.. Don’t wait until years after to realise you have lived in a remarkable age – the age of BOOM.
Queen magazine, 15 September 1959
The coming together of the nations of Europe requires the elimination of the age-old opposition of France and Germany. Any action taken must in the first place concern these two countries.
Schuman Declaration, 9 May 1950
Prosperity was the hallmark of the new era in Western Europe. It was made possible by unprecedented rates of economic growth that lasted until the shock waves following the oil crisis of 1973. The generation born towards the end of the war, or in the post-war ‘baby boom’, was truly fortunate. Although at first growing up during the years of post-war austerity, amid the physical as well as psychological scars of the Second World War, they had experienced neither the misery of the Great Depression nor the horrors of the war itself. And they went on to enjoy material conditions in a peaceful Europe that their parents and grandparents could scarcely have imagined: the security blanket of the welfare state; improved housing; stable jobs amid full employment; better opportunities to benefit from education; and, gradually, money to spend on consumer luxuries, not just necessities, as well as increasing opportunities to travel to other countries. They could look to the future with optimism. They were living in good times.
For West Germans these were the barely believable years of the ‘economic miracle’. But the ‘miracle’ was far from confined to one country. Italians, too, saw their post-war economic recovery as nothing short of miraculous. The French looked back on the era between 1946 and 1975 as the ‘glorious thirty years’ (‘les trentes glorieuses’) – even if, in any other than an economic sense, some of those years were far from glorious. The British, told by their Prime Minister, Harold MacMillan, that they had ‘never had it so good’, spoke of ‘the affluent society’, though, for all the improvements, ‘affluence’ scarcely covered the living conditions of much of the British population. Compared with what was to come, the material improvements in people’s lives were, of course, still modest. Compared with what had gone, they were massive. Understandably, the period 1950–73 came to be labelled a ‘golden age’.
In southern parts of Europe it was a different story. The heavily restrictive, practically closed economies of the authoritarian regimes in Spain and Portugal – political hangovers from yesteryear – prevented those countries from benefiting fully from the material advances that were being made in north-western Europe. Notable improvement in standards of living, which remained well below the average in Northern Europe, came to Spain and Portugal only in the 1960s, as both countries belatedly took steps to liberalize their economies and Spain started to profit from international tourism. (The number of tourists visiting Spain rose eightfold between 1959 and 1973, while the money they spent rose twentyfold.) Greece, slowly recovering from civil war and where, as in Spain and Portugal, almost half of the population still worked on the land, also lagged behind, though high and sustained economic growth brought some modernization and a modest improvement in living standards by 1973. Turkey, rushing headlong to overcome its economic backwardness and dependent heavily upon foreign investment and American loans, hindered its progress by poor planning and rapidly rising national indebtedness.
The ideological determinants of the Soviet Union and its satellites in Eastern and Central Europe severely hindered the developments that brought prosperity and the emergence of the consumer society to the western parts of the continent. Communist economics and the heavy hand of state direction and planning dictated that the economy was disproportionately tilted towards infrastructural projects and military spending. The peoples of Eastern Europe and the USSR were consequently deprived of many of the rapid improvements in material life enjoyed by the population of Western European countries.
Nevertheless, even here – fully bearing in mind that the loss of personal liberties under repressive regimes has no price – living conditions, though falling way behind those in the West, were far better than they had been before the war, let alone during the horrors and devastation of the war itself. If not the ‘golden age’ enjoyed by Western Europe, economists feel able to describe the era in Eastern Europe as at least a ‘silver age’. The standard of living did improve, if modestly compared with that of Western Europe: the gap between rich and poor was greatly reduced; social welfare (different to that in the West) brought a level of security unknown to most of the population before the war; housing accommodation was made available (if mostly mediocre to poor in quality and allocated, not chosen); there was full employment (with little or no choice in the place and type of work); and there were educational opportunities (narrowly confined in content and promoted by ideological rectitude and political patronage). For most people in the West there was nothing to envy in a lifestyle shaped almost entirely by the demands of the command economy. Younger people in Eastern Europe, too, tolerated it only because they had no choice, and frequently with growing dissatisfaction. Many of the older generation nonetheless recognized that, with all its obvious failings and immeasurable limitations, life under communist regimes did, in a purely material sense, amount to an improvement on what they had previously known.
Viewed through the prism of what went before rather than what would come later these were indeed, for much of the population of Europe, unheard-of ‘good times’. Behind all the vast changes in material life that gathered pace in the 1950s and 1960s lay the extraordinary rates of economic growth, understandably viewed by many, who had previously known only misery and poverty, as a ‘miracle’.
Western Europe’s astonishing surge to prosperity was not in the main attributable to any genius of political leaders for economic management. Economic policy in any case varied from country to country. The remarkable growth of the post-war economy was, in fact, global. All parts of the world (also the Soviet bloc of Eastern Europe) benefited, though some more than others. Japan’s growth outstripped that of anywhere in Europe. The United States and Canada also experienced high levels of growth, though slightly lower than Europe’s. The striking economic growth in Europe allowed it to some extent to make up for the ground it had lost to America during the disastrous preceding decades. Europe’s share of world trade increased. By 1963 France, West Germany, Italy and the United Kingdom between them accounted for nearly two-fifths of world manufacturing exports, the USA under one-fifth. Europe, and the rest of the industrialized West, could also benefit from the fall in the cost of imports of food and raw materials from the developing world, while the manufactured products they exported continued to rise in price.
The extraordinary economic growth had arisen from the unique circumstances that followed a global war, and instigated a virtuous circle that promoted prosperity and social advantages. Partly the growth was a natural business recovery from the ground lost during two world wars and the Great Depression. But it was no ‘normal’ recovery, no conventional business cycle. Numerous factors help to explain it. Release of stored-up demand, huge reservoirs of available labour at low cost and, not least, massive technological advances made during the war that could now be put to civilian use, all formed a big part of the reason for the explosive growth. The necessary rebuilding of ruined towns and cities provided a boost to growth. And where high levels of investment in technology and labour in the crucial manufacturing sector took place, in West Germany for example, high rates of economic growth tended to follow. Where investment in manufacturing was sluggish, as in Britain, growth rates remained stubbornly low. Investment, much of it initially from public spending on big infrastructural projects, brought growth, which encouraged confidence, led to further investment, and created a positive growth spiral. The role of the state was an important part of this, especially in the early stages of economic recovery, as the lessons of the Great Depression and deployment of Keynesian economics resulted in significant economic stimulus. In general, the public and private sectors of the economy were seen less as in conflict than in partnership with each other.
A major contributory factor in the sustained growth was the massive expansion of international trade. Measured in value, world exports doubled between 1953 and 1963 and then more than trebled in the subsequent decade, with particularly strong growth in manufactured products. Growth in Western Europe was sharply boosted in the early phase by the liberalization of trade that accompanied the adoption of Marshall Aid and by the recovery of international markets. As price controls and other trade restrictions of the first post-war years were lifted and currencies were stabilized, enabling a market economy to function (though with the worst effects of the free market mediated by state planning and intervention), Western European countries started to export to expanding markets abroad. West Germany led the way. Its foreign trade increased by an astounding average of 16 per cent per year between 1948 and 1962. And increasingly during the 1950s, even more so once the European Economic Community had been established by the Treaty of Rome in 1957, the countries of continental Western Europe exported to each other, bringing more than a doubling of intra-European trade by the end of the decade.
The high rates of growth that lasted, with only minor and brief interruptions, until the late 1960s – when they tailed off as economic conditions began to alter, before the sudden and steep rise in the price of oil forced on the West by oil-producing Arab states following the Arab–Israeli War of 1973 – were not just extraordinary but historically unique. In the development of capitalism, this was a completely exceptional era. The quest to maximize profits was not at the cost of the welfare of society in Western European countries (though it exploited the low price of raw materials in the developing world). Sustained high rates of growth permitted profits to rise substantially (enabling enhanced investment) while wages and salaries could increase in real terms, bringing improved living standards. At the same time governments could benefit from the full employment that followed such high growth rates to gain additional tax revenue to fund social welfare programmes. And the growth was general, traversing diverse kinds of political and economic structure. The economies of Western Europe grew in that period at an average of 4.7 per cent per year, more than twice as fast as their average rates of growth since 1820 of 2.2 per cent. Southern Europe (Greece, Spain, Portugal and Turkey) grew – though from a low base – at an even faster rate (an average of 6.3 per cent a year). The planned state economies of Eastern Europe and the Soviet Union saw average rates of growth of gross domestic product per head only a little below those of capitalist Western Europe – and actually a greater improvement on the more modest historical growth rate – though this was from a low base, allowing scope for what economists call ‘catch-up’.
