and Early German Imperialism' in R. Owen & B. Sutcliffe, eds., Studies in the Theory of Imperialism, London 1972, and Bismarck and der Imperialismus, Koln 1970.

2. K. Kautsky, 'Der Imperialismus', Die Neue Zeit, 1913-1914, vol. 2 (1914).

3. Cf. R.E. Wyman, 'Middle-Class Voters and Progressive Reform: The Conflict of Class and Culture', The American Political Science Review, vol. LXVIII, no. 2 (June 1974), p. 503.

4. Quoted in K.R. Spillmann, 'Wilsonian Ideas and European Politics: A Compara­tive Analysis of Peace Aspirations' in A.N.J. den Hollander, ed., Contagious Conflict. The Impact of American Dissent on European Life, Leiden 1973, p. 131.

5. G. Kolko, The Triumph of Conservatism. A Reinterpretation of American History 1900-1916, New York 1963, p. 2.

6. N. Bukharin, Imperialism and World Economy, London 1972 (1918), p. 112.

7. W.E.B. DuBois, 'The African Roots of War' (1915), Monthly Review, vol. 24, no. 11 (April 1973), p. 32. On the AFL and the IWW, M. Davis, 'Why the US Working Class is Different', New Left Review 123, (September-October 1980), p. 36; Gossett, pp. 287, 291.

8. A.M. Schlesinger, Jr., 'Origins of the Cold War', Foreign Affairs, vol. 46 no. 1 (October 1967), p. 26.

9. L. Gelber, The Rise of Anglo-American Friendship. A Study in World Politics, Hamden, Conn. 1966, p. 21.

10. Cf G. F. Kennan, American Diplomacy 1904-1950, New York 1952, pp. 25-41 on the Open Door episode.

11. Quoted in Gelber, p. 134.

12. W. Lippmann, Early Writings (Introduced and annotated by A.M. Schlesinger, Jr.), New York 1970, p. 53.

13. Ibid., p. 73.

14. New Republic, February 17 1917, in Ibid., p. 75.

15. New Republic, April 281917, in Ibid., p. 84.

16. Cf. R. Girault, 'Ein neues Bild des Franzosischen Unternehmers um 1914' (1969), in G. Ziebura (with H.-G. Haupt), eds., Wirtschaft undGesellschaft in Frankreich seit 1789, Koln 1975, for French bank capital in the imperialist era.

17. Selection in Opitz, Europastrategien p. 206.

18. Quoted in A.J. Mayer, Political Origins of the New Diplomacy 1917-1918, New York 1970, p. 340.

19. Cf. Lloyd George's argument against new military offensives in June 1917 in order not to weaken bourgeois Britain on these two dimensions, K. Middlemas, Politics in Industrial Society. The Experience of the British System Since 1911, London 1979, p. 106.

20. For an excellent summary analysis of the causes of the World War in these terms, see G.W.F. Hallgarten, 'Der Zusammenprall der Imperialismen im Jahre 1914' in Das Schicksal des Imperialismus im 20. Jahrhundert. Drei Abhandlungen aber Krieg­sursachen in Vergangenheit and Gegenwart, Frankfurt 1969.

21. Cf. the particularly relevant selection of quotations in'Intemational Finance and National Power', by the Editors, Monthly Review, vol. 35, no. 5 (October 1983), p. 5.

22. Cf. the table in J. M. Keynes, The Economic Consequences of the Peace, London 1920, p. 254.

23. Quoted in M.J. Sklar, 'Woodrow Wilson and the Political Economy of Modem United States Liberalism' (1960) in J. Weinstein & D.W. Eakins, eds., For a NewAmerica, New York 1970, p. 92.

24. Mayer, p. 330.

25. 71. A.S. Link, Woodrow Wilson and the Progressive Era 1910-1917, New York 1963 (1954), p. 180.

26. Although he questions the familiar picture of Morgan's one-man rule in Wall Street, Kolko writes that 'Wilson was in large measure the foil of Eastern conservative Democrats against the threat of William Jennings Bryan and he was quite deliberately groomed for this role by George Harvey, a millionaire with important connections with Morgan as well as by other capitalists', Kolko, Triumph of Conservatism, p. 205, cf. p. 153. The influence of the East Coast internationalists and financiers was enhanced when Bryan, the Populist leader, was replaced at the State Department by the pro-British international lawyer, Robert Lansing, in June 1915.

27. Link, pp. 224-225.

28. Ibid., pp. 265-274; C. Julien, L'empire americain, Paris 1968, pp. 180 etc.

29. S. Welles, The Time for Decision, Cleveland/New York 1945, pp. 393-394.

30. W.J. Cash, The Mind of the South, New York 1941, p. 199.

31. Ch. O. Lerche, Jr., The Uncertain South. Its changing pattern of politics in foreign policy, Chicago 1964, p. 42.

32. C. A. Brooke-Cunningham, Anglo-Saxon Unity and other essays, London 1925, p. 89.

33. Lerche, p. 44.

34. Unemployment started falling in 1916, reaching a record low of 1.4% in 1918. See R. B. DuBoff, `Unemployment in the United States. An Historical Summary, Monthly Review, vol. 29 no. 6 (November 1977), p. 11, table 1.

35. D.H. Kelly, Labor relations in the steel industry: management's ideas, proposals, and programs, 1920 to 1950, (Ph. D. Indiana University), Ann Arbor 1979, pp. 47-48.

36. D.W. Mills, Government, Labor, and Inflation, Wage Stabilization in the United States, Chicago/London 1975, p. 18.

37. Quoted in R. Radosh, American Labor and United States Foreign Policy, New York 1969, p. 291.

38. J. Weinstein, `Socialism's Hidden Heritage: Scholarship Reinforces Political Mythology' (1963), in J. Weinstein & D. W. Eakins, eds., For a New America, New York 1970, p. 246; on the Socialist Party, in the same volume, G. Kolko, 'The Decline of American Radicalism in the Twentieth Century' (1966), p. 206.

39. Quoted in R. Marshall, The Negro Worker, New York 1967, p. 19.

40. E.E. Morison, Turmoil and Tradition. A Study of the Life and Times of Henry L. Stimson, New York 1966 (1960), p. 206.

41. Schuker, p. 10. Significantly, the American branch of the Institute of Inter­national Affairs, headed by Round Table member Whitney Shepardson, at first did not fare well and it took until the 1921 merger with an informal dinner club of Wall Street bankers and lawyers before it could rise, as the Council on Foreign Relations, to prominence. Rather than sponsoring an exclusive concept of American hegemony, the new Council was'an attempt to reestablish unity among the internationalist forces that were split by the League ratification controversy', Shoup and Minter, pp. 12-19; Quigley, p. 132.

42. Ridgeway, p. 74.

43. Cf. Gossweiler, pp. 187-188. 44. Ridgeway, pp. 39-45

45. Ibid., pp. 145-148.

46. S. Menshikov, Millionaires and Managers. Structure of U.S. Financial Oligarchy, Moscow 1973 (1969), pp. 232-233.

47. Quoted in Ridgeway, pp. 166-167; cf. Williams, Tragedy pp. 13(1-131. 48. Gossweiler, p. 209.

49. Quoted in Schuker, p. 166.

50. Quoted in Ridgeway, pp. 68-69.

51. A. Sauvy, Histoire &onomique de la France enne les deux guerres (1918-1931). De !'armistice d la devaluation de la Livre, Paris 1965, p. 54.

52. Fortune, August 1968, pp. 158, 160; F.J. A.M. Mallens, De structuur van het France bankwezen, Tilburg1958, p. 103.

53. Monnet, pp. 121-124.

54. Schuker, p. 147; Mommen, Belgische bourgeoisie, p. 175.

55. Quoted in Pritzkoleit, Das kommandierte Wunder, p. 596. On the Dawes Plan cf. also Ridgeway, p. 186.

56. G. Kolko, 'American Business and Germany, 1930-1941', The Western Political Quarterly, vol. XV (December 1962), p. 718.

57. Weekly Report, March 9 1925,,appendix to R. Gottwald, Die deutsch-amerikani­schen Beziehungen in der Ara Stresemann, Berlin 1965. Robert Murphy, then a junior diplomat stationed in Munich, wrote in retrospect that 'the only real American interest in Germany at that time was concerned with money; a few Americans made fortunes out of German inflation; American promoters high-pressured unrealistic loans upon German communities and corporations, loans which were defaulted later at the expense of the American bondholders' R. Murphy, Diplomat Among Warriors, New York 1965, p. 27.

58. H.N. Brailsford, quoted in 'Marcus Aurelius', Am 1 My Brother's Keeper?, London, November 1945, p. 7. This pamphlet by a self-proclaimed `international socialist' advocated European unity to prevent Brailsford's scenario from happening again. Cf. also A. Sohn-Rethel, Grootkapitaal en fascisme. De Duitse industrie achter Hitler, Amsterdam 1975.

59. Schuker, pp. 148-149.

60. Kolko, American Business, p. 718. Menshikov, Millionaires, p. 290. 61. Schuker, p. 290.

62. L. Corey, The House of Morgan. A Social Biography of the Masters of Money, New York 1930, p. 430; Fortune, July 1934, pp. 82, 84.

63. L. Trotsky, Europe et AmMque. Ou va I'Angleterre? Paris 1970 (1926), p. 19.

64. Quoted in E.R. Cameron, 'Alexis Saint-Leger Leger' in C.A. Craig & F. Gilbert, eds., The Diplomats 1919-1939, vol. II, New York 1972 (1953), p. 381.

65. R. Coudenhove-Kalergi, Eine Idee erobert Europa. Meine Lebenserinnerungen, Wien 1958, pp. 84-85, 88.

66. Ibid., p. 118.

67. Ibid., pp. 134-150.

68. J.C. Grew, Turbulent Era. A Diplomatic Record of Forty Years 1904-1945 (W. Johnson, ed.) London 1953, vol. I, pp. 627-628.

