Since this is an inquiry into the economic aspects of the Cold War, which so dominated global international relations for almost half a century, it is fitting at the end to inquire into its costs and benefits even if the gains and losses of any grand national project, such as a war or an arms race, can never be fully determined. If there are benefits - perhaps employment levels maintained at a higher level than might otherwise be the case, or stimuli for innovation - it is impossible to attribute them unambiguously to the conflict. Conversely, the levies imposed on a society represent not just what was actually spent, but the opportunity costs ofpostponed or discarded alternatives; and it is hard to price even plausible counterfactual paths of development. Perhaps we can compare the societies caught on different sides of the Iron Curtain - East and West Germany, North and South Korea, in which case the indices of economic welfare clearly favor the non-Communist side. Between 1936 and 1955, East German GNP rose 10.4% while West German GNP increased 80.3%. The East Germans did relatively better from 1950 to 1955, when their GNP rose 40.6% while the West German went up 63.5%.53 To be sure, West Germany had received Marshall Plan aid while East Germany had paid heavy sums in reparation; nonetheless, even at the time of reunification almost four decades later, East German productivity and per capita national income were probably about half those of West Germany. The toll taken by a cumbersome state socialism is not the same as the costs imposed by the rivalry between the systems. Communism and the Cold War were not the same, but the Cold War helped to congeal the differences between systems as well as being in part their consequence.
We should question, I believe, one popularly held hypothesis, namely that in the West, at least, the military rivalry imposed a great burden on civilian investment and general progress. Western defense-related expenditures in the Cold War were highest for Britain and the United States; the UK was spending roughly io% of GDP on defense in 1947, almost twice the US ratio of 5.25%, and, in 1948, 7.26% or 1.5 times the US share. The Korean War and the NATO rearmament effort brought US expenditure to almost 15%; Britain’s peaked at about 10.5%; and France hit its maximum - even higher than before World War II - of about 12% in 1952. Other Western societies did not approach this level. The most careful study of the economic impact on Britain concludes correctly, I believe, that even allowing for indirect costs, such as the higher interest rates for civilian expansion, and for short-term strains, no major economic drag intervened. France’s war in Indochina was largely funded indirectly by the Americans, according to the best study we have. The demands of defense probably stimulated research and development in what would prove to be the most advanced sectors of the civilian economy - namely computers and related electronic and software industries - beyond what civilian demand alone might have encouraged. NATO forces also continued to lower Europe’s current account constraints. On the other hand, Soviet expenditures may have been 20 percent of GDP, and probably did contribute to the difficulties of its economy.54
What impact, one might finally ask, did the Cold War have on the global environment that was its arena? The emphasis on industrialization and economic growth, the privileged access to minerals, fossil fuels, and hydrocarbons, either by Western companies or state socialist governments, probably increased the rapid exploitation of these resources. Of course, this toll would have been even higher if, absent the Cold War, economic growth had been even more rapid. Still, it makes sense that insofar as each side felt it must press industrial and military output to a maximum, it would sacrifice ecological and even safety considerations. The East Germans, for example, expanded brown coal production, dirty chemical firms, and an exploitative use of their once-extensive forests. The emphasis on heavy industry, whether in the Soviet paradigm of socialist planning or the American encouragement of import substitution, spurred industrial construction that had grave impacts on the environment.
Without the competitive pressures of the Cold War, according to John McNeill, the "green revolution" might have been far slower to make its effects felt in Mexico or India. On the other hand, in Third World regions where the superpowers competed, their prescriptions for import substitution and industrialization encouraged the sacrifice of subsistence agriculture, and the abandonment of farms for shantytowns. The Chinese regime embarked on the reckless "Great Leap Forward" in the late 1950s and helped produce one of the most disastrous famines of its history. But a megalomaniacal leader, not Cold War competition per se, motivated this policy, and China drew appropriate lessons. Old-fashioned national economic competition would probably have been intense even without the Cold War. Brazil and Africa incurred deforestation without extensive Cold War motives; barrios and favelas have continued to spread after the Cold War ended. And even state socialism brought to its lands public goods - literacy and access to basic health care - that might otherwise have lagged. And of course the environmental costs were not produced by one side alone: the American consumerism that Nixon vaunted in that Moscow kitchen, with the personal auto as its centerpiece, has played its role in global warming and other externalities that have yet to be tallied.55
Should we not also assign some cost to the fact that at many moments hundreds of millions of men and women and children and the accumulated monuments of their many civilizations were hostage to atomic destruction? Would humankind not collectively and individually have paid a substantial premium to have that very real danger removed? Or was the danger itself, as deterrence theory suggested, the premium we had to pay so that these weapons were never used? Alternatively, the danger could be construed as the premium that political leaders on both sides claimed was needed to avoid political subjugation. Could we have developed a less risky and more rational premium? Or was its rationality ultimately demonstrated by the fact that the wager was never called? With such inquiries, however, we reach the limits of history and of political economy.15
15 For additional assessments of the Cold War and the world economy, see the chapters by Wilfried Loth and Richard N. Cooper in volume II and Giovanni Arrighi in volume III.
World History