The growth was, of course, not evenly spread. In Western Europe it was greatest (at an average of around 5 per cent a year) in West Germany – whose ‘economic miracle’ was crucial to resurgence far beyond its own borders – as well as in neighbouring Austria, and in Italy (especially the north). It was lowest, at only 2.5 per cent a year, in the United Kingdom. Ireland’s growth was only moderately higher. Even though three times its long-term average rate, Ireland remained a backward economy. Turkey lagged behind Greece and the Iberian peninsula in Southern Europe, while Bulgaria, Romania and Yugoslavia performed best of the Eastern European economies (though also from low starting points).
As mentioned, the growth in the Soviet bloc was concentrated in heavy industry, where production output soared without being translated into the markedly higher living standards that economic growth in the West promoted. Largely cut off from burgeoning international trade, the countries beyond the Iron Curtain experienced no consumer boom. Even so, living conditions did start to improve modestly from the mid-1950s onwards for the great majority of the population. Construction of new dwellings almost trebled in the Soviet Union between 1953 and 1960 in an attempt to overcome the chronic shortage of housing and serious overcrowding, especially in cities. The situation was somewhat better in the satellite countries of Eastern Europe, though everywhere in the Soviet bloc housing was well below the standard in Western Europe.
Growth was everywhere more dramatic in manufacturing industry than in agriculture. But farming, too, was transformed in the course of the lasting prosperity. Agricultural productivity was at first generally much lower than productivity in industry. But the big drain of labour from the land across the continent in the 1950s and 1960s for higher earnings in industry prompted mechanization, more intensive farming methods and high-yield crops, innovations that saw productivity rise sharply. With less land under cultivation and a smaller agricultural workforce, Europe was turning out higher quantities of food.
It needed to do so to feed the growing population, increasingly concentrated in large towns and cities. Pre-war morbid anxieties about population decline seemed like a bad dream as Europe experienced a post-war ‘baby boom’ – another aspect of ‘catching up’, a reaction from the falling birth rates during an era of war and economic depression. In France, where population decline had appeared irreversible, there was an increase of nearly 30 per cent in the post-war decades. Large increases also took place in other European countries, east as well as west. Exceptions were poorer countries such as Greece, Portugal and Ireland, which saw actual population loss as workers, especially from rural occupations, sought employment and higher wages in booming industry in other countries. Birth rates in the more prosperous western half of the continent increased until the mid-1950s, reversing the pre-war decline, though they fell in much of poorer Southern and Eastern Europe. Child-mortality rates dropped markedly in practically all countries of both Eastern and Western Europe.
The drain from the countryside, already widespread before the war, accelerated. More than a third of the population in Western Europe had still worked in farming and related occupations on the eve of the war, in Eastern and Southern Europe often well over a half. Only in Britain and Belgium at that time were negligible proportions of the population engaged primarily in agriculture. During the 1950s and 1960s this changed dramatically. In Italy, for example, there was a drop in agricultural employment between 1950 and 1973 from 41 per cent to 17.4 per cent, in France from 33 per cent to 12.2 per cent. Equal if not even more spectacular drops were encountered across the continent. As the countryside emptied, urbanization intensified. Cities grew in size almost everywhere, but especially in previously relatively underdeveloped and peripheral regions of Europe. Belgrade, for example, more than quadrupled its population in the first post-war decades. Kiev’s population increased threefold. So did Istanbul’s. Sofia, Bucharest and Warsaw doubled in population, while Leningrad’s population rose from 2.9 to 4.3 million inhabitants, Moscow’s from 5.3 to 7.6 million, over that period. In Europe as a whole, 58 per cent of the population lived in cities of over 750,000 inhabitants by 1970, compared with 45 per cent in 1950, with the greatest percentage increases over that period in Southern and Eastern Europe.
As well as the magnet of the industrial regions attracting labour from rural areas, there was a massive increase, compared with the pre-war era, of labour movement across national borders. In the immediate post-war years most of the migration was politically driven. The war had created around 40 million refugees and led to enormous ethnic cleansing in Eastern Europe. Germans, the prime target for expulsions from Poland, Czechoslovakia, Romania and other countries, headed west in their millions. An estimated 12.3 million Germans were expelled between 1945 and 1950, amounting by then to nearly a fifth of the West German population. Thereafter, the draw of work and its material rewards in the booming economies of Western Europe was the key element in migration.
Until the building of the Berlin Wall in 1961 closed the last exit route through the Iron Curtain, West Germany could benefit from the big exodus of labour from its eastern neighbour, a drain that was highly damaging to the East German economy. From 1961 other sources of labour were needed. At the height of the economic boom, in the early 1960s, over 300,000 migrants a year were moving to West Germany and a similar number to France. Italy, Spain, Portugal, Greece and Ireland had the greatest number of emigrants in search of work and better living conditions, though Turkey, Yugoslavia and North Africa, especially Algeria and Morocco, soon became major sources of cheap foreign labour. By 1973 some 7.5 million migrants were employed in Western Europe, 2.5 million of them in West Germany, 2.3 million in France. Few had met with a warm welcome on arrival. Many if not most had then faced deprivation and discrimination of one kind or another. The ‘guest workers’, as West Germany called them, were supposedly merely temporary residents and were not given citizenship rights. Elderly Germans, such as Franz Göll, a lower-middle-class pensioner in West Berlin, were often reminded by the Turks and Yugoslavs they saw, ‘who have taken over the lower-paid work that German workers will no longer accept’, of the ‘foreign workers’ they had regarded with some animosity during the war. The ‘guest workers’ themselves at first usually imagined that they would return in the end to their native countries, and sent a good portion of their earnings home to support the families from which they were separated by their work abroad, indirectly in this way providing much-needed foreign income to the poorer countries they had left behind.
Britain took a different route, recruiting cheap, unskilled labour from its former colonial territories in the Commonwealth. Unlike the ‘guest workers’ of West Germany, who were expected eventually to leave the country, the citizens of the Commonwealth had a right to permanent residence and a doorway to British citizenship – a factor that was starting to make immigration a significant political issue. The numbers of immigrants amounted in the early 1950s to little more than a trickle. Only 28,000 arrived between 1948 and 1953, half of them from the West Indies. The highest annual total during the 1950s was 46,850 in 1956. More people were actually leaving than entering Britain at that time, mainly to settle in the former white Dominions of Australia, New Zealand and Canada. Over 50,000 British people a year were leaving for Australia in the early 1950s, as many as 80,000 in 1965. In 1959 immigrant numbers totalled 21,600 (around 16,000 of them from the Caribbean, just over 3,000 from the Indian subcontinent – a number that would substantially increase during the 1960s). Total immigration then increased sharply to 136,400 by 1961. On average about 75,000 immigrants from the New Commonwealth came to Britain each year during the 1960s – far lower than the influx of immigrants, for instance, into France and West Germany.
Immigrants, encouraged to come to Britain to serve the needs of the growing economy, formed only a small part of the total population. The foreign-born population within the United Kingdom totalled about 2.5 million in 1961. France, Belgium and Switzerland had a substantially higher proportion of foreign-born residents among their population. Most of these were Europeans, not from overseas, though the number of Algerians living in France roughly doubled to around 700,000 between 1952 and 1975. By 1962, the British government, under growing pressure to act after some 230,000 immigrants from former British colonies had arrived within the previous eighteen months, legislated to restrict the numbers permitted to settle in Britain through the Commonwealth Immigration Act, which was followed by further restrictive measures in subsequent years.
The objective reality about immigration levels ran up against some ingrained racial prejudice. The rising animosity towards immigrants from the Commonwealth, most prevalent in the industrial regions of north-west England, the Midlands and London with its surrounds, was overwhelmingly directed at non-white immigrants – plainly an expression of racism. In August 1958 there were serious race riots in Nottingham and in the London district of Notting Hill, where hundreds of white youths attacked the homes of West Indian immigrants several nights running from 29 August to 5 September 1958. Six years later Smethwick, part of the Birmingham conurbation in the Midlands, became notorious at the 1964 general election for the disgraceful racist campaign run by the Conservative candidate, Peter Griffiths. The seat had been held by Labour, but the district’s white working class was suffering from factory closures and a housing shortage, and the Sikh minority faced vicious racism in which far-right groups were able to exploit economic and social resentment. Griffiths took the seat for the Conservatives, though he was subsequently dubbed ‘a parliamentary leper’ by the Labour Prime Minister, Harold Wilson. Labour regained the seat at the 1966 election. In the interim the local town council had overtly pursued a housing policy based on racial discrimination.