69. Coudenhove-Kalergi, p. 194.

70. L. Fischer, The Soviets in World Affairs. A History of Relations between the Soviet Union and the Rest of the World, 1917-1929, New York 1960 (Vintage Ed.) (1930), pp. 236-250.

71. Gossweiler, p. 175; Ridgeway, pp. 186-187.

72. Gossweiler, pp. 274-277.

73. B. Weisbrod, Schwerindustrie in der Weimarer Republik. Interessenpolitik zwischen Stabilisierung and Krise, Wuppertal 1978, p. 149; Gossweiler, p. 280.

74. Foreign participation (as a percentage of assets) in 1930 was 15.8% in the case of another heavy-industry combine, Gutehofnungshutte, and 3.5% in the case of Krupp,

L 7VWeisbrod, p. 83.

75. Gossweiler, pp. 301, 304-306.

76. Mao Tse-tung, `Analysis of the Classes in Chinese Society' (1926) in Selected Readings, Peking 1971, pp. 11-12.

77. D. Stegmann, `Kapitalismus and Faschismus in Deutschland 1929-1934. Thesen and Materialien zur Restituierung des Primats der Grossindustrie zwischen Weltwirtschaftskrise and beginnende Riistungskonjunktur', Gesellschaft 6 (1976), p. 26.

78. Sohn-Rethel, Grootkapitaal en fascisme; Opitz, Introduction, pp. 34-35. 79. Ridgeway, p. 347.

80. In Opitz, p. 583.

81. Morison, pp. 296, 295; G. M. Gathorne-Hardy, A Short History of International Affairs 1920-1939, London 1939 (3rd ed.), pp. 262-263.

82. A. V. F. van der Gouw, . . . alias Teixeira, vol. Ila, Utrecht 1969, p. 233.

83. Pritzkoleit, Das kommandierte Wunder, pp. 658"9. Cf. on Morgan's pre­eminence in the Young Plan negotiations, Corey, p. 432.

84. M. Nussbaum, Wirtschaft and Staat in Deutschland wdhrend der Weimarer Republik, vol. 11 of H. Nussbaum & L. Zumpe, eds., Wirtschaft and Stain in Deutschland, Vaduz 1978, pp. 325x331.

85. Stegmann, pp. 45-48; cf. D. Abraham, The Collapse of the Weimar Republic. Political Economy and Crisis, Princeton, N.J. 1981, p. 320.

86. G. Hass, Von Munchen his Pearl Harbor. Zur Geschichte der deutsch-amerikanischen Beziehungen 1938-1941, Berlin 1965, p. 36.

87. G. Ritter, Carl Goerdelerunddiedeutsche Widerstandsbewegung, Stuttgart 1954, pp. 46-47,66-67.

88. Pritzkoleit, Das kommandierte Wunder, pp. 683-684. 89. Gossweiler, pp. 317-318.

Chapter four

1. V.I. Lenin, The Impending Catastrophe and How to Combat it (1917), Coll. Works, vol. 25, p. 363.

2. Ibid., p. 333.

3. Collectif, Le Capitalisme monopoliste d'Etat, Paris 1971, vol. 1, pp. 21-24. Cf. E. Varga, 'Der "Plan" Henryk de Mans' (1934), in Die Krise des Kapitalismus and ihre politische Folgen, (E. Altvater, ed.), Frankfurt 1974, p. 372ff (Varga on the other hand in important respects cleared the way for the understanding of the new role of the state in capitalist accumulation).

4. Faulkner, p. 118.

5. As Fortune wrote in a critical article of 1942, `The cardinal concept of the cartel mind is that free price competition equals a chaotic economy', Fortune, September 1942,p.105.

6. C. Solberg, Oil Power. The Rise and Imminent Fall of an American Empire, New York 1976, pp. 65-66, 73.

7. Menshikov, Millionaires, pp. 258, 261.

8. P. Collier and D. Horowitz, The Rockefellers: An American Dynasty, New York 1976, pp. 121, cf. 111ff, 143.

9. Kelly, p. 97.

10. Collier & Horowitz, p. 208; H.M. Larson, E.H. Knowlton, and Ch. S. Popple, New Horizons. History of the Standard Oil Company (New jersey) 1927-1950, New Yorket. 1971, p. 50 & passim. References to Standard Oil hereafter refer to the Jersey company unless indicated otherwise.

11. Claude, Histoire, real ite et destin, pp. 41-42.

12. R.F. Kuisel, Ernest Mercier, French Technocrat, Berkeley/Los Angeles 1967, chapters 5 and 6.

13. Larson, Knowlton & Popple, pp. 185-186, 201; F. Lundberg, America's Sixty Families, New York 1939, p. 184.

14. Larson, Knowlton & Popple, pp. 333-334. 15. Collier & Horowitz, p. 225.

16. Ibid., pp. 152-153.

17. W. A. Visser't Hooft, Memoires, Amsterdam 1971, pp. 140, 147, 160, 168.

18. Menshikov, Millionaires, p. 297 W. Klinkenberg, Prins Bernhard. Een politieke biografie, Haarlem 1979, p. 176.

19. G. Baumann, Atlantikpakt der Konzerne, Berlin 1952, p. 33, cf. p. 36.

20. S.A. Schuker, The End of French Predominance in Europe. The Financial Crisis of 1924 and the Adoption of the Dawes Plan, Chapel Hill 1976, p. 287.

21. V. Perlo, Das Reich derHochfinanz, Berlin 1960, pp. 284-288, 298-301.

22. Fortune, December 1937, p. 89.

23. Ibid., pp. 89, 157-162; Du Pont de Nemours, Du Pont. The Autobiography of an American Enterprise, Wilmington 1952, pp. 73-78, 81.

24. Braverman, pp. 159, 161; J. Radkau, `Die Kalkulation des Unberechenbaren. Zur Entwicklungs- and Wirkungsweise des industriellen Kernenergie-Interesses', Bldtterfurdeutsche and internationale Politik 1978/12, p. 1455.

25. This thesis has been convincingly argued by several authors: I mention only Sohn-Rethel, Grootkapitaal en fascisme, Abraham, 1981, and Stegmann, 1976.

26. Hass, p. 53.

27. Larson, Knowlton & Popple, p. 157.

28. I. Bulmer-Thomas, The Growth of the British Party System, vol. 2, London 1965, p. 30; S. Aaronovitch, Monopoly. A Study of British Monopoly Capitalism, London 1955, p. 77.

29. Baumann, Atlantikpakt, p. 56; on the Anglo-German Fellowship, S. Haxey, Tory MP, London 1939, pp. 230-232; on the missions to Germany, cf. the memoirs of the president of Unilever, P. Rijkens, Handel en Wandel. Nagelaten Gedenkschriften, Rotterdam 1965, pp. 76-90.

30. Aaronovitch, The Ruling Class, p. 71.

31. Quigley, p. 526.

32. Le Crapouillot 16, 'Les Gros', special issue edited by R. Lefebvre, P. Dominique and E. Beau de Lomenie, 1952, p. 54; F.J. A.M. Mallens, De structuur van het Franse bankwezen, Tilburg 1958, pp. 77-78, 104.

33. Le Crapouillot 16, p. 57; Quigley, p. 527. Characterization of Tardieu from Kuisel, p. 63.

34. On Belgian industry and the development of the Belgian bourgeoisie, see A. Mommen, Belgische bourgeoisie; on Montecatini, Fortune, April 1957, p. 128.

35. Sohn-Rethel, Grootkapitaal en fascisme, pp. 47-48.

36. Braverman, p. 144; D. F. Noble, America by Design. Science, Technology, and the Rise of Corporate Capitalism, Oxford 1979, pp. 302-303.

37. Gossweiler, pp. 341-342; M. Fennema, International Networks of Banks and Industry, The Hague p. 127, fig. 6-1.

38. M. Rothbard, `The Hoover Myth' (1966), in J. Weinstein and D.W. Eakins, eds., For a New America, New York 1970, pp. 176x177.

39. Lazard Bros. was naturalized in World War I at the request of the Bank of

England and came under the influence of Weetman Pearson, Fortune, August 1968, pp. 158-160; cf. Aaronovitch, The Ruling Class, pp. 87-58.

40. H.W. Ehrmann, Organized Business in France, Princeton 1957, p.p. 46-49; Hexner, p. xi.

41. Fortune, June 1945, pp. 127, 202; A. Teulings, Philips. Geschiedenis en praktijk van een wereldconcern, Amsterdam 1976.

42. Cf. Polanyi's remark on agrarian tariffs: `The identical function which allowed the reactionary classes in Europe to make play with traditional sentiments in their fight for agrarian tariffs was responsible in America about half a century later for the success of TVA and other progressive social techniques. The same needs of society which benefited democracy in the New World strengthened the influence of the aristocracy in the Old.', Polanyi, p. 185.

43. P. Baran, P.M. Sweezy, Monopoly Capital, Harmondsworth 1968, pp. 216-217. 44. Menshikov, Millionaires, p. 290 note.

45. W. Plowden, The Motor Car and Politics in Britain, Harmondsworth 1973, pp. 99-102.

46. Economic Commission for Europe, The European Steel Industry and the Wide­Strip Mill, Geneva 1953, p. 46, table 31.

47. Gossweiler, Grossbanken, p. 344; L.T. Wells, Jr., `Automobiles', in R. Vernon, ed., Big Business and the State. Changing Relations in Western Europe, Cambridge, Mass., 1974, passim.

48. Overbeek, Finance Capital and Crisis, pp. 105-106.

49. The various phases of the New Deal have been analysed in terms of class fractions and capital groups by Thomas Ferguson in `From Normalcy to New Deal: Industrial Structure, Party Competition, and American Public Policy in the Great Depression', International Organization, vol. 38, no. 1 (Winter 1984); and by Ph. H. Burch, Jr., Elites in American History, New York/London 1980, vol. III. Unless indicated otherwise, factual material on the identity of the supporters of the various stages of the New Deal has been taken from these two sources.

