3. Michal Kalecki, the World Economic Report, and McCarthyism
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63 3 Michal Kalecki, the World Economic Report, and McCarthyism • The Political and Economic Context • The DEA and Michal Kalecki • The World Economic Reports:The Lack of an Architect • Kalecki, GNP Decomposition, and the Analysis of Inflation • Kalecki on the Problem of Financing Development • The Shadow of Senator McCarthy • The Harassment and Resignation of David Weintraub • Reorganization of the DEA and Kalecki’s Resignation in 1954 • Conclusion: The Weintraub and Kalecki Exits Compared The Political and Economic Context TheTruman Doctrine is generally seen, following the earlier buildup of tensions between the USSR and the West, as marking the start in earnest of the Cold War. In a panicky reaction to Britain’s decision to withdraw military aid from Greece and Turkey, both of which were believed to be under threat from Soviet expansionism, President Harry S. Truman stated on  March : I believe that it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures. . . . I believe that our help should be primarily through economic and financial aid which is essential to economic stability and orderly political processes.1 The global conflict that was thereby unleashed had major consequences for the UN’s economic activities. The United Nations became the divided nations . The development of global cooperative initiatives was paralyzed. The UN’s founders had envisaged that the new organization—through its Economic and Social Council, supported at the Secretariat level by the Department of Economic Affairs—would help the world avoid the major economic 64 The UN and Global Political Economy dislocations that threatened peace.ECOSOC would act politically on the information and analysis provided by the essentially technical DEA. Shared world economic goals, on the existence of which such activities were predicated, became virtually impossible, as the world was divided into spheres that operated under radically different economic systems. Moreover, the divergent interests of the great powers added further to the endemic weakness of ECOSOC. At the most mundane level, it would be very difficult, if not impossible , for example, for the DEA to draw up a meaningful UN World Economic Report when countries were manipulating their economic statistics for the purposes of political propaganda. How, then, and with what success, did the DEA adjust to this great geopolitical rupture, and to what extent could it still make good use of the substantial intellectual talent that was already at its disposal? These questions must be answered with reference to the different types of Cold War pressures, direct and indirect, that had an impact on the DEA in its formative period. At the geopolitical level, the Truman Doctrine signaled the start of a “bidding war” between the U.S. and the USSR, whereby foreign aid would be used to attract or shore up political support in countries whose loyalties were malleable. The UN was the obvious forum for political grandstanding to this end.2 At the institutional level, because of its physical location in New York, idealistic and internationally minded UN staff members were vulnerable to the spillover of U.S. domestic anticommunism. In fact, key UN personnel, including some important figures in the DEA, did become victims of the anti-communist excesses of the early s. Meanwhile, the poisonous political atmosphere paradoxically enhanced the tendency to discuss economic issues as if they existed in an entirely apolitical context. The – period was, in global terms, perhaps the most politically explosive of the Cold War, seeing the breakaway of Yugoslavia from the Soviet bloc (),the Berlin Blockade (–),the communist takeover of China (), the Soviet acquisition of the atom bomb (), and the outbreak of the Korean War (). Only in April , once Truman had dismissed the overambitious General Douglas MacArthur from command of U.S. forces in Korea, did it become clear that neither superpower was prepared to contemplate outright world war.3 The extreme political turbulence of these years was reflected within the UN. As Robert G. Wesson has argued, in the first years after , its reliable majority in the General Assembly ( or  to  or  in East-West disputes) prompted the United States to see the UN as a court to resolve differences that could not be resolved by direct negotiations.4 Understandably, the Soviets were displeased by the successful U.S. attempts to orchestrate pressure against them and enraged by the Truman Doctrine. Therefore, although the Michal Kalecki, the World Economic Report, and McCarthyism 65 Soviets supported the UN in a few cases where it contributed to...