Racism again became a flashpoint in 1968 when Enoch Powell, at the time opposition defence spokesman, a Conservative of unusually dogmatic views, once a brilliant classics scholar who in 1934 had been elected to a fellowship at Trinity College, Cambridge, at the remarkably early age of twenty-two, but an anachronistic English nationalist and imperialist with a reputation as a maverick politician, addressed the question of immigration in highly emotive and provocative terms. His speech in Birmingham on 20 April 1968 at a Conservative Association meeting was actually directed at the Labour government’s Race Relations Act that year, which aimed to ban racial discrimination in housing. Known for his rhetorical flourishes, Powell opened up the prospect of violent racial conflict in years to come. He referred to ‘wide-grinning piccaninnies’ and – a former scholar of the classics – envisaged the future in England when he cited the poet Virgil’s allusion to ancient Rome’s River Tiber ‘foaming with much blood’. He was promptly dismissed from his post in the Conservative opposition’s shadow cabinet and his political career never recovered. But an opinion poll shortly afterwards indicated that three-quarters of the British population agreed with Powell. London dockworkers marched on parliament to demand his reinstatement in the shadow cabinet. Racial prejudice, officially condemned, of course continued but, in terms of outward expression, from now on it became politically the province of fringe racist and neo-fascist movements – menacing to those in their path, but with little of a following and facing vehement opposition both from organized anti-fascist groups and from mainstream politicians of all parties. The excitable mood that Powell had aroused fairly quickly subsided, helped by the drop – already under way when he delivered his ‘rivers of blood’ speech – in further immigration from the New Commonwealth in the wake of the Labour government’s race-relations legislation.
By this time Britain, which had begun the 1950s as the leading economy in Europe (for all its post-war austerity and national indebtedness), was well on the way towards the unenviable reputation that it gained in the 1970s as the ‘sick man of Europe’ because of its poor economic performance. Britain’s levels of growth in the post-war decades had been mediocre by international comparison – though they were actually more than twice as high as the country’s growth rates at the height of Britain’s industrial supremacy in the nineteenth century. Britain was increasingly exposed as the economic potential of the grouping of six states (France, West Germany, Italy, Belgium, the Netherlands and Luxembourg), which by 1957 had come to form the European Economic Community (EEC), rapidly expanded.
Britain’s relatively weak rates of growth were partly a consequence, paradoxically, of the country’s wartime triumph. Especially high growth rates were, perhaps unsurprisingly, registered by the countries where war-damage had been extensive – Germany, Austria, Italy and, outside Europe, Japan – and where, consequently, there was a pressing need for massive infrastructural repair. Compared with most of continental Europe, however, the war had caused much less physical damage to Britain and had left its economic, as well as political, structures largely intact. And Britain had emerged from the war still (just about) in possession of its colonial empire – since 1931 named ‘the Commonwealth’. Not only was its residual world-power status retained (if in reality strongly diminished) and still entailing a relatively high level of military spending, but its economic elites felt assured of their continued pre-eminence. But, on top of the country’s huge debts (which would finally be repaid only decades later), victory in the war had left outdated methods of production, complacent management too unwilling to risk innovation, and a multiplicity of trade unions, which increasingly proved a further handicap to economic efficiency. Crucially, Britain invested less than its main competitors. And Britain’s industrial relations, with a tradition of managerial authoritarianism and union militancy, were not conducive to the innovatory methods of production needed in increasingly competitive markets. The result was a steady decline in Britain’s exports. The contrast between Britain’s decline and West Germany’s rise – a loser in the war, a winner in the post-war economic-growth stakes – was stark.
In West Germany, the paradigm of the ‘economic miracle’, the effort to rebuild the country was accompanied by an attempt to avoid conflict between employers and employees. Nazism, war and the post-war huge influx of cheap labour had broken not just the structures but also the mentalities of pre-war class struggle. The German Labour Front had during the Third Reich replaced the brutally destroyed independent trade unions with a single huge Nazified agglomerate. This had forcibly established a pseudo-solidarity of the workplace, sugaring the pill of coercion with improvements in leisure facilities and enhancement of workers’ status within the ‘people’s community’. The destruction and twelve-year absence of genuine trade unionism produced, if at inordinately high human and political cost, the basis for a new start in industrial relations after the war. The urgency of rebuilding out of the ruins had stimulated greater unity in the workplace than had ever been achieved by Nazi propaganda. And the workforce itself was drastically changed, a consequence of wartime losses and the massive influx of refugees and expellees. A more pliant, individualistic workforce had emerged, content for the most part with increasing wages, better living standards and stable employment in an expanding economy. Trade unions were reconstituted along more rational lines than the unreconstructed myriad craft unions in Britain. Workers’ councils, following the example of the Weimar Republic, gave workers a voice in industrial relations, and a legal stipulation in 1951 compelled the boards of large firms to involve workers’ representatives in the co-determination (Mitbestimmung) of managerial decisions. Economists adjudge that better industrial relations and investment in vocational training to produce a skilled labour force contributed substantially to the growing gap in economic performance between West Germany and Britain.
Britain’s relative decline was also a consequence of political judgement largely fashioned by the country’s imperialist tradition, its former economic supremacy, and its preference for Atlanticist and Commonwealth rather than continental links. When early steps were taken to promote economic cooperation, as the ruined continent looked to recovery from the wartime devastation, Britain’s encouragement to other countries was accompanied by a determination to remain aloof itself. Despite post-war austerity, economic considerations, quite apart from political priorities, pointed British policymakers towards keeping their distance. Steel and coal production in the first post-war years, for instance, far outstripped that of any other European country. Detachment rather than involvement in European cooperation seemed sensible.
Britain’s attachment to the Commonwealth – which attracted three-quarters of the country’s exports in 1956 – turned it away from continental Europe, but saw it anchored to declining markets. By the mid-1960s only a quarter of the United Kingdom’s total trade was with the Commonwealth as its different members developed closer relations with other parts of Europe, Japan and the United States. Britain was not able, however, to benefit fully from the expanding intra-European trade. By the time Britain, slow to liberalize its external trade and its economy by now increasingly uncompetitive, realized the disadvantages of the route it had chosen and decided that it did after all want to join the EEC, it had missed the boat.
This unbroken pattern of economic growth showed the first signs of stalling in the mid-1960s. The pattern was not uniform, and national economies performed in varied ways. Italy, for instance, saw no economic stagnation. Booming exports and soaring tourism contributed to a continuation of Italy’s ‘economic miracle’. But indicators of difficulties were nevertheless apparent in many parts of Western Europe. Labour shortages, wage inflation and rising prices started to cast shadows. Wages had risen sharply, and faster than prices during the 1950s, largely owing to a growth in labour productivity. But in the early 1960s prices, which had been relatively stable and had only risen modestly in the previous decade, increased on average by about 20 per cent in Western Europe.
Demand for labour, in economies with full employment, was high. Trade unions, whose membership attained peak numbers in the post-war decades, were able to flex their muscles. Industrial unrest became more commonplace. Denmark, Sweden, Belgium, France and – most chronically – Britain came to experience problems with labour militancy. Deterioration in labour relations often followed or accompanied attempts by governments to curb the inflationary pressures of overheating economies. West Germany, the motor of Europe’s economic recovery, saw growth slacken after 1962 but, worried about inflation, curtailed lending and tightened the labour market, measures that contributed to sharp, though temporary, recession in 1966–7. Switzerland, Sweden and Denmark were among the other European countries to introduce measures to stem rising inflation and overheating economies. France had brought in restrictive measures in 1964, which led to a temporary recession before renewed expansion in 1965–6.
Throughout Western Europe, the economic downturn in the mid-1960s was a passing interlude rather than a fundamental break in the pattern of growth that had existed since 1948. It was, however, a harbinger of the more troubled years of the later 1960s before the onset of the oil crisis in 1973 brought the long post-war boom to an abrupt end.
The ‘economic miracle’ had produced untold benefits for the population of Western Europe, improvements, too, in the southern and eastern parts of the continent. Surveys showed that people were in general more satisfied, happy and optimistic by the early 1970s than they had been in the 1950s. High levels of economic growth had, however, one lasting disadvantage, not recognized by many people at the time. They came at the cost of the environment. This suffered irreparably, as it had done since the Industrial Revolution, from the drive to improve productivity, and especially from the huge growth in manufacturing. At this point only a small minority were paying any attention to the long-term damage that was being caused. The ‘golden age’, though it brought great improvements to the living standards of Europeans, was responsible for a serious worsening of environmental damage. The swiftly growing use of pesticides and other chemicals in more intensive farming greatly improved crop yields but inflicted harm on the environment that only slowly came to be widely recognized. The huge boost in energy consumption from the 1950s reflected growing prosperity, for example in the ownership of cars and wider possibilities of travel. But it also led to new records of harmful carbon emissions (doubling in Germany, for instance, between 1948 and 1957), the scale of whose damage would become apparent only to later generations. Only from the 1970s onwards would the environment become a significant political theme – and even then have difficulty in stirring the interest of most of the population.
Part of the virtuous circle of economic growth was the increased stream of revenue to governments that enabled states to spend far greater amounts on welfare provision. Tax revenue rose at unprecedented rates with the return to full employment and the big expansion of consumer spending. State budgets in Western Europe were up to twenty times higher in the 1970s than they had been in 1950. Governments were consequently in a position to spend far more on welfare programmes than ever before. Welfare provision and full employment had been the overwhelming needs of a new society – the obvious lesson of the Great Depression, and recognized by all post-war governments. In the post-war decades all political parties agreed on the need to expand welfare provision. The extraordinary economic growth allowed the fulfilment of both aims – in the east under communist regimes that forcibly created societies more equal than ever before, if at a high political price, and greatly extended welfare provision from the state, and in Western Europe under liberal capitalism that also reduced social inequalities (though to a far smaller degree than in the east) and combined market forces with the varying forms of welfare state.