50. cf. Kelly, p. 166.

51. 1. Fisher, `Letter to Roosevelt, February 25, 1933', in J. Schwarz, ed. 1933. Roosevelt's Decision. The United States Leaves the Gold Standard, New York 1969, p. 27. See also W. Miller and T.E. Levitin, Leadership and Change. Presidential Elections from 1952 to 1976, Cambridge, Mass., pp. 289-290.

52. Rothbard, p. 178.

53. J.P. Warburg, Diary entry, 15 March 1933, reprinted in Schwarz, ed., Roose­. velt's Decision, p. 139.

54. R. F. Fenno, Jr., The President's Cabinet. An Analysis in the period from Wilson to Eisenhower, New York 1959, p. 74.

55. Cf. Kelly, p. 166.

56. ibid., p. 203.

57. W. Galenson, `The Labor Movement in the United States 1929-1940', in D. Fauvel-Rouif, ed., Mouvements ouvriers et depression &onomique de 1929 a 1939, Assen 1969, p. 138; M. Kalecki, p. 424.

58. R. Herding and Ch. Sabel, "'Business Unions" in den USA. Eine Verteidigung gegen ihre falschen Feinde', in J. Bergmann, ed., Beitrage zur Soziologie de Gewerkschaften, Frankfurt 1979, p. 375. On the bifurcation of the working class resulting from the corporatist truce between high productivity capital and organized labour, Braverman, pp. 383-384, and J. O'Connor, The Fiscal Crisis of the State, New York 1973.

59. Hobsbawm, p. 169.

60. Overbeek, `Finance Capital and Crisis' p. 105.

61. J. Grahl, `The Liberal Revolutionary', Marxism Today, June 1983, p. 21; Hobsbawm, p. 170.

62. James Wickham, `Social Fascism and the Division of the Working-Class Move­ment', Capital and Class, 7 (Spring 1979), p. 11; D. Schneider and R. Kuda, Arbeiterrdte in der Novemberrevolution, Frankfurt 1968, p. 24. The majority socialists had an etatist tradition reaching back to Lassalle, but the councils movement added a lasting plant-level counterpoint.

63. F. Naphtali, Wirtschaftsdemokratie, Frankfurt 1969 p. 30. E. Heimann, Soziale Theorie des Kapitalismus. Theorie der Sozialpolitik, Frankfurt 1980 (1929).

64. Abraham, p. 239-241.

65. On the effects of co-determination on the profit distribution process, cf. K.O. Hondrich, Mitbestimmung in Europa. Ein Diskussionsbeitrag, Koln 1970, p. 94.

66. M. Josephson, The Money Lords. The Great Finance Capitalists 1925-1950, New York 1972, p. 133.

67. Keynes, General Theory, p. 376.

68. H.M. Burns, The American Banking Community and New Deal Banking Reforms 1933-1935, Westport, Conn./London 1974, p. 65. Collier & Horowitz, p. 16.

69. Quoted in Schwarz, Roosevelt's Decision, p. vii; Brooks, p. 155.

70. Once the major transformation of American capitalism was a fact, specific circumstances could decide over political loyalties: in 1952, Weinberg was treasurer of Citizens for Eisenhower, Fortune, October 1953, p. 173; Mazur quote in Rothbard, p. 158. On the Bank of America, M. James and B.R. James, Biography of a Bank. The Story of the Bank of America NT & SA, New York 1954, p. 381; `Vanderhp Favors End to Gold Basis', New York Times March 6, 1933, reprinted in Schwarz, Roosevelt's Decision, pp. 44-45.

71. Quoted in L.C. Gardner, Economic Aspects of New Deal Diplomacy, Boston 1971 (1964), p. 35; Ridgeway, p. 259.

72. Gardner, p. 25.

73. M. Palyi, Wahrungen am Scheideweg. Lehren dereuropaischen Experimente, Frank­furt 1960, pp. 29.

74. F.L. Ford, `Three Observers in Berlin: Rumbold, Dodd, and Francois-Poncet, in C. A. Craig and F. Gilbert, eds., The Diplomat -1939, vol. 2, New York 1972 (1953), p. 457.

75. K. Middlemas, Politics in Industrial Society. The Experience of the British System since 1911, London 1979, pp. 180-181.

76. Cf. Anthony Eden's judgment at the time, The Eden Memoirs, Facing the Dictators, London 1962, p. 21.

77. Gossweiler, pp. 388, 291; V. Ronge (with P.J. Ronge), Bankpolitik im Spatkapi­talismus. Politische Selbstverwaltung des Kapitals?, Frankfurt 1979, pp. 78, 59. Selbstver­waltung des Kapitals?, Frankfurt 1979, pp. 78, 59.

78. J. Meynaud, Rapport surly classedirigeante italienne, Lausanne 1964, pp. 69-70. 79. Mommen, Belgische bourgeoisie, p. 90; R. Weston, Domestic and Multinational Banking. The Effects of Monetary Policy, London 1980, p. 110.

80. A. Granou, La bourgeoisiefinanciere au pouvoir et les luttes de classe en France, Paris 1977, p. 14; Mallens, chapters 1 and 2.

81. Bode, Nederlandse bourgeoisie, p. 43. 82. Gramsci, p. 294.

Chapter five

1. W.L. Neumann, After Victory. Churchill, Roosevelt and Stalin and the Making of the Peace, New York/Evanston 1967, p. 33.

2. E.E. Freudenthal, `The Aviation Business in the 1930's' (1940) in G.R. Simonson, ed., The History of the American Aircraft Industry. An Anthology, Cam­bridge, Mass. /London 1968, p. 107, table V (figures for 1935-38)

3. Unless indicated otherwise, details concerning the successive groups working for aid to Britain are taken from W. Johnson, The Battle against Isolation, Chicago 1944.

4. Fenno, p. 47.

5. C.K. Streit, Freedom's Frontier. Atlantic Union Now, New York 1961, re-edition containing a large part of Union Now (1938) expanded by an autobiography; here pp. 297-298,301.

6. Quoted in commemoration in Fortune, April 1949, p. 78.

7. Streit, Freedom's Frontier, p. 81.

8. Ibid., p. 247.

9. C.K. Streit, Union Now with Britain, London 1941, p. 219, cf. pp. 20-22.

10. G.E.C. Catlin; The Atlantic Commonwealth, Harmondsworth 1969, p. 39.

11. Ibid., p. 38.

12. G.E.C. Catlin, One Anglo-American Nation. The Foundation of Anglo-Saxony as Basis for World Federation. A British Response to Streit, London 1941, pp. 82, 31-32.

13. Johnson, Battle, pp. 115-116; Shoup and Minter, p. 123.

14. Radosh, pp. 16-18; A.S. Milward, War, Economy and Society 1939-195, Berkeley/Los Angeles 1979, p. 240.

15. Johnson, Battle, pp. 2, 163.

16. Visser 't Hooft, p. 104.

17. Fortune, January 1942, pp. 42-43, 87, 90.

18. A. Roelofs, `De Loopbaan van John Foster Dulles', Politiek en Cultuur, Vol. 9 no. 12 (December 1954), p. 635.

19. Quotes from Collier and Horowitz, p. 230.

20. Josephson, p. 322. Cf. for fixed capital growth statistics, J.M. Gillman, Das Gesetz des tendenziellen Falls der Proftrate, Frankfurt/Wien 1969 (1957), p. 79. Statis­tical evidence concerning the profit distribution process in the Atlantic economy is presented in Appendix 1 of the present study.

21. W. Hamilton, The Politics of Industry, New York 1967, p. 97.

22. Kelly, P; 234; p. 30.

23. Bulmer-Thomas, pp. 131-136.

24. Churchill to Roosevelt, December 7, 1940, in Roosevelt and Churchill. Their Secret Wartime Correspondence (F. L. Loewenheim, H. D. Langley, M. J. Onas, eds.), London 1975, pp. 122-123. Cited hereafter as Correspondence.

25. Fortune, December 1940, p. 153.

26. W. S. Churchill, Churchill's memoires over de Tweede Wereldoorlog, Amsterdam/ Brussel 1963, vol. 4, p. 1157.

27. Fortune, June 1941, pp. 177-178; May 1942, p. 59. ef. F. Schurmann, The Logic of World Power. An Inquiry into the Origins, Currents and Contradictions of World Politics, New York 1974, p. 8 on Roosevelt's own perspective.

28. Welles, p. 176.

29. Churchill to Roosevelt, February 7, 1942, in Correspondence, p. 176. 30. Churchill to Roosevelt, August 9, 1942, in Correspondence, p. 234.

31. L. Woodward, British Foreign Policy in the Second World War, London 1976, vol.5, p. 40.

32. Homer, p. 405.

33. Middlemas, pp. 287, 274.

34. Ibid., pp. 299-300.

35. F.X. Rebattet, The European Movement 1945-1953, dissertation St. Anthony's College, Oxford 1962, pp. 1-2.

36. Rebattet, pp. 4-5.

37. Spaak, Continuing Battle, pp. 78-80.

38. L. de Jong, Het Koninkrijk der Nederianden in de Tweede Wereldoorlog, 's Graven­hage 1979, vol. 911, pp. 1090-1091, 1101-1102, 1110.

39. Ibid., pp. 1109-1114; Rijkens, pp. 110-111.

40. W.L. Langer, Our Vichy Gamble, New York 1947, pp. 173-174, 368.

41. After the war, the French appeasers on their part explained their conduct by referring to American passivity in the period before Roosevelt's 1940 re-election, cf. G. Bonnet, De Washington au Quay d'Orsay, Geneve 1946, p. 320.

42. Murphy, p. 81.

43. W.W. Kauffmann, `Two American Ambassadors: Bullitt and Kennedy' in C.A. Craig & F. Gilbert, eds., The Diplomats 1919-1939, vol, 2, New York 1972 (1953), p. 676; Murphy, pp. 65, 67.

44. Quoted in Langer, p. 97.

45. Murphy, p. 182.

46. Kuisel, p. 69.

47. W. D. Leahy, I Was There, London 1950, pp. 34, 15; G. Kolko, The Politics of War. The World and United States Foreign Policy, 194.-1945, New York 1968, p. 65; R. Bourderon, `La politique economique et sociale du gouvernement de Vichy' in D. Blume et al., La politique de 1'impMalismefrancais de 1930 d 1958, Paris 1974, p. 67.

48. Welles, p. 152; F. de Tarr, The French Radical Party. From Herriot to Mendes­France, Oxford 1961, p. 40.

49. Langer, p. 129.

50. Kolko, Politics of War, p. 65.

51. Langer, pp. 169-170.

52. Ehrmann, p. 73; Bourderon, p. 67.

53. Ibid, pp. 102, 111; Leahy, pp. 95, 77. 54. Murphy, pp. 92-93.

55. Murphy, p. 135.

56. Langer, pp. 375, 368; Leahy, p. 112.

57. A. Werth, De Gaulle, Harmondsworth 1967, pp. 142-143.

58. Murphy, p. 206; Monnet, pp. 217-218, 220.

59. De Tarr, pp. 41-42.

60. Morton, pp. 218-219, 232. Cf. on antisemitic reaction in Paribas, Claude, Histoire, realize et destin, pp. 48-49.

61. Murphy, pp. 91, 169-172; on Couve's family ties with Protestant bank capital, H. Claude, Le Pouvoir et l'Argent, Paris 1972, p. 19.

62. Monnet, p. 237-241.

63. K. Pritzkoleit, Das kommandierte Wunder, 1959, p. 714.

64. Eitter, pp. 55-83.

65. Ibid., chapter 10.

66. C. Goerdeler, Das Ziel (1941) in Opitz, Europastrategien pp. 806-808; Ritter, p. 77.

67. C. Goerdeler, Der Weg (1943) in Opitz, p. 969.

68. Hallgarten and Radkau, pp. 431-32.

69. N. Poulantzas, Fascisme et Dictature, Paris 1974 (1970), p. 158.

70. Cf. the exchange between Roosevelt and Churchill in 1943, in Correspondence, pp.357-360.

71. F. Claudin, The Communist Movement. From Comintern to Cominform, Har­mondsworth 1975 (1970), pp. 350-351.

72. [bid

73. A. Dulles, The Secret Surrender, New York etc., 1966, pp. 44-45, 49, 65.

74. Neumann, p. 51; A. Werth, Russia at War, 1941-1945, London 1964, pp. 581-582.

75. Kolko, Politics of War, p. 334.

76. Welles, pp. 328, 334.

77. H. Feis, `Political Aspects of Foreign Loans', Foreign Affairs vol. 23 no. 4 (July 1945), p. 614. On the implications of the Morgenthau Plan in this respect, Kolko, Politics of War, p. 338.

78. Josephson, p. 322; corporate tax raise from G. Kolko, Wealth and Power in America. An Analysis of Social Class and Income Distribution, New York etc. 1965 (1962), p. 31.

79. Mills, pp. 26, 30; Milward, p. 242.

80. Welles, p. 413.

81. D. Yergin, Shattered Peace. The Origins of the Cold War and the National Security State, Harmondsworth 1980 (1977), pp. 244-245.

82. W. LaFeber, America, Russia and the Cold War, 1945-1971, New York etc., 1972, 38.

83. W. Lippmann, US Foreign Policy. Shield of the Republic, New York 1943, pp. 98-99.

84. Ibid., p. 119.

85. Ibid., p. 86.

86. Neumann, pp. 150-151, 157-158.

87. Yergin, p. 177. Churchill's advocacy of the Atlantic Union concept in this period reflected his fear that the Labour government might drift to a neutralist position or give in too easily to demands for de-colonization. In his much-cited three-circle theory, Atlantic relations came second to Commonwealth relations es­sential to the maritime liberal fraction. Against this `Churchill option' in which Atlantic Union was a means to preserve the integrity of the British Empire, Weibes and Zeeman distinguish a second option with its centre of gravity in the Foreign Office. This option, behind which the contours of the state-monopoly tendency are not difficult to discern, put a neo-colonial Commonwealth first and Europe second in an attempt to consolidate an independent role for Britain in the Cold War on the basis of its projected capacity to speak for the Commonwealth and for Europe. The `Foreign Office option' was most influential at the time of Churchill's visit to the United States and again in th6 mid-1950s, when Eden took over from Churchill. At several junctures, the two options clashed, as when Churchill in late 1944 forbade Eden to go into a proposal made by Spaak concerning the formation of a Western European block. C. Wiebes and B. Zeeman, `A Star is Born'. Militaire alliantievorming in de Atlantische regio, 1945-1948, Amsterdam 1983, pp. 31, 35, 37.

88. Quoted in Claudin, p. 22. 89. Ibid., p. 30.

90. H. Quast and A. Bleich, `Koude Oorlog in de Internationale Vakbeweging', Cahiers voor de Politieke en Sociale Wetenschappen, vol. 2 no. 1 (February 1979), pp. 14-16.

91. E. B. Haas, Beyond the Nation-State. Functionalism and International Organization,

Stanford 1964, p. 55. This is not meant to imply that human rights are to be rated low as a social goal, but only means to highlight its manipulation as an ideological weapon against the Soviet Union and communism.

92. Ibid., pp. 158, 293.

Chapter six

1. Fortune, October 1946, pp. 166-167.

2. R. Badstubner and S. Thomas, Restauration and Spaltung. Entstehung and Entwick­lung der BRD 1945-1955, Koln 1975, pp. 93-94, 100-102; Hallgarten and Radkau, pp. 457-458.

3. Pritzkoleit, Das kommandierte Wunder, p. 721.

4. Hallgarten and Radkau, pp. 451-452; cf. Pritzkoleit, Manner, Mdchte, Monopole, pp. 41-42, 50.

5. G. Braunthal, The Federation of Germany Industry in Politics, Ithaca, N.Y. 1965, pp. 111-112.

6. Badstubner and Thomas, pp. 176-177.

7. Ibid., p. 187; Pritzkoleit, Das kommandierte Wunder, p. 734.

8. Executive Sessions of the Senate Foreign Relations Committee (Historical Series), Washington 1976 ec. Quoted hereafter as SFRC, and volume number. Here vol. III/1, p. 529 and IV, p. 469.

9. Badstubner and Thomas, p. 135.

10. Claudin, p. 366.

11. Monnet Plan, 1946, in S.B. Clough, Th. & C. Moodie, eds., Economic History of Europe: Twentieth Century, New York et. 1968.

12. Quoted in Fortune, January 1945, p. 226.

13. CERES, Nationale Konjunkturpolitik in Europa 1945-1956, Frankfurt 1958, pp. 123,127.

14. H. Baudet, M. Fennema et al., Het Nederlands belong bij Indie, Utrecht/ Antwerpen 1983, p. 18; P. Lieftinck, The Post-War Financial Rehabilitation of the Netherlands, The Hague 1973, p. 16.

15. M. Keizer, De gijzelaars van Sint Michielsgestel. Een eliteberaad in oorlogstiid, Alphen 1979.

16. Bulmer-Thomas, p. 179; Overbeek, `Finance Capital and Crisis', p. 108.

17. Middlemas, p. 418.

18. Fortune, January 1947, p. 214; N. Kerssemeeckers, De houding, rol en invloed van de Belgische kolen-, ijzer-en staalindustrie bij het tot stand komen van de E.G.K. S., Unpub­lished paper, University of Amsterdam 1976, pp. 11-17.

19. cf. Fortune, October 1943, p. 22; D.W. Eakins, `Business Planners and America's Postwar expansion', in D. Horowtiz, ed., Corporations and the Cold War, New York/London 1969, p. 156 & passim.

20. The New York Times, September 21, 1947.

21. The New York Times, July 20, 1945.

22. Fortune, January 1945, p. 226.

23. W. Link, Deutsche and amerikanische Gewerkschaften and Geschaftsleute 194.-1975, Dusseldorf 1978, p. 101.

24. G. Baumann, -Eine Handvoll Konzernherren, Berlin 1953, p. 36.

25. Baumann, Atlantikpakt, p. 36.

26. Link, Gewerkschaften and Geschaftsleute, pp. 110-111.

27. Fleming, The Cold War and Its Origins, 1917-1960, New York, vol. I, p. 434.

304

28. Joint Hearings held in Executive Session before the Committee on Foreign Relations and the Committee on the Armed Services, United States Senate, on S. 2388 (Military Assistance Program 1949), Washington, p. 121.

29. Selection in Opitz, Europastrategien, pp. 1009-1013.

30. J.P. Warburg, Germany-Bridge orBattleground? New York 1947, pp. 2, 186, 247.

31. Ibid., p. 201, cf. 166-167.

32. J.M. Jones, The Fifteen Weeks. An Inside Account of the Genesis of the Marshall Plan, New York 1955, pp. 48,121; G. and J. Kolko, The Limits of Power. The World and United States Foreign Policy 1945-1954, New York 1972, p. 355.

33. R.J. Barnet, Intervention and Revolution. The United States in the Third World, New York/Cleveland 1968, p. 114.

34. Jones, p. 105.

35. Ibid., pp. 100-101.

36. SFRC, vol I, p. 15.

37. Jones, p. 122; SFRC, vol. I, p. 216.

38. Eakins, pp. 164-165.

39. SFRC, vol. 11, p. 193.

40. The first load of Dutch Hoogovens' new sheet steel output went straight to Detroit, K. van der Pijl, Een Amerikaans Plan voor Europa. Achetergronden van het ontstaan van de EEG, Amsterdam 1978, p. 182. On productivity programs, W.L. Buitelaar et al., Ploegenarbeid in Nederland, Amsterdam 1977, pp. 51, 77-78.