Pre-war advances in social security had left many gaps. Scandinavia, Germany and Britain had made most progress with national insurance schemes, but these were still limited, while in most European countries large sections of the population had minimal insurance (or none at all) for accidents at work, unemployment and ill-health, and little or no provision for old-age pensions. The war had then massively increased the need for the state to provide for widows, orphans, refugees and, at first, still high numbers of the unemployed. So there was a general necessity to develop far more comprehensive systems of social security. This blended with the general belief in the need for drastically improved social welfare and the drive in every country to create a better and fairer society. It was not all altruistic. There was wide recognition that welfare provision was essential to ensure an effective labour force for a modern economy.
The Beveridge Plan that formed the basis of the sweeping reforms in social security introduced by the Labour government in Britain was widely admired beyond British shores. Sweden also attracted international attention for its successful extension of the national system of social security it had developed in the 1930s, based upon principles of equality. Sweden introduced a state pension of the same level for all in 1946, child allowance the following year, and began moving towards a uniform system of comprehensive education in 1950. Over the following few years nearly all Western European countries introduced national schemes, varying in detail but each of them setting out to provide a wide framework of social security for their citizens that would guarantee basic material well-being for everyone, without distinction. By 1960 most countries were spending between 10 and 20 per cent of gross domestic product on welfare, only authoritarian Portugal and Spain less than 5 per cent.
In essence, people contributed through their earnings either directly to state-administered insurance funds or through general taxation, receiving appropriate benefits in accordance with contributions. They were under such schemes legally protected from the worst hardships of unemployment, invalidity through accidents at work, or poverty in old age, while child welfare was supported by family allowances. By 1970 the overwhelming proportion of citizens in Western Europe were covered by health insurance and pension schemes. The principle that the elderly, the young, the sick and the incapacitated would have a safety net of social security, funded through the contributions of the working population, was crucial not just to providing for the most vulnerable, but also in establishing the framework of a society in which the strong helped the weak. The advances on the decade before the war were enormous. Belgium spent twelve times as much per head of the population on social security in 1957 as it had done in 1930, Italy eleven times as much, France eight times, Holland five times. Even those countries which had already in the 1930s spent relatively heavily on social security now spent far more – Sweden six times as much, Switzerland four times as much, Germany two and a half times as much, the United Kingdom – the highest spender in 1930 – a third more. The welfare state became everywhere, therefore, a major – and expanding – component of state expenditure. As long as economic growth continued, income from tax revenues was sustained, and expectations of social security remained relatively modest, the welfare state could flourish as the crowning glory of post-war Western European society.
In Europe behind the Iron Curtain the systems of social security, which before the war had resembled those in Western Europe even though less well developed, were now shaped by communist ideology, though they were never wholly unified in practice. The state completely controlled social welfare. There was no place for private insurance schemes or charitable institutions, as in Western Europe. Provision for the working population was the decisive criterion. Full employment was taken as the axiom of welfare. There was no unemployment insurance, since unemployment officially did not exist. Those regarded as unproductive – pensioners, handicapped, housewives – had lower levels of support than those in work. Anyone not employed in state-run concerns was also disadvantaged. And the principle of equality was in practice undermined by the higher benefits paid to soaring numbers of bureaucrats and a corrupt political elite. Even so, when compared with the gross inequalities and extreme poverty in Eastern Europe before the war, the communist systems of the post-war era, whatever their heavy-handed state control and restrictions of personal freedoms, did succeed in improving the welfare provision of the great majority of the population.
The prosperity created by the ‘mixed economy’ – a restructured capitalism in which free-market competition was tempered by government intervention (what the West Germans called the ‘social market economy’) – opened the door to sweeping social change. Exceptional economic growth blunted the edges of the class conflict that had bedevilled Europe before the war. The spectre of mass unemployment that had plagued the Depression years seemed to have been banished forever. Full employment appeared destined to last indefinitely. Trade unions became converted from quasi-revolutionary forces of class warfare into coopted parts of a corporative triad of government, capital and labour representation that increasingly came to dominate state economic planning. Wages, both nominal and real – that is, in terms of their relative buying power – increased. West German workers, benefiting from their country’s ‘economic miracle’, saw their real income grow fourfold over the 1950s and 1960s. That was an extreme case. But most people everywhere in Western Europe were better off.
In most countries progressive taxation led to a modest redistribution of incomes. The share of income of the top 10 per cent was slightly reduced (most notably in the Scandinavian countries, Finland and Britain), that of the lowest income groups marginally increased – though of course great disparities both in income and in wealth remained. In terms of wealth distribution, inequality was even more marked. The richest 1 per cent in Britain still owned 45 per cent of the country’s wealth in the 1950s, in Sweden the richest 1 per cent owned around 33 per cent of the wealth, though the trend – as long as high economic growth was maintained and governments still pursued mild redistributive policies – was downward, to 31 per cent in Britain in the 1960s, 24 per cent in Sweden. Statistical comparisons are not possible for other countries, though big differences are unlikely. The richest 1 per cent in Switzerland owned 43 per cent of the country’s wealth in the 1960s. In West Germany 35 per cent of the wealth was in the hands of the richest 1.7 per cent of the population at the beginning of that decade. In Eastern Europe such crass disparities of wealth and income had effectively been solved by draconian expropriation, even if a new political elite was able to accumulate sufficient wealth and privilege to belie all the basic principles of communism.
As prosperity (though certainly not evenly experienced) spread across society, households needed to spend less of their income on necessities. They were finding that they had money left over and, in Western Europe at any rate, could buy from a swiftly widening range of commodities. The modern consumer society was born.
Europe – west as well as east – had been a poor continent in 1950. Housing was mostly of bad standard, often lacking hot water, a bathroom or indoor toilet; families could afford few luxuries; food was still widely rationed; and most men still had jobs entailing hard manual labour. (Relatively few women worked in paid employment, though the pattern was not uniform; the textile industry, for instance, though in decline, still employed high numbers of women.) The consumer boom that gradually gathered momentum separated Western Europe from the eastern parts of the continent. There, the modest rise in living standards was accompanied by constraints imposed by ideological priorities on the variety and availability of the type of household commodity that would soon be taken for granted in the West. Standardized products, often of poor quality, were available at low cost. But a consumer boom such as Western Europe was starting to experience was ideologically impossible in the closed economies of the east.
In Western Europe, consumerism brought the population of different countries closer together in their lifestyles, tastes and leisure pursuits. This was made easier by the increasing uniformity of commodities. Consumerism encouraged mass production of goods and standardization of products that reduced costs and cut the price to the purchaser. Small producers increasingly found it an uphill struggle to compete against the big manufacturers. Regional or local tastes and variations became less and less pronounced. Supermarkets, a new phenomenon whose dominance would become extensive only from the 1970s onwards, could buy in bulk (with bargaining power to force down prices from suppliers) and offer a wide range of goods, supplanting small shops. Food production was meanwhile expanding so rapidly that within a few years surpluses began to accumulate. Household expenditure was no longer dominated by necessities. A declining amount had to be spent on food (though still a much higher proportion of income in Eastern European countries than in the West). Severe malnutrition was a thing of the past. It would increasingly be replaced by a new form of bad diet: excess sugar and fats. Advertising became a new industry, well tuned to exploit the expanding market for a wide array of consumer products. The success of Coca-Cola across the whole of Western Europe was just one guide to the impact of new marketing techniques. Cigarette firms used ubiquitous international advertising for their products, whose serious health risks were only beginning to be acknowledged.
With prosperity came better and cheaper accommodation, aided by state subsidies and a doubling in the number of houses built during the 1950s. The quality was at first low. Given the desperate post-war housing shortage, quantity was more important than quality. New dwellings (houses and apartments) were being built at the rate of around half a million a year in West Germany, 400,000 a year in Italy and France and almost that level in Britain. Practically all buildings in north-western Europe would now be supplied with electricity and running water. However, as late as the 1960s only about half of households in Portugal, Greece and Balkan countries had access to electricity. States were commonly spending 6–7 per cent of their gross national product on house-building. And accommodation was becoming better – more spacious, less crowded, more comfortable, increasingly now with a bathroom and toilet inside and not out in a yard. What this could mean for personal dignity was graphically expressed in 1969 by an Italian peasant who lived south of Rome. Having an inside toilet instead of being forced to go out into the fields, he said, made him ‘feel like a human being, like other people, not like an animal as I felt before’.