41. Economic Commission for Europe, The European Steel Industry and the Wide­Strip Mill, Geneva 1953, table 16, p. 18. On the British example, Overbeek, 'Finance Capital and Crisis', p. 106.

42. SFRC, vol. II, pp. 546-548; cf. Overbeek, p. 109.

43. Mills, p. 36.

44. R. Godson, American Labor and European Politics. The AFL as a Transnational Force, Need York 1976, p. 51; Ph. Foner, American Labor and the Indochina War. The Growth of Union Opposition, New York 1971, p. 12.

45. Link, Gewerkschaften and Geschaftsleute, pp. 44, 52; Radosh, pp. 326-328. 46.,Badstubner and Thomas, pp. 40-41, 85-86.

47. Link, Gewerkschaften and Geschaftsleute, pp. 54-55, 73, 78; W. Muller Jentsch, 'Streiks and Streikbewegungen in der Bundesrepublik 1950-1978' in J. Bergmann, ed., Beitrdge zur Soziologie derGewerkschaften, Frankfurt 1979, p. 37.

48. Link Gewerkschaften and Geschaftsleute, pp. 68, 88.

49. cf. Radosh, p. 366.

50. Ibid., pp. 310-317.; Godson, p. 99.

51. R

52. J.P. Windmuller, 'The Foreign Policy Conflict in American Labor', Political Science Quarterly, vdl. LXXXII no. 2 Qune 1967), p. 231; Godson, pp. 101-102, 119.

53. J.D. Reynaud, Les syndicate en France, Paris 1963, p. 91; Godson, pp. 89, 118-119,129.

54. Radical Research Services, The Labour Party & the C.I.A. The secret funding of Labour leaders - the story the Sunday Times withdrew, pamphlet, London n.d., p. 11. 55. Middlemas, p. 395.

56. Bulmer-Thomas, p. 165.

57. Windmuller, p. 231; Quast and Bleich, p. 22.

58. Fortune, May 1949, p. 186.

59. H. Sporken, 'Het Nederlands Verbond van Vakverenigingen: Ideen, Bemoei­ingen en Lotgevallen van een vakverbond in de 'Vrije Wereld' (1945-1950), Cahiers voorde Politieke en Sociale Wetenschappen, vol. II no. 1 (February 1979).

60. Quast and Bleich, p. 23. cf. P. Thompson, Bilderberg and the West. This manuscript, containing a wealth of facts but still awaiting publication, was kindly made available to me by Karl van Meter.

61. Quast and Bleich, pp. 26-27.

62. Haas, Behond the Nation-State, p. 199; K. van Oene, 'Der Weltgewerkschafts­bund zwischen Einheit and Spaltung (1945-1949)' in W. Olle, ed., Einfuhrung in die internationale Gewerkschaftspolitik, vol. 1, Berlin 1978, p. 164.

63. Fortune, May 1946, p. 123; February 1947, p. 3.

64. I. Szent-Miklosy, Development of American Thinking on an Atlantic Community, 1945 to 1962 (Ph. D. Columbia University), Ann Arbor 1962, pp. 645.

65. Wiebes and Zeeman, A Star is Born, p. 44. Cf. chapter 4, note 94 on British foreign policy options.

66. Ibid., pp. 122, 133-134.

67. C. Wiebes and B. Zeeman, 'The Pentagon negotiations March 1948: the launching of the North Atlantic Treaty', International Affairs, vol. 59 no. 3 (summer 1983), here, p. 359. Official NATO history prefers the autumn of 1948 as the starting date of the preliminary negotiations.

68. Th. A. Wolf, US East-West Trade Policy. Economic Warfare Versus Economic Welfare, Lexington, Mass. 1973, pp. 47-54; cf. on McCloy's problems, SFRC, vol. 111/2, p. 62.

69. SFRC, vol. 111/1, p. 19.

70. H.S. Truman, Memoirs, Garden City 1956, vol. 11, p. 230.

71. SFRC, vol. I1I/2, pp. 103-104; cf. p. 161.

72. S. Menshikov, The Economic Cycle: Postwar Developments, Moscow 1975, p.43. 73. Truman, Memoirs, vol. 11, p. 238.

74. R.E. Baldwin, 'The Political Economy of Postwar U.S. Trade Policy', The Bulletin (Graduate School of Business Administration, New York), 1976, no. 4, p. 16.

75. E.H. van der Beugel, From Marshall Aid to Atlantic Partnership, Amsterdam 1966, pp. 79-82.

76. SFRC, vol. 11, pp. 183-184. 77. Ibid., p. 184.

78. 'Three-fourth of the funds for Europe flow channels', The New York Times, August 29, 1948.

79. ECA, The International Flow of Private Investment Depository Library, Amsterdam, 1954, p. 15.

80. B. Tew, International Monetary Cooperation 1945-67, London 1967, ninth ed., p. 109.

81. Monnet, p. 320; CEPES, pp. 117-127.

82. De Tarr, p. 85.

83. Ibid., pp. 159-164.

84. Braunthal, p. 51; Fortune, March 1952, p. 152; cf. Opitz, Europastrategien, p. 1045.

85. Sampson, Anatomy of Europe, p. 151; Fortune, March 1952, p. 162; September 15, 1967, p. 98.

86. Pritzkoleit, Das kommandierte Wunder, p. 751; Manner, Mdchte, Monopole, pp. 35-36, 38; Baumann, Konzernherren, p. 23.

87. Opitz, Europastrategien, p. 1052; K. Pritzkoleit, Auf einer Woge von Gold. Der Triumph der Wirtschaft, Wien et, 1961, p. 165.

88. Weston, p. 90.

89. Middlemas, p. 419; Bulmer-Thomas, p. 183.

90. Quoted in Bulmer-Thomas, p. 185.through (private) business 1946-52, Doc. EV UN,306

91. Lloyd's Bank through chairman (and British ambassador to the USA from 1948 to 1952) Sir Oliver Franks and director Lord Balfour was prominent in various Atlantic and European pressure groups; so was ICI through Sir Paul Chambers and Lord McGowan. Unilever financed the first Bilderberg conference in the early fifties. F.X. Rebattet, The European Movement 1945-1953, diss. St. Anthony's College, Oxford 1962, p. 24 & passim; additional material from the works of Sam Aaronovitch quoted already.

92. J. Meynaud, Les partis politiques en Italie, Paris 1965, p. 112; Kolko and Kolko, p. 371.

93. Fortune, October 1955, p. 184.

94. Ibid., p. 189; Rebattet, p. 240.

95. R. de Bruin, Les Pays-Bas et l'Integration europeenne 1957-1967, these de doctorat, Paris 1978, pp. 69-72; F. Baruch, ed., Grote macht in klein land. Een beeld van het monopoliekapitaal en zijn invloed in Nederland, Amsterdam 1962, passim.

96. Rebattet, passim; Mommen, Belgische bourgeosie, passim.

97. Projektgruppe Parteiensystem, 'Bundesrepublik Deutschland' in J. Raschke, ed., Die politischen Parteien in Westeuropa, Reinbek 1978, pp. 96-97; De Tarr, p. 86.

98. Chr. van Esterik and K. van Twist, Daar werd ietsgrootsch verricht, Weesp 1980, pp. 56-58, 64-68; J. Bank, 'Rubber, rijk, religie. De koloniale trilogie in de Indone­sische kewestie 1945-1949' in P.W. Klein, G.N. van der Plaat, eds., Herrijzend Nederland, 's Gravenhage 1981, pp. 590.

99. D. U. Stikker, Memoirs, quoted from the German edition, Bausteinefureine Neue Welt, Wien/Dusseldorf 1966, p. 137.

100. R. Murray, 'Draketanden. HVA en de ontwikkeling van het imperialisme', in F. Crone & H. Overbeek, eds., Nederlands kapitaal over de grenzen, Amsterdam 1981, pp. 98-101; Bank, pp. 60, 67; Van Esterik & Van Twist, p. 70.

101. Bode, 'De Nederlandse bourgeoisie', p. 46; Van der Pijl, Amerikaans plan, p. 189.

102. The full list of signatories is in Szent-Miklosy, p. 222.

103. Quoted inj. Baumier, Lesgrandes afaires francaises, Paris 1967, pp. 173-174.

104. Unless indicated otherwise, factual material on the French bourgeoisie has been taken from the works of Henri Claude referred to already.

105. Fortune, September 15, 1967, p. 96; Sampson, Anatomy of Europe, p. 110.

106. Alphand, p. 212.

107. Le Crapouillot, no. 59, special issue entitled 'Le vrai Mitterrand', 1981, pp. 27-28.

108. Quoted in Fortune, January 1956, p. 152; cf. Dulles on the US attitude towards the French war in Vietnam, SFRC, vol. VI, p.5.

109. Fortune, November 1952, pp. 175, 182.

110 I. F. Stone, The Truman Era, New York 1973 (1953), pp. 18-19; Bradstubner and Thomas, p. 95.

111. Opitz, Europastrategien, pp. 1035, 1046.

112. Braunthal, p. 51; Baumann, Konzernherren, p. 63.

113. Quoted in L. Erhard, Wohlstand fur Alle, Guttersloh 1962, p. 166.

114. Badstubner and Thomas, p. 271.

115. Ibid., pp. 272, 299. 116. Braunthal, p. 97.

117. Projektgruppe Parteiensystem, pp. 81, 84.

118. Fortune, January 1946, p. 228.

119. K. Pritzkoleit, Gott erhdlt die Mdchtigen. Ruckblick and Rundblick aufden deutsche" Wohlstand, Dusseldorf 1963, pp. 164-169; Hallgarten and Radkau, p. 453 note 25a.

120. Fortune, September 1948, p. 115.

121. Selection in Opitz, Europastrategien, pp. 1018, 1026, 1033; Badstubner Thomas, p. 265.

122. Link, Gewerkschaften and Geschaftsleute, p. 122.

123. Ibid., pp. 135-143, 227-228.

124. Fortune, February 1956, p. 107.

125. Grewe, pp. 161-162, 169.

126. K. Pritzkoleit, Die neuen Herren. 1955, p. 103.

127. SFRC, vol. VI, p. 660.

128. Grewe, p. 146.

129. Badstubner and Thomas, p. 395. 130. Meynaud, Lespartis politiques, p. 112.

131. Ch. S. Maier, 'The politics of productivity: Foundations of American inter­national policy after World War II', International Organization, vol. 31 no. 4 (autumn 1977), p. 263.

132. Club Turati, II partito americano in Italia, Milano 1975. 133. Fortune, September 1952, p. 212 and Die Mdchtigen in Staat and Wirtschaft, Wien et.

Chapter seven

1. Baldwin, p. 16.

2. SFRC, vol. II, pp. 264, 251, 356.

3. Ph. Zarifian, Inflation et crise Monetaire, Paris 1975, p. 148.

4. A Report to the National Security Council by the Executive Secretary on United States objectives and programs for national security, Washington, April 14, 1950 (NSC-68), fotocopy of the original document, p. 31.

5. C. N. Degler, Affluence and Anxiety, 1945-present, Glenview, Ill., 1968, p. 87; on Humphrey, cf. Fortune, May 1947, p. 94.

6. Kolko, Wealth and Power, p. 44; cf. B. Hanse, Fiscal Policy in Seven Countries 1955-1965, (with W.W. Snyder), Paris 1969, p. 476.

7. Lundberg, The Rich, pp. 403, 423.

8. Domhof The Powers That Be, p. 47.

9. Solberg, pp. 9, 74, 77; Lundberg, The Rich, pp. 443, 158.

10. Solberg, p. 165.

11. SFRC, vol. V, p. 315.

12. D. Calleo, The Atlantic Fantasy: The U.S., NATO, and Europe, Baltimore/ London 1970, p. 45.

13. SFRC, vol. VIII, p. 157.

14. SFRC, vol. V, p. 387.

15. Ibid., p. 323.

16. D.A. Hellema, Frontlijn van de Koude Oorlog. De Herbewapening van West­Duitsland en het Atlantisch Bondgenootschap, Amsterdam 1984, ch. 4.

17. Cf. the notice taken in the US Senate of statements in favour of German neutrality by former Chancellors Bruning and Luther in June 1954, SFRC, vol. VI, p. 677.

18. D. Middleton, 'NATO Changes Direction', Foreign Affairs, vol. 31, no. 3 (April 1953), pp. 427-428.

19. H. Fish Armstrong, 'The Grand Alliance Hesitates', ForeJQn Affairs, vol. 32, no. 1 (October 1953), p. 48.

308

20. Klinkenberg, p. 309; Rijkens, p. 137.

21. Rikjkens, p. 139. On US scepticism as to the handling of communism in Europe, cf. Dulles's statements in SFRC, vol. VI, p. 37.

22. Rijkens, p.p. 141, 143; Klinkenberg, p. 310. An example of the conspiracy image is B. Englemann, Hotel Bilderberg. Tatsachenroman, Munchen 1977: A full account of the Bilderberg Group is in the Thompson manuscript already referred to.

23. Szent-Miklosy, p. 180; Catlin, Atlantic Commonwealth, p. 49.

24. C. A. Kelleher, Germany and the Politics of Nuclear Weapons, New York/London 1975, p. 43. On service rivalry in the US armed forces, A. Wolfe, The Rise and Fall of the'Soviet Threat': Domestic Sources of Cold War Consensus, Washington 1979, ch. 5.

25. D. A. Hellema, 'De Bondsrepubliek en de proliferatie van atoomwapens', Tijdschrift voor Diplomatie, vol. 6, no. 11 (July 1980), p. 736; the newspaper accounts were C.L. Sulzberger's in The New York Times in 1964, 1965 and 1977, cf. H.W. Kahn, 'Strauss and der Griff nach der Atommacht', Bldtter fur deutsche and inter­nationale Politik, 10, 1979, pp. 1207-1209.

26. Th. K. Finletter, Interim Report on the U.S. Search for a Substitutefor Isolation, New York 1968, p. 56; Spaak, Memoirs, p. 323.

27. Spaak, Memoirs, p. 259.

28. Quoted in Finletter, pp. 40-41.

29. SFRC, vol. IX, p. 452.

30. J. F. Kennedy, 'A Democrat Looks at Foreign Policy', Foreign Affairs, vol. 36, no. 1 (October 1957), pp. 47, 46.

31. D. Acheson, Power and Diplomacy, New York 1962 (1958), p. 72. 32. Ibid., p. 84.

33. Szent-Miklosy, pp. 136-138.

34. Ibid., p. 238; Catlin, Atlantic Commonwealth, p. 42.

35. Szent-Miklosy, p. 159; Fortune, February 1961, p. 71.

36. Braunthal, pp. 236-270; H. Rondi, 'Die Grossen werden noch grosser. Das Kartellrecht reguliert den Konzentrationsprozess', Bldtterfardeutsche and internationale Politik, 7, 1979, p. 873.

37. Ehrmann, p. 387; OECD Economic Survey: France, Paris, February 1974, p. 13.

38. Middlemas, p. 427; Aaronovitch, Monopoly, p. 124.

39. Cepes, p. 41. The Netherlands showed the highest rate ofdomestic fixed capital formation of the countries under review in the 1950s, cf. United Nations, The Growth of World Industry, 1963. In Italy, the modernization policy included the important Sinigaglia plan meant to provide Italian industry with cheap steel, and ENI, the state energy trust. Before 1957, deflationary policy prevented the investment programmes to develop their full potential however, Cepes, p. 244; J. B. and R. Proctor, 'Capitalist Development, Class Struggle, and Crisis in Italy, 1945-1975', Monthly Review, vol. 27, no. 8 (January 1976), pp. ?,3-24.

40. P.H. Spaak, 'The West in Disarray', Foreign Affairs, vol. 35, no. 2 (January 1957), p. 189.

41. S. Clarke, 'Capital, fractions of capital and the state: "Neo-Marxist" Analysis of the South African State', Capital & Class 5 (Summer 1978), p. 62; Catlin, Atlantic Commonwealth, p. 34.

42. G.M. Carter, The Government of France, New York., pp. 52, 63; De Tarr, pp. 86,182-183.

43. Claude, Le pouvoir et Pargent, p. 74.

44. Ibid., pp. 66-70; Claude, Histoire, rialitt et destin, p. 55. Another prominent capitalist with both nationalist convictions and Atlantic connections of a sphere-of­interest nature dating from the interwar years was Pierre Andre, president of Esso­

Standard and director of the CFP, who in 1953 founded a national committee to defend the integrity of the French empire, Ehrmann, p. 416.

45. Hanse, pp. 152-154; cf. Granou, p. 66.

46. Erhard, p. 167.

47. Projektgruppe Parteiensystem, p. 101; D. Wagner, FDP and Wiederbewaffnung. Die Wehrpolitische Orientierung der Liberalen in der Bundesrepublik Deutschland 1949­1955, Boppard 1978, p. 39.

48. Bulmer-Thomas, pp. 231-232.

49. R.J. Nicholson, `The Distribution of Personal Income in the U.K.', in J. Urry and J. Wakeford, eds., Power in Britain, London 1973, p. 49.

50. Bulmer-Thomas, p. 235.

51. Tew, p. 116.

52. The New York Times, June 2, 1960.

53. G. Junne, Der Eurogeldmarkt. Seine Bedeutung fur Inflation and Infationsbekamp­fung, Frankfurt/New York 1976, p. 31.

54. Zarifian, p. 157; Tew, p. 122.

55. G. W. Ball, 'The European Economic Community' in American Management Association, ed., The European Common Market - New FrontierforAmerican Business, New York 1958, p. 46.

56. Ibid., pp. 49, 46.

57. The importance of distinguishing between direct investment between closed economies and direct investment in a liberalized context, which allows intra­company division of labour and thus represents a higher form of internationalization but also further distinguishes corporate liberal from state-monopolistic international concepts was brought to my attention by Jeremy Beale.

58. Link Gewerkschaften and Geschaftsleute, pp. 147, 231 note 7.

59. R.R. Bowie, 'Tensions Within the Alliance', Foreign Affairs, vol. 42, no. 1 (October 1963), p. 61.

60. J.B. Evans, U.S. Trade Policy. New Legislation for the Next Round, New York/ Evanston 1967, p. 7; Baldwin, pp. 19-20.

61. Menshikov, Economic Cycle, p. 40.

62. A.W. Griswold, 'Wormwood and Gall. An Introspective Note on American Diplomacy', Foreign Affairs, vol. 39, no. 1 (October 1960), p. 39.

63. Quoted in R.A. Packenham, Liberal America and the Third World. Political Development Ideas in Foreign Aid and Political Science, Princeton 1973, pp. 114-115. 64. Ch. Bowles, Promises to Keep. My Years in Public Life, 1941-1969, New York etc, 1971, p. 345.

65. Chomsky traces these characteristics straight to the Wilson era, when social critic Randolph Bourne detected them in an 'earnest group of young liberals, who direct their course by an opportunist programme of state socialism at home and a league of benevolently imperialistic nations abroad'. Quoted in N. Chomsky, American Power and the New Mandarins, Harmondsworth 1969, p. 9.

66. Quoted in ibid., pp. 106-107.

67. W.A. Williams, 'The Large Corporation and American Foreign Polity', in D. Horowitz, ed., Corporations and the Cold War, New York/London 1969, p. 102.

68. D. Halberstam, The Best and the Brightest, Greenwich, Conn., 1973, p. 273; R. Hilsman, To Move a Nation. The Politics of Foreign Policy in the Administration ofjohn F. Kennedy, Garden City, N.Y., 1967, p. 35; Rebattet, p. 305.