By the early 1960s, slums were being swept away in big cities. Urban planners saw new opportunities to redesign towns and cities, many of them often badly damaged during the war, to accommodate the growing workforce and rapidly increasing volume of traffic. Suburban areas were expanded, new arterial roads constructed, sometimes entirely new towns built. The thirst to discard the old and to modernize as quickly as possible consumed some of the town planners. The result was often shoddy architectural designs, housing projects that would soon degenerate into new slums, and a ready resort to civic vandalism in some cities. Industrial priorities produced some horrendous urban designs not only in Eastern European countries (where forty new cities, constructed on the basis of socialist realism, were created in the 1950s, among them Nowa Huta in Poland and Eisenhüttenstadt in the German Democratic Republic). But, mercifully, the historic centre of Prague, undestroyed in the war, was preserved, while the core of the completely ruined Warsaw and Gdańsk (formerly Danzig) was elegantly restored.
Patterns of employment started to change. Working hours were generally reduced (giving more time for leisure pursuits); the numbers working in agriculture fell sharply, those in gruelling industrial work less rapidly, though there was a significant growth in the ‘tertiary sector’ of white-collar work. By the 1960s, too, far more women were entering the labour market. By 1970 around a third of employees in Western European countries were women, with Denmark in the lead at just under two-fifths, though about a third of female employees had part-time work. Only the Scandinavian countries and Finland came close in the 1960s to the levels of female employment in the communist countries of Eastern Europe, especially Poland and the German Democratic Republic. And in the eastern bloc part-time jobs scarcely existed, for women as for men.
In 1950 few people had cars, tourism was still the preserve of the wealthy, and household components that later generations would take for granted – telephones, washing machines, fridges, television – remained scarce. During the 1950s the spread of prosperity began to bring such commodities within reach of ordinary families and, fired by the continued economic growth and rapid technological innovation – for instance in electronics – the availability grew during the following decade. By the later 1950s the children of the immediate post-war ‘baby boom’, with little or no experience of the earlier acute shortages, were starting to enter their teenage years. Most of them were soon in work and starting to develop their own consumer demands, contributing to the rapid expansion of, for instance, the clothing and record industries. Meanwhile, even the least affluent sectors of society – the economic migrants who had poured into rapidly growing towns and cities and immigrant workers from overseas former colonies or ‘guest workers’ – were earning sufficient to contribute to (and benefit from) the expanding consumer boom.
Expenditure on household appliances rose more quickly than any other part of the household budget. The fridge and the washing machine were increasingly commonplace in middle-class households but within two decades, as their price dropped, became accessible also to working-class families. By the early 1970s most households had a fridge, and could for the first time buy food in bulk for storage and later use. Two-thirds of families by then had a washing machine, freeing women for the most part from a significant element in household drudgery. A big status symbol in the 1950s was ownership of a television. Britain began in the lead, but when television had launched there in 1946 there had been only 1,760 subscribers. By the mid-1960s there were 13 million television sets in Britain, nearly 10 million in West Germany, 5 million in France and Italy, about 2 million in Holland and Sweden. By the end of the decade nearly every household in Western Europe had a television. For family entertainment, television had supplanted radio. But the invention of the small transistor radio and its mass production at low prices meant that during the 1960s radio ownership became available to nearly everyone, and was the medium of choice for most teenagers. Radio listening was turning into an individual, not family, form of entertainment.
More than anything else, the ownership of a car was the mark of the new age. From being a luxury attainable only by a few, the car became a mass product available even to families with relatively modest levels of income. In 1950 Britain had proportionately the most passenger cars (42 for every 1,000 inhabitants) of any European country. Spain was at that time at the bottom of the league in Western Europe (three cars per 1,000 inhabitants), at the same level as Poland and Hungary. By 1970 Britain had been overtaken in car ownership, using the same measure, by France, Belgium, West Germany, Sweden and Denmark, with Italy, the Netherlands and Norway close behind. Spain still languished in this regard among Western European countries, just ahead of Poland and Czechoslovakia.
The growth of the automobile industry after 1950 was startling. Hitler had promised Germans a ‘people’s car’ (Volkswagen) in the 1930s. But it was only in the 1950s that the Volkswagen could become a symbol of Germany’s ‘economic miracle’. At last, under a successful democracy not a dangerous dictatorship, a car was accessible to much of the population. By the 1960s West Germany was Europe’s biggest car manufacturer, producing just under three million passenger cars a year, and exporting about a million of them. Volkswagen meanwhile saw its market share decline in the face of the competition in particular from Fiat and Renault as Italian and French automobile manufacture soared to meet the rapidly expanding demand. Where villagers in central Italy had even in the late 1950s still in the main used donkeys as their means of transport, many were a decade later driving their own Fiats. Of the major industrial countries, only Britain managed, through lack of innovation and investment, abetted by mounting labour militancy, to turn its once thriving car industry into one of near terminal decline. Only the brilliantly innovative Mini, in its early years, and, at the luxury end of the market Rolls Royce, Bentley, Jaguar and Aston Martin, bucked the general downward trend, as Britain’s cars gained an unenviable reputation for unreliability and lack of style. By 1965, car ownership had soared – nearly 10 million owners in France (up from 1.5 million in 1948), 9 million in West Germany (compared with 0.2 million in 1948), 9 million in Britain (compared with 2 million in 1948) and 5.4 million in Italy (against 0.2 million in 1948).
Greatly extended car ownership contributed enormously to the spread of tourism. But chartered flights and package holidays also started to become available, opening the possibility of foreign tourism at relatively modest prices for the first time to a mass market. Foreign tourism before the war had been the preserve of the wealthy. It now began to be made accessible to all. By the mid-1950s European borders were crossed by 30 million tourists. A decade later this had risen more than threefold. Traffic jams on major tourist routes every summer, throngs in railway stations and airports, were from now on an unchanging part of Europe’s calendar. Tourism began to rescue Spain’s backward economy, still in the doldrums after years of General Franco’s dictatorship. By the later 1960s, 17 million foreign tourists were visiting Spain, swelling the state’s coffers by a much-needed $1.5 billion (about 40 per cent of its foreign currency income). Italy was Europe’s main tourist magnet, with 27 million visitors, France had 12 million, Switzerland, Germany and Austria around 7 million. Not everyone went abroad, of course. Domestic tourism also thrived. A fully fledged tourist industry emerged as hotels, campsites, caravan manufacturers and the myriad businesses that operated at seaside resorts flourished.
Relatively few tourists went to Eastern Europe, which in this way, too, was blocked off from the influx of Western spending. The Dalmatian coast of Yugoslavia, it is true, started to attract visitors from Western Europe, and there was a trickle to Hungary and Czechoslovakia. For the most part, however, the Soviet bloc had to rely on its own tourists, who had relatively little to spend compared with their counterparts in the West, and faced greater regulation of their movement.
As foreign tourism, and consumerism more generally, spread, the differences between the countries of Western Europe diminished. Travel exposed people – many of them of the younger generation – to other cultures, customs, foods and lifestyles. Partnerships of ‘twinned’ towns in different countries were established, leading to organized visits from each of the towns every year. Student or school-pupil exchanges were often set up. More people learned foreign languages. Some cultivated ‘pen-friends’ in other countries. The ease with which young people in general could travel abroad began to break down barriers that had seemed insuperable to their parents’ generation. They often encountered similar tastes in music, dress and leisure pursuits with Europeans from different countries. European borders started to mean less. And ignorance, the ubiquitous basis of prejudice, was reduced. This all formed part of a far-reaching transformation of cultural norms in Europe that started slowly in the 1950s but then gathered pace rapidly amid the great vitality of the later 1960s.
Western Europe’s remarkable recovery in such a brief period from the ruins of war and the legacy of austerity to a ‘golden age’ of prosperity brought the first, tentative steps towards integration. Each step on a long, winding and unending journey towards European union would prove tortuous. Potholes would have to be avoided, hurdles jumped, detours made. Above all and from the very outset, whatever steps were taken, small though they were at first, there was the obvious difficulty of reconciling the supranational organizations necessary even for limited economic cooperation with the reluctance of nation states to concede ground in preserving their own sovereignty.
The integration of Western Europe was from the outset at least as much a political as much as it was an economic project. The need to overcome the disastrous national economic protectionism of the interwar years and the extremes of nationalism that had led to the calamity of the Second World War was felt on all sides. What turned this general feeling into practical, if somewhat hesitant, early steps towards integration was a threefold constellation: strategic concerns, national interest and farsighted idealism.
Even in the darkest days of the war small numbers of idealists, some of them in resistance movements, had contemplated some form of unification of Europe, and such ideas gained ground immediately after the war. Winston Churchill was one of those, in a famous speech he delivered in Zurich in 1946, who advocated unity on the broken continent, looking to a future ‘United States of Europe’ (though without British inclusion). At The Hague in May 1948, 750 delegates from sixteen European countries (and participants from the United States and Canada) attended a Congress of Europe that voiced ideas on European cooperation and, from some delegates, calls for political, economic and monetary union, though without tangible results.