69. Halberstam, pp. 11-15. 70. Ibid., p. 271.

71. Perlo, pp. 189-190; Fortune, April 1959, pp. 115-116.

Chapter eight

18. Ibid., pp. 15-16.

19. T. Nairn, The Left Against Europe?, Harmondsworth 1973, pp. 75-76.

20. Radical Research Services, p. 11.

21. Ibid., p. 12; Middlemas, p. 396.

22. Nairn, p. 46; Radical Research Services, p. 13.

23. Middlemas, p. 396, cf. p. 411.

24. S.H. Barnes, 'Italy: Oppositions on Left, Right, and Center', in R.A. Dahl, ed., Political Oppositions in Western Democracies, New Haven/London 1966, pp. 326-327.

25. H. Lange, 'Gewerkschaftliche Aktion and politisches Bewusstsein der wis­senschaftlich-technische Intelligenz in Frankreich', in R. Vahrenkamp, ed., nologie and Kapital Frankfurt 1973; K. Hansch, 'Frankreich', inj. Rasche, ed., Die politischen Parteien in Westeuropa, Reinbek 1978, pp. 182-183.

26. A. Farhi, 'Europe: Behind the myths', in T. Nairn, ed., Atlantic Europe? The Radical View, Amsterdam 1976, p. 85.

27. Meynaud, Classe di igeante, p. 77.

28. Sampson, Anatomy of Europe, p. 121; Fortune, September 1960, p. 137.

29. Sampson, Anatomy of Europe, p. 90.

30. D. Murphy, 'Italien', in J. Raschke, Die politischen Parteien in Westeuropa, Reinbek 1978, p. 306.

31. Cf. Granou, p. 75.

32. Carter, p. 40.

33. A. Babeau and D. Strauss-Kahn, La Richesse des Francais, Paris 1977, pp. 149-151; cf. Hansch, p. 206.

34. I. Davidson and G. Weil, The Cold War, London 1970, p. 188.

35. Hansch, pp. 188, 193. The Schlumberger group subsequently shifted its sup­port to Mitterrand and the reformed Socialists.

36. Quoted in A. Buchan, 'Partners and Allies', Foreign Affairs, vo. 41 no. 4 (July 1963), p. 623; cf. Sampson, Anatomy of Europe, p. 11.

37. Cf P. Menges-France, Choisir (Conversations avecjean Bothorel), Paris, PP.-50.

38. Claude, Le pouvoir et Pargent, p. 153; Menshikov, Millionaires, p. 298; Fortune, August 1968, p. 102.

39. Lerner and Gorden, p. 116; Claude, Le pouvoir et Pargent, pp. 150-151.

40. Alphand, p. 347.

41. Claude, Le pouvoir et Pargent, pp. 144-145.

42. Braunthal, p. 209.

43. J. Huflschmid, Die Politik des Kapitals. Konzentration and Wirtschaftspolitik in der Bundesrepublik, Frankfurt 1975 (1969), pp. 94-95.

44. Braunthal, pp. 210-211.

45. Hansen, p. 98.

46 J.Hartmann, 'Belgien',, in J. Raschke, ed., Die politischen Parteien in Westeuropa, Reinbek 1978, p. 60.

47. Bulmer-Thomas, p. 237.

48. Ibid., p. 259; Menshikov, Economic-Cycle, pp. 267-278.

49. Sampson, Arms Bazaar, p. 27.

50. De Waarheid, September 9 and 11, 1976; Rapport van de Commissie van Drie, Onderzoek naarde juistheid van verklaringen over betalingen door een Amerikaanse vliegtuig­fabriek, 's Gravenhage 1976, p. 196.

51. A. van Staden, Eeen trouwe bondgenoot. Nederland en het Atlantisch Bondge­nootschap 1964-1974, Baarn 1974, pp. 102-105.

52. De Bruin, p. 74.

53. H.-J. Axt, 'Kontinuitat and Wandel sozialdemokratischer Westeuropa-Politik

von 1945 bis heute', Bldtterfur deutsche and internationale Politik, 2, 1979, pp. 282, 285; Fortune, April 1960, p. 86.

54. O. Kirchheimer and C. Menges, 'A Free Press in a Democratic State? The Spiegel Case', in G.M. Carter and A.F. Westin, eds., Politics in Europe, New York etc. 1965, pp. 130-131.

55. Grewe, p. 639.

56. Murphy, Italien, p. 320; Meynaud, Classedirigeante, p. 78.

57. Barnes, p. 325; Club Turati, pp. 9-11.

58. Barnes, pp. 326-327.

59. Martinelli, Chiesi, Dalla Chiesa, p. 259, fig. 3.

60. Club Turati, p. 12.

61. Williams, The Large Corporation, pp. 102-103.

62. J. W. Fulbright, The Arrogance of Power, Harmondworth 1970 (1966), p. 58. 63. Degler, pp. 131-132.

64. E.F. Goldman, The Tragedy of London Johnson, New York 1969, p. 7.

65. Miller and Levitin, p. 57.

66. Mills, p. 41. 67. Foner, p. 22.

68. Hansen, pp. 483-484.

69. A.M. Okun, 'Measuring the Impact of the 1964 Tax Reduction' in W.W. Heller, ed., Perspectives on Economic Growth, New York 1968, pp. 33-37, 45.

70. W. Woodruff, America's Impact on the World. A Study of the Role of the United States in the World Economy, 1750-1970, London/Basingstoke 1975, p. 253, table Vii.

71. R. Vernon, Sovereignty at Bay. The Multinational Spread of US Enterprises, Harmondsworth 1973 (1971), p. 71, table 3-4.

72. H. Kragenua, Internationale Direktinvestitionen 1954-1973. Vergleichende Unter­suchung and statistische Materialien, Hamburg 1975, pp. 90-91, table A.1.4; pp. 100­101, table A.2.3.

73. Junne, pp. 34-35J.-P. Koszul, 'American Banks in Europe', in Ch. P. Kindle­berger, ed., The International Corporation. A Symposium, Cambridge, Mass./London 1970, p. 281.

74. T. Etty and K. P. Tudyka, 'Wereldkoncernraden: vakbonden en hun "kapitaal­gerichte" strategie tegen multinationale ondernemingen', Te Elfder Ure, vol. 21 no. 2 (1974), pp. 361-363.

75. Ibid., p. 363.

76. Quoted in E. Hildebrandt, W. Olle, W. Scholler, 'Multinational Corporations and Internationalisation of the Trade Unions', paper, ECPR workshops Louvain-la­Neuve 1976, p. 14.

77. J. S. Baker, 'Trade Union internationalism and the supranational state', Capital & Class 5 (Summer 1978), p. 97; cf. Cox, p. 206.

78. Etty and Tudyka, pp. 386-387.

79. K. Busch, Die multinationalen Konzerne. Zur Analyse der Weltmarktbewegung des Kapitals, Frankfurt 1974, pp. 136-137; Ch. Layton, L'Europe et les investissements am&icains, Paris 1968 (1966), p. 41.

80. Calculated from Kragenau, pp. 94-95, table A.1.7.

81. J. R. Hiller, 'Long-Run Profit Maximization? An Empirical Test', Kyk1os, vol. 31 no. 3 (1978), p. 484.

82. H. Levy and M. Sarnat, 'Devaluation Risk, Portfolio Balance and International Capital Flows', Konjunkturpolitik, vol. 22 no. 5 (1976), p. 314.

83. Fortune, March 1961, p. 88.

84. Fortune, September 1957, p. 181; January 1958, p. 125; July 1962, pp. 149-150.

85. Fortune, July 1962, p. 264.

86. Layton, pp. 230, 235.

87. Perlo, p. 191.

88. W. Polder, Internationalisering van de koncernfinanciering, Nijmegen 1978, p. 123. 89. Ibid., pp. 90-91, table 15;195-108, table 21. Divided by population for 1960 and 1970 respectively.

90. Ibid., pp. 131-132, table 5.

91. Mills, pp. 41-42.

92. Foner, p. 32.

93. Baldwin, p. 23, 25.

94. Quoted in Fortune, September 15, 1967, p. 95.

95. H.A. Kissinger, The Troubled Partnership. A re-appraisal of the Atlantic Alliance, New York 1965, p. 8.

96. A. Beaufre, NATO and Europe, New York 1966, p. 34.

97. Spaak, Memoirs, p. 467.

98. Finletter, p. 60.

Chapter nine

1. Quoted in R. Gilpin, U.S. Power and the Multinational Corporation. The Political Economy of Foreign Direct, Investment, New York 1975, p. 136. An anthology of internationalist fantasies, Bal~included, is in Cox, pp. 239-231.

2. H. Schmidt, `Germany in the Era of Negotiations', Foreign Affairs, vol. 49. no. 1 (October 1970), p. 40.

3. Lerner and Gorden, pp. 176, 119.

4. F. Church, 'U.S. Policy and the New Europe', Foreign Affairs, vol. 45, no. 1 (October 1966), pp. 51-52.

5. Sampson, Arms Bazaar, p. 131.

6. Sampson, Anatomy of Europe, p. 68.

7. Link, Gewerkschaften and Geschaftsleute, p. 96. 8. Hufschmid, pp. 114 etc.

9. A. Bonisch, and J. Isa, Keynes oder Friedman? Wirtschaftstheorie and -praxis im Kapitalismus, Berlin 1978, p. 189.

10. J J. Servan-Schreiber, Ledefi am&icain, Paris 1968, p. 35.

11. Ch. Tugendhat, The Multinations Harmondsworth 1973, pp. 88-89; Overbeek, Finance Capital and Crisis, pp. 112-113.

12. Hansen, p. 154.

13. Fortune, April 1966, pp. 69-70.

14. Meynaud, Classedirigeante, pp. 88-93.

15. A. Mommen, Staat en kapitaal in Belgie, p. 23.

16. Financial Times, March 4,1977; D. Fano and C. Sardoni, `The Fiscal Crisis of the State: Notes on the Italian Case', Capital & Class 7 (Spring 1979), p. 49.

17. Cf. The Economist, January 15, 1966, reprinted in J. Urry and J. Wakeford, eds., Power in Britain, London 1973 (1968), on the Finance Act of 1965.

18. Huflschmid, p. 166.

19. J. Lau, 'Investitionskontrolle and monopolistischer Wettbewerb in der Euro­paischen Gemeinschaft', in F. Feppe, ed., Arbeiterbewegung and Westeuropaische Integra­tion, Koln 1976, pp. 309-310; Etty and Tudyka, p. 387.

20. Annex to Servan-Schreiber, p. 370.

21. E. Heath, `Realism in British Foreign Policy', Foreign Affairs, vol. 48, no. 1 (October 1969); Cf. W. Klinkenberg, De Ultracentrifuge 1937-1970, Amsterdam/ Baarn 1971, pp. 154-160.

22. In 1969, the Pompidou government yielded to pressures from the Empain­Schneider group, represented in the government by Giscard, to abandon the indepen­dent nuclear energy strategy and accept American nuclear technology, owned by Westinghouse (of which FRAMATOME, the atomic combine of the Schreiber group, was the licensee). West Germany at this point took over the challenge to American hegemony. The Kraftwerkunion (Siemens and AEG) suspended US licenses and started competing on the world market, which eventually culminated in the Brazilian order of 1975. A European approach was never achieved. Cf. T. Beumer et al., The Separation of Europe. France and the Foundation of Euratom, Amsterdam 1981, p. 66.

23. H. Overbeek, `Twintig jaar Europese ontwikkelingshulp. Her Europees ontwikkelingsfonds 1957-1977', Cahiers voorde Politieke en Sociale Wetenschappen, vol. 2, no.2 (April 1979), pp. 72, 68.

24. K. P. Tudyka, Marktplatz Europa. Zur politischen Okonomie der EG, Koln 1975, PP.77-78,87.

25. A. Grosser, Les Occidentaux. Les pays d'Europe et les Etats-Unis depuis la guerre, Paris 1978, p. 338.

26. Nairn, pp. 41, 40.

27. D.A. Hellema, `De Europese Verkiezingen', Cahiers voor de Politieke en Sociale Wetenschappen, vol. 2, no. 2 (April 1979), pp. 18-20.

28. Braunmuhl, pp. 67, 75-76.

29. Cf. the emphatic articulation of the deepening of Western European integration and the German initiatives towards the East in Brandt's speeches and interviews in Bundeskanzler Brandt. Reden and Interviews, Hamburg 1971.

30. Braumuhl, pp. 87-88.

31. Link, Gewerkschaften and Geschaftsleute, p. 161; P. M. Johnson, `Washington and Bonn: dimensions of change in bilateral relations', International Organization, vol. 33, no. 4 (Autumn 1979), p. 480.

32. Quoted in B. Greiner, Amerikanische Aussenpolitik von Truman bis heute, Koln 1980, p. 22.

33. Z. Brzezinski, `America and Europe', Foreign Affairs, vol. 49, no. 1 (October 1970), p. 22.

34. Ch. W. Yost, `World Order and American Responsibility', Foreign Affairs, vol. 47, no. 1 (October 1968), p. 1.

35. R. Nixon, Inaugural Address, January 20, 1969, in Great Issues in American History (R. Hofstadter, ed.), New York 1969, pp. 509-510.

36. H.S. Roth, Labor: America's Two-Faced Movement, New York 1975, p. 47; functions of other cabinet members and advisers from M. Myerson, Watergate. Crime in the Suites, New York 1973.

37. Wolf, pp. 102-103, 84, 114.

38. Greiner, p. 166.

39. The New York Times, April 16, 1971.

40. J. Frieden, `The Trilateral Commission: Economics and Politics in the 1970s', Monthly Review, vol. 29, no. 7 (December 1977), p. 7.

41. Time, September 27, 1971.

42. Le Monde diplomatique, November 1974.

43. D. Schneiderman `La theorie et la pratique de Alliance selon M. Kissinger', Le Mondediplomatique, May 1974, p.9.

44. R. Parboni, The Dollar and its Rivals. Recession, Inflation, and International Finance, London 1981, p. 89.

45. Quoted in Solberg, p. 1

46. Neue Ziircher Zeitung, February 20, 1975.

47. A. Ward, 'European Migratory Labor. A Myth of Development', Monthly Review, vol. 27, no. 7 (December 1975), p. 22.

48. Ibid., pp. 30-31.

49. J. Heinrichs, 'Entwicklung der Arbeitslosigkeit and Arbeitsmarktpolitik in den Industrielindern', in Starnberger Studien 4. Strukturverdnderungen in der kapitalistischen Weltwirtschaft, Frankfurt 1980, pp. 188-189; direct investment shares from K. van der Pijl, Marxisme en internationale politiek, Amsterdam 1982, p. 111, table 2.

50. R. Kronish, 'Crisis in the West European Automobile Industry', Monthly Review, vol. 31, no, 4 (September 1979), pp. 35-36, 40-41; A. Lipietz, 'Towards Global Fordism?', New Left Review 132 (March/April 1982), p. 37.

51. Lipietz, pp. 46-47.

52. Parboni, pp. 34-35, 46; W. Hankel, 'Shylock gesucht. Hochzinspolitik and Kreditmirkte, Bldtterftir deutsche and internationale Politik, 5 (1982), p. 594.

53. Weston, p. 81.

54. Ronge, p. 81; Huffschmid, p. 87.

55. Fortune, May 15, 1969, pp. 164-165; Domhoff, Powers, pp. 47-53.

56. Koszul, pp. 288-289.

57. Nairn, pp. 19-21, 31.

58. Finanz and Wirtschaft, July 19, 1978.

59. W. Hankel, 'Die Schuldenkrise. Ein Problem der Dritten oder der Ersten Welt?', Bldtterfiirdeutsche und internationale Politik, 1 (1984), p. 72.

60. Fennema, International Networks, p. 169. For the size of Euro-dollar ('Xeno­dollar') credits, cf. Hankel, Shylock gesucht, p. 595.

61. Hankel, Schuldenkrise, pp. 70-71.

62. J. Morris, 'The Revenge of the Rentier or the Interest Rate Crisis in the United States', Monthly Review, vol. 33, no. 8 (January 1982), pp. 30-31.

63. The Editors, 'Production and Finance', Monthly Review, vol. 35, no. 1 (May 1983), p. 6.

64. Newsweek,June 4,1979.

65. W. Hankel, 'A New Order for American-European Monetary Policies', in E.O. Czempiel and D. A. Rustow, eds., The Euro-American System, Frankfurt/ Boulder 1976, p. 52.

66. Fennema, International Networks, p. 24.

67. Fortune, August 1968, p. 101.

68. Fennema, International Networks, pp. 190, 182-183.

69. Ibid., p. 127.

70. M. Fennema, 'Graven naar Marct. Enkele opmerkingen . . .', De Gids, February/March 1976. cf. Baruch, Grote macht.

71. Overbeek, Finance Cdpital and Crisis.

72. Cf. Sampson, Money Lenders, p. 120; on Lloyd's Bank, Aaronovitch, Finance Capital, pp. 91-94; M. Barratt Brown, 'The Controllers of British Industry', in J. Urry and J. Wakeford, eds., Power in Britain, London 1973 (1968), pp. 100-101.

73. H. Anglade (A. Mommen), 'De Belgen en hun Banken', De Nieuwe, October6, 1983.

74. F. Morin, La structurefinanciere de capitalismefrancais, Paris 1974, pp. 90, 92-93, 271, 210, & passim.

75. Ibid., p. 169.

76. C. Pallenberg, Vatican Finances, Harmondsworth 1973 (1971), pp. 188-189 & passim.

77. D. A. Yallop, In God's Name, London 1984. Banks on account of the compara­tively late rescinding of 'Keynesian' legislation are not the nerve centres in the Italian economy in terms of interlocking directorates, the network of which is polarized at the centre between the private Pesenti/Falck orbit in Milan and the state holdings, cf. A. M. Chiesi, 'Property ofCapital and the Network Structure in the Italian Case', in J. Scott, F.N. Stokman, & R. Ziegler, eds., Intercorporate Structure (forthcoming).

78. Fennema, International Networks, p. 116; Menshikov, Millionaires, group lists; Pastre, table 15, p. 105; Lundberg, The Rich, Appendix B.

79. Fennema, International Networks, p. 158, table 7-2; Woodruff, pp. 250251, table V-F.

80. Fennema, International Networks, pp. 170-171. Pastre, p. 117.

81. Fennema, International Networks, p. 189.

82. Full list in H. Donkersloot, Jimmy Carter en de Trilaterale Strategie', Tijdschri(t voor Politieke Ekonomie, vol. 1, no. 3 (1977), p. 28. Officers from the AFL-CIO, the DGB, the CFDT, and other trade unionists also were members.

Epilogue

1. M. Davis, 'The New Right's Road to Power', New Left Review 128 (July/August 1981).

2. R. N. Rosecrance et al., 'Whither Interdependence?', International Organization, vol. 31, no. 3 (Summer 1977), p. 440; E. Scholing and V. Timmerman, 'Lander-und Branchenkonjunkturverbund. Empirische Untersuchung unter Verwendung der Hauptkomponenten-und Transformationsanalyse', Kyklos, vol. 30, no. 4 (1977), pp. 603,609.

3. Club Turati, p. 27.

4. Kragenau, pp. 77-78.

5. Sampson, Arms Bazaar, p. 274; Rapport van de Commissie van Drie, 's Gravengahe 1976. In Japan, the Trilateral imperative led to the fall of Premier Tanaka.