A number of significant moves in the direction of European political and economic cooperation took place in the later 1940s without greatly advancing the cause of the integration that idealists desired. The emerging Cold War formed the background. If the impulse was at first to guard against any possible resurgence of a threat from Germany, this soon became transmuted into a defence mechanism against the perceived new menace of the Soviet Union. Still directed at Germany, the Treaty of Brussels in 1948 envisaged military cooperation between Britain, France and the Benelux countries, though it also made provision for economic, social and cultural collaboration. By 1949 Stalin was seen as the clear danger, and the extension of Western European defence provision to include the United States had resulted in the formation of NATO.
In the economic realm, the need to implement the distribution of Marshall Aid under the European Recovery Plan of 1947 had led to the creation the following year of the Organization for European Economic Cooperation (OEEC) by sixteen European countries and the western zones of Germany, which helped to foster the idea of the interdependence of economic systems. (In 1961 this would become the Organization for Economic Cooperation and Development, now extended to a number of non-European countries to create a far wider body.) In 1949 the establishment of the Council of Europe provided a further framework for cooperation in a number of fields, most important of which were legal matters, out of which emerged the vital European Convention on Human Rights of 1950. At least in the Council of Europe a sense of European, not just national, values had been given institutional form. But it fell far short of integration. None of these developments, in fact, highly welcome though they were, went beyond differing levels of cooperation. None transcended, through the establishment of supranational bodies, the prerogatives of the nation states. At each step, in fact, the sovereignty of the nation states was expressly upheld. The United States had strongly backed an integrated, united Europe as a bulwark against Soviet Communism and had seen Marshall Aid as a significant step on the way. But Britain’s adamant refusal to have anything to do with the integration of European economies, let alone concede anything of political and juridical sovereignty, proved an insuperable obstacle to that goal.
As the Cold War hardened inexorably between 1947 and 1949, and the Soviet Union, not a revengeful Germany, was seen as the danger to European peace, American strategic priorities forced French foreign policy to change. A revitalized West German economy now became essential to European reconstruction, while the steps that were rapidly taken in 1948–9 to create the Federal Republic of Germany reflected the centrality of the new state to the security of Western Europe, as a crucial bulwark against the USSR. To gain the support for the establishment of a new West German state from the still wary French, understandably still concerned more than all else with their country’s security, the control of Ruhr coal and steel production was in 1949 placed under an International Authority for the Ruhr.
This had a council of representatives from France, the Benelux countries, the United Kingdom, the United States and West Germany (though German voting on the council was dependent on Allied approval). Unsurprisingly, the West Germans intensely disliked the Allied control of German industrial production. At a time when the Korean War had increased the demand for steel, the International Authority was not working well and was wound up in May 1952. It was superseded by a new organization, the European Coal and Steel Community (ECSC), which would use the issue of coal and steel control to create the embryo of wider European integration. The Community’s origins dated back two years, to a speech made on 9 May 1950 by the French Foreign Minister, Robert Schuman. His proposal blended together pragmatic national interest and strategic priorities – to expand the French steel industry and to make it competitive in Western Europe – with visionary idealism. It was an important milestone on the chequered route towards European integration.
Schuman proposed a new, ambitious supranational plan that would ‘lead to the realisation of the first concrete foundation of a European federation indispensable to the preservation of peace’. A ‘united Europe’ – the ultimate goal – could only arise, Schuman stated, if at the outset the age-old antagonism of France and Germany were eliminated. He saw the pooling of coal and steel production as a start. But technical issues of coal and steel production were only a part of the far wider vision. He held open the prospects of other countries joining in a common market that could expand to other areas of production and would promote European prosperity as well as peaceful coexistence.
The ideas that Schuman presented were above all those of his fellow countryman, Jean Monnet, head of the French Planning Board, a former banker and businessman whose skills had been utilized both by the Chinese government (in the 1930s) and the US administration (during the war), and who had then played a major role in the early stages of French economic reconstruction after 1945. Monnet provided most of the idealistic inspiration to what became known as ‘the Schuman Plan’. Monnet was a long-standing, convinced federalist. He envisaged a democratic supranational federation that would take shape gradually, incrementally, and over a lengthy period of time through a process of continuous reform. As early as October 1943, in Algiers as part of the French Committee of National Liberation, headed by Charles de Gaulle (whose autocratic tendencies worried Monnet) and effectively France’s government-in-waiting, Monnet had declared that Europe’s future social development and prosperity needed a Europe united by free trade. In 1944 he spoke of the need to rebuild post-war Europe through ‘a true yielding of sovereignty’ to ‘some kind of central union’, and a European market without customs barriers to prevent any resurgence of nationalism. He hoped the United Kingdom and France would take the lead, though evidently he doubted whether the British would be willing to participate. Four years later, writing to Schuman while on a visit to Washington, Monnet stated a ‘deeply rooted conviction’ of what was needed to cement the European relationship with the United States and to counter the danger threatening the West: ‘Western European countries’ efforts have to become a true European effort. And only a Western Federation is able to achieve this.’ But Monnet did not see pooled sovereignty as eclipsing France’s national standing. On the contrary: Monnet saw European integration as a vehicle to restore French political and economic dominance in continental Europe. After the war he put French interests first in proposing that France take over the crucial German coalfields of the Saarland and the even more vital coal and steel of the Ruhr, with a view to greatly strengthening the French economy while also leaving Germany permanently weakened.
Behind the undoubted idealism lay, therefore, pragmatic national imperatives. The key determinant – it would prove the lasting basis of the European Community (and later the European Union) – was the relationship between France and Germany. French priorities were to integrate the West Germans in a European framework under French control before they could regain any great strength, at the same time reinforcing France’s hand in the production and distribution of the most vital industrial base, Ruhr coal and steel (and freeing this also from British control). West Germany, the major partner, also had overt national interests in integration. Konrad Adenauer, the Chancellor, was anxious to bind – economically, politically and strategically – the Federal Republic to the West, both as a bulwark against the threat from Soviet communism and as a platform for acquiring full territorial sovereignty at the earliest opportunity. For West Germany it was a chance to remove Allied control of Ruhr coal and steel production, prevent any further thoughts of dismantling industrial installations, establish German equal rights with other countries, and ultimately bring the major industrial area of the Saar (from 1947 onwards a ‘Protectorate’ under French occupation) fully back to Germany (which eventually took place after a plebiscite in 1955). The Benelux countries (Belgium, the Netherlands and Luxembourg), which had in fact removed customs duties and set up a common external tariff already in 1948, needed little persuasion to see national advantages in the wider markets and liberalization of trade that was implicit in Schuman’s proposal. Alcide de Gasperi, the premier of Italy, another European idealist, saw a chance to overcome his country’s long-standing economic weaknesses and backwardness (especially in the south, the Mezzogiorno). Italy was the poorest of the six nations that would join the new organization, but de Gasperi looked to advantages in ending its traditional protectionism, despite weighty opposition from the country’s steel manufacturers. He was right. By 1961 Italy’s ‘economic miracle’ had turned the country from being economically backward into one of Europe’s advanced industrial nations.
Putting the Schuman Plan into operation had faced internal opposition. This was at its most vehement in West Germany, where the Social Democrats saw the country’s integration into Western Europe as an obstacle to the desired unification of the country, and in France from the Gaullists (for the Plan’s limitation of national sovereignty) and the Communists (regarding it as a ‘capitalists’ club’). Nevertheless, the European Coal and Steel Community, confined to six countries, was established by treaty, signed on 18 April 1951, and came into effect on 23 July 1952. It brought together the vital coal and steel industries of France, West Germany, Italy, the Netherlands, Belgium and Luxembourg under a single ‘High Authority’. For Jean Monnet, it was ‘the first expression of the Europe that is being born’. Britain, still confident of its lead in steel and coal production and unwilling to be bound by a supranational authority, declined the invitation to join.
The High Authority, comprising nine representatives from all the member states, was the policymaking body. It was to preside over a programme aimed at the removal of tariffs and establishment of a common market (initially for coal and steel, though to be widened to other spheres). Its powers were hedged by a ‘Special Council of Ministers’ drawn from national governments, to ensure that national interests were upheld. A Court of Justice, to adjudicate on any disputes arising from High Authority action, was also established. But the High Authority was deliberately designed as a ‘top-down’ institution. There was no legislative body, nor a proper parliament. A Common Assembly, whose delegates were drawn from the national parliaments, had merely supervisory, not legislative powers. In practice, the Assembly, far from trying to confine the High Authority, promoted its moves to supranational direction of the economy. Progress in this regard was not speedy, and national protectionism by the Belgians, Italians and, not least, the French themselves, hindered progress, though gradually trade barriers started to be eliminated. In the wider aim of political integration, envisaged by Schuman, little was achieved beyond a growing awareness that the administration of increasingly interwoven economies necessarily demanded institutions and laws that had implicit, if not explicit, political implications.
By the mid-1950s there had been some real, if slow, progress towards economic integration. Politically, however, the European project as envisaged by Monnet and Schuman had stalled. This was in the main because of the failure of the European Defence Community, a project that the French (hoping to head off German rearmament) had proposed in 1952 only to vote it down themselves in 1954. Integration of European defence would have necessitated a common foreign policy. As it was, the inability to create a European army, the foreign policy to support it, and the institutional arrangements that would invariably follow, left the kernel of what had already been given a name, the European Political Community, stillborn. The ill-starred European Defence Community had been a case of trying to run before walking. It was simply asking too much of nation states with their own strong military traditions, like France (and Britain, too, which, it was initially hoped, would participate), to relinquish so soon such a key part of their sovereignty to an unknown and untried supranational entity. There was no disguising the fact that it amounted to a severe setback for those who had pinned their hopes on unhindered advancement towards European integration.
The European Coal and Steel Community was left, it was true, to linger until the Treaty of Paris, which had established it, expired in 2002. It was a slow death, noticed by few. In reality, it had lost its momentum in the wake of the collapse of the European Defence Community. An indication of its waning significance was the decision of its chief architect, Jean Monnet, not to seek re-election to the presidency of the High Authority. Western Europe seemed indeed to be retreating from integration rather than proceeding towards it. West German military rearmament, then the Suez debacle, in which Britain and France had acted like imperialist powers of a bygone age, looked like major impediments to any common cause among European nations. Curiously, however, Suez, the self-evident dominance of the two Cold War superpowers, and also the growing anti-colonial movements in Africa and Asia, were such plain signs of the diminished international standing of Europe’s nation states that the one area where they could plainly benefit from closer integration, rather than separate national paths – the economy – gained new momentum. In the wake of Suez, where the Anglo-French invasion had collapsed after the Americans had merely threatened damaging financial repercussions for Britain, the French premier Guy Mollet was open to the argument of Adenauer that the only counterweight to American dominance was to be found in European unity. Mollet and Adenauer subsequently overrode doubts within their own governments to reach agreement on the free entry of French and German goods into each other’s markets. It was the pivot of the wider agreement that was already taking shape on the creation of a common market between the six countries of ‘little Europe’ that had formed the European Coal and Steel Community.
Whatever political travails were besetting Western Europe in the early 1950s, the economy of every country was booming. The success, if still limited, in the economic sphere of the European Coal and Steel Community and the unwieldy framework of the earlier Organization for European Economic Cooperation both pointed the way towards new initiatives, most especially in creating a common market for European trade. Monnet, though no longer head of the High Authority, played a significant role in promoting the idea. But the key figure in driving forward the process was the former Belgian socialist Prime Minister and President of the Common Assembly of the European Coal and Steel Community, Paul-Henri Spaak.
Britain wanted nothing to do with the proposed common market. And the Scandinavian countries had established their own closer cooperation in the Nordic Council that had been formed in 1952. So the steps towards future closer European integration were confined from the outset to the original six members of the European Coal and Steel Community. Their foreign secretaries met at Messina in 1955, aiming to promote ‘a fresh advance towards the building of Europe’. In concrete terms they proposed the establishment of a customs union leading to a common market and an integrated policy on the use of atomic energy. After Messina progress was surprisingly swift until the decisive moment in March 1957, at Rome, when two treaties were signed by the prime ministers of the six member countries, setting up a European Economic Community (EEC) and a European Atomic Energy Community (Euratom). Three years earlier, with the collapse of the attempt to create a European Defence Community, European integration looked to have run into the buffers. By 1957 it was full steam ahead. As the name of the new institution suggested, economic integration was the priority. But it was to be the start, not the finish. The long-term political objective was embedded in the Treaty of Rome itself: this was ‘to establish the foundations of an ever closer union among the European peoples’.
The short- to medium-term objectives of the Treaty, which came into effect on 1 January 1958, were ambitious enough. They sought to consolidate and promote rising living standards through economic growth. There was to be free movement of labour and capital, the ending of trade restrictions, together with coordinated policies of social welfare and the creation of a European Investment Bank. The aim was to create a common market, free of internal tariffs. External tariffs, though generally reduced, were retained. And agriculture, facing quite specific difficulties, was protected. The institutional arrangements were modifications from the European Coal and Steel Community. A Commission of nine members formed an executive. Its powers were, however, limited by the Council of Ministers, drawn from the national governments and by the Parliamentary Assembly – still not a fully fledged parliament – that could recommend, but not legislate. A Court of Justice was set up to adjudicate on disputes between member states. A separate Commission and Council were set up for Euratom (and eventually merged with those of the EEC in 1965). The institutions were served by a bureaucracy of around 3,000 civil servants (and growing) by 1962.
By 1960 the EEC, covering a population of 165 million, had made impressive progress. It had hugely expanded its contribution to world trade, while total industrial production had increased by 70 per cent over the previous decade. Euratom’s progress was less impressive. It faced obvious difficulties from the start – even greater once de Gaulle had come to power in 1958 – since the French were determined to uphold national security interests in such a sensitive field and were unwilling to stand by while West Germany acquired atomic capability.
The success of the EEC already in its first years forced the nation states that did not belong to it to create their own organization. The European Free Trade Association (EFTA), founded on 20 November 1959 and coming into effect on 3 May 1960, linked together the ‘Outer Seven’ – Great Britain, Denmark, Norway, Austria, Portugal, Sweden and Switzerland (Finland was later to join) – in a second economic area in Europe. Compared with the EEC, however, it was a far looser arrangement, purely (as the name suggested) a trading organization that demanded no dilution of national sovereignty and had no aim of ultimate political integration. It was also from the outset weakened by the deteriorating economic performance of its most important member, Britain.
The British economy had by this time not only lost the European economic predominance it had briefly enjoyed in the first post-war years, but was being overtaken by the rapidly growing continental economies. Its trading strength was diminishing, its ties with the Commonwealth waning, and its ‘special relationship’ with the United States largely one-sided. It was not surprising, therefore, that by 1961 Britain was reconsidering its stance and deciding to apply for membership of the EEC. For existing members two concerns predominated. The first was the problem of Britain’s Commonwealth trading arrangements, which could not be accommodated. The second was the fear that Britain’s almost exclusive preoccupation with free trade would hinder, perhaps even vitiate, the long-term political objectives of the EEC. Britain’s application indeed came with strings attached – safeguards for British agriculture and Commonwealth ties, and agreement with the other EFTA countries that wanted to join the EEC. These were significant obstacles. Britain’s application was directly to founder, however, on the rocks of opposing French national interests. In 1963 the application met with the resounding ‘Non’ of the French President, Charles de Gaulle, who was to repeat his veto on British entry when a second application was made in 1967.
De Gaulle’s primary concern was to prevent the possibility of Britain coming to usurp France’s dominance in the EEC and damage the Franco-German foundation of the Community. He also distrusted Britain’s close relations with the United States, the main threat in his view to France’s leadership of Europe and prestige as a great power. Quite apart from his negative stance towards British entry, de Gaulle was, however, at best an ambivalent European and his years in office as President of France were difficult ones for the cause of European integration. De Gaulle, a traditional French nationalist whose views were anchored in the need to restore France’s former glory and uphold its great-power pretensions, most obviously against the dominance of the USA, was prepared to accept pragmatically the benefits that the limited forms of European integration had brought his country. What he wanted, however, was not a supranational power, but a ‘Europe of the Fatherlands’. His version of European union was one in which France dominated while the Germans were willing but subordinate partners and American and British influence was kept at bay. He set his face adamantly against any significant inroads into French national sovereignty, opposed any strengthening of the EEC’s Commission and consistently put the interests of France first, way beyond those of the Community.
The resulting tension brought open conflict in 1965. Matters came to a head over the powers of the Commission. The occasion was the complex issue of agriculture. Following wearisome negotiations it had been agreed in 1962 to establish a Common Agricultural Policy (CAP) with a single market for agricultural produce at fixed prices and subsidies for farmers. However, the question of financing the CAP had become embroiled in proposals to extend the powers of the Commission, which sought to gain control of the revenue from external tariffs, and suggestions that the European Parliament should be given legislative powers. This would have meant, therefore, a widening of the supranational authority of the EEC. When this became a condition of the agricultural settlement, de Gaulle – even though the CAP would benefit French farmers – posed his own conditions: unless France was offered a solution it found satisfactory, and a right of veto on the strengthening of supranational powers in the EEC, it would boycott European institutions.
For seven months France did so, after de Gaulle had ordered French representatives back from the Commission’s negotiations. The resulting ‘empty chair crisis’, as it was dubbed, was finally resolved with an uneasy ‘Luxembourg Compromise’ of 1966. This provided for a veto on matters of ‘very important national interest’ (left undefined), qualified majority voting on agriculture, and a weakening of the Commission, whose prerogatives in some spheres were subject to approval by the Council (representing member states). The underlying problem of trying to reconcile national interests with supranational institutions, far from moving towards any resolution, had become magnified. As long as de Gaulle remained in power in France, this was unlikely to change.
By this time the ‘European project’ could point to some successes. Institutionally and administratively there was some streamlining when, in 1965, it was agreed to merge the EEC, Euratom and the Economic Coal and Steel Community. And economic advances, if at times stuttering, had certainly been made, particularly in liberalizing trade. The last internal customs were eliminated in 1968 and a unified external duty was introduced. The liberalization of trade, together with greater investment and technology transfer, increased competition, and economies of scale added an estimated 1 per cent to European growth rates. On the debit side, the Common Agricultural Policy remained a headache and deliberations in 1969 to try to move towards monetary union proved abortive, given the disparity in strength of national currencies (not least between the French franc and the German mark). Politically, however, union seemed as distant a goal as ever. Integration on all fronts had progressed since 1950 in a sort of European foxtrot: two steps forward, one to the side, and one back. In fact, from the outset moves towards integration had been overwhelmingly driven by national motives – initially to ensure French dominance, then as a platform to re-establish a German nation state. The aim of ever-closer union had in practice bolstered the system of European nation states.
The core of the six founder members of the EEC was not widened until 1973. Before then, Greece (in 1962) and Turkey (in 1964) had been given associate status – Greece’s suspended in April 1967 when a military putsch abruptly ended (temporarily) democracy in the country. Malta (1971) and Cyprus (1973) also gained the status of associate members, while preferential terms on the import of a range of industrial goods were offered to a number of developing states in Africa. But de Gaulle’s double veto of British membership meant that the EEC had remained a ‘club’ of the original Six that had founded it in 1957. Apart from France, however, the other five countries were much more favourably disposed towards British membership. Once de Gaulle had left office in April 1969, and when, in June 1970, the strongly Europhile conservative Edward Heath, after an unexpected election victory, had become British Prime Minister, the prospects of widening the European Community (as it had been called since 1967) to include the United Kingdom improved sharply.
The new French President, Georges Pompidou, was more open to British membership of the European Community than his intransigent predecessor had been. In part this was because he saw the need to counterbalance the position of West Germany, whose thriving economy and strong currency had turned it into Europe’s indubitable economic powerhouse and weakened the dominance of France that the French had at first taken for granted. Moreover, the Federal Republic’s Social Democratic Chancellor (since October 1969), Willy Brandt, had begun to shape a new relationship with Eastern Europe, his Ostpolitik, which had unknowable consequences for the European Community and for France. From the British side, it was time to make a final attempt to join the Community. Heath, relatively cool towards America, was a European from conviction. He had been deeply moved by the devastation he had witnessed while serving in the British army after the Normandy landings. European unity was for him, as for other idealists of his generation, the only way to secure lasting peace. And from the point of view of national interest, joining the European Community seemed an attractive option. With trade with the Commonwealth in sharp decline, membership of the European Community would offer the British economy – in poor shape, suffering high inflation, and wracked by industrial unrest – the opportunity of benefiting from the far more successful Common Market that had developed in Western Europe. Following a meeting in Paris in May 1971 between Pompidou and Heath, detailed negotiations in Brussels paved the way for the United Kingdom to become a member of the European Community on 1 January 1973. Ireland and Denmark joined at the same time. Norway’s application caused, however, bitter divisions in the country. A referendum in 1971 in which 53 per cent of the voters rejected membership, put an end to Norwegian expectations of joining the Community.
The expansion of the Economic Community to now nine countries introduced a new, and as it would prove, lasting difficulty: Britain’s semi-detached stance. Heath belonged to a small minority of European idealists in Britain. In his own party (and beyond) there were many, especially of the older generation, who could not be reconciled with the end of empire and the fact that Britain’s status had been reduced in effect to that of a European medium-power. Most of the British population were at best indifferent towards the European Community, while the left was opposed to an organization perceived as a ‘rich man’s club’. Those who favoured it did so generally because of its perceived economic advantages, but no more. ‘Europe’ was a balance sheet. The European Community was tellingly referred to, for years afterwards, as the ‘Common Market’. Would Britain be better off inside the EC, or staying outside? That was the only question for most people.
They did not see Britain as part of Europe. And indeed in some significant ways its historical development had set it apart from continental Europe. The country’s centuries-old parliamentary sovereignty, its traditions, ancient institutions and legal system, had not been interrupted by invasion and occupation. Its modern history had rested on overseas empire rather than European ties (other than being twice in recent memory forced to fight in European wars). Its duodecimal coinage and system of measurements (decimalized, to many people’s regret, in 1971 to facilitate European trade) reminded people on a daily basis that they were not like the countries of continental Europe. The sense of distinctiveness was enhanced by Britain’s geography as an island on the edge of the continent, looking across the Atlantic as much as across the English Channel. All this was subsumed more than anything else in Britain’s long-standing sovereign and jealously guarded powers as a nation state whose complete independence would brook no inroads from any source. Politicians – Conservative and Labour – and the majority of ordinary citizens therefore needed a good deal of persuasion to overcome their insularity and to embrace, rather than grudgingly accept, being part of a European Community. The insularity had produced ingrained prejudice. France, just over twenty miles off the southern English coast, was seen as ‘foreign’; Australia, 12,000 miles away, was not.
Over time, of course, and especially in the younger generation, such attitudes changed. But there was no avoidance of the fact that Britain was belatedly joining a European Community which, by this time, had evolved, naturally enough, in ways to suit its core membership. The Common Agricultural Policy was one area bound to cause hackles to rise in Britain, where consumers now had to pay higher food prices in order to subsidize uncompetitive continental – especially French – farmers. That already efficient British farmers should also profit substantially was no consolation to British consumers, already hit hard by rampant inflation. So the ‘Common Market’ began in Britain somewhat inauspiciously. But the disadvantages of not belonging were emphasized by business and by the government. The arguments seemed convincing, whatever the misgivings. When put to a referendum in 1975, a two-thirds majority favoured Britain staying inside the European Community. Many had voted to stay in ‘Europe’ because they had presumed this meant belonging to a widened free-trade area, and would therefore have economic benefits, ignoring (or oblivious to) the underlying political objective of ‘ever closer union’ that had been enshrined in the Treaty of Rome in 1957. It was an impressive result, nonetheless, showing that most British people recognized that the country’s future was best assured by closer ties with its European neighbours. A sense of Britain as part of Europe was taking hold, specifically in the better-educated and wealthier sectors of society. A residual antagonism towards everything emanating from, and associated with, ‘Brussels’ (the seat of the European Community’s Commission) remained, however, and would continue to complicate and weaken the aim of turning economic integration into closer political union.
By 1973 the European Community had far more to worry about than any potential future difficulties in accommodating British particularist interests. Problems in the American economy, notably a rising payments deficit, were affecting European monetary stability. Britain had devalued its currency in 1967 and France in 1969, while the extraordinary strength of the Deutschmark reflected an obvious economic imbalance among European countries that had increasing difficulty in sustaining fixed rates of exchange among themselves. In 1971 the Bretton Woods system of convertible fixed-rate currencies, dating back to the international agreement of July 1944, was abandoned in favour of more flexible floating currencies. In practice this further enhanced West Germany’s financial dominance among the countries of the European Community.
The real blow to the economies of Western Europe came, however, with the oil crisis of 1973. This followed the fourth and largest Arab–Israeli War – after those of 1948, 1956 (the Suez debacle) and the Six-Day War of 1967 that had brought Israel huge gains in territory. The Arab countries had, unsurprisingly, refused to accept the territorial outcome of Israel’s preemptive strike in June 1967. This had taken away great tracts of land that had previously been possessed by the Arabs, enlarging Israeli territory more than threefold, incorporating the Golan Heights and Sinai peninsula into Israel while placing the whole of Jerusalem under Israeli rule. Quietly the Arab states had planned their revenge. On 6 October 1973, the Jewish holy day of Yom Kippur (the Day of Atonement), Egypt and Syria launched a huge, and at first highly successful, military attack on Israel. The Israelis hit back strongly, however, and regained much of the initiative before the intervention of the superpowers (along with a massive increase in American aid to help to rebuild a badly damaged Israeli economy) engineered an uneasy ceasefire at the end of the month.
The Arab countries turned to oil as a new and potent weapon that they were prepared to use against the West. The Middle East had produced only 7 per cent of world oil output in 1945. By 1973 the proportion was almost two-fifths. In the middle of the war Arab oil ministers, working through the cartel of OPEC (the Organization of Petroleum Exporting Countries), had agreed to raise oil prices to Western oil companies by 70 per cent, cut production by 25 per cent, and impose an oil embargo on the United States and other supporters of Israel. It marked a new departure in international conflict, and created huge problems for Western economies that had become heavily dependent upon oil consumption. The oil regime that the West had both promoted and hugely benefited from now showed itself capable and ready to defend its interests with dramatic effect. The quadrupling of the price of oil had a devastating impact on almost every economic calculation or assumption. The ensuing near panic pointed again to the limited progress of integration as the individual countries of the European Community (as well as those outside) sought their own national solutions.
The oil crisis brought severe economic recession, the first one of any seriousness since before the Second World War. In a wider sense it inaugurated a new era for Europe. The years of post-war boom were at an end. The good times were over.