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Europe In Retrospect

by Raymond F. Betts

An Era of Booming Success

It is an international cliche that deeds are more important than words-but action does not have to be political. It can be commercial. International trade, not international talk, will assure genuine communication among nations.

President, Volkswagenwerke
October 26, 1962

In the middle of the period of Europe's impressive economic success, the United States sank into deep mourning. No state funeral, since that held for King Edward VII in 1910, was so solemnly majestic and international in its ceremony as that of President John F. Kennedy in Washington, D.C., on November 25, 1963. Victim of an assassin's bullet, the president was honored in death by some two dozen heads of state, including the presidents of France, Ireland, and West Germany, the king of Belgium, and the consorts to the queens of England and Holland.

To view that group of leaders walking together, one would have thought that world unity had become a reality. Of course, it had not. However, the international congregation on that sad day was an expression of the growing interdependency of the regions of the world. It particularly expressed American dominance in Western Europe.

It was during the second decade of Europe's recovery from World War II that the "Americanization" of the Old Continent intensified. The American language made incredible inroads, with terms like "okay," "pipeline," "jet," "jeans," and "parking" becoming part of several European vocabularies.

As if this were not enough, branches of American fast-food and hotel chains soon located in the major capitals of Europe and added a pungent and colorful quality to the cultural invasion.

"Americanization" is a rather loose term, descriptive of the contemporary consumer-oriented economy and mechanically structured daily life. It furthermore implies an accelerated pace of living-with ulcers becoming the modern European equivalent of eighteenth-century gout. And, as in the United States, European magazines soon carried advertisements for a variety of labor-saving devices, which could now be widely afforded. For the bourgeoisie, the maid went out as the electric dishwasher came in.

The period of recent European history which roughly straddled the years 1958-1969, the time when General Charles de Gaulle was president of France and near-arbiter of European affairs, was the extended moment of Europe's greatest economic development, the period when the benefits of industrial society were for once widely spread throughout European society. As in the previous decade, economics again dominated European history.

The Economics of Plenty
The success of the Common Market seemed one indication of an era of domestic peace and comfort. All European countries, even those outside of the Common Market, fared quite well. Between 1957 and 1961, for instance, the per capita income in Western Europe rose about 20 percent. One easy measure of modernization was the purchase of television sets. In 1957, Italians owned 647,000 sets; in 1967, they owned 7,669,000. The French numbers grew equally spectacularly: from 683,000 in 1957 to 8,316,000 in 1967.

The growth in family income allowing for such purchases was matched by its redistribution within family budgets. Europeans, particularly in France and England, were now spending less on food and more on rent and leisure-time activities. Vacation travel increased, as the automobile and better train service made a vacation in the mountains or at the beach as fashionable as it was attractive. Traditional patterns of purchasing also altered. The local market and the small shop declined in commerce, as large concerns replaced them. The supermarket became a part of European culture, such that self-service, hitherto an alien practice, was made an aspect of daily domestic routine.

Such changes resulted from many factors, of course, but none was more significant than the new economy of scale. European companies grew in size, output, and range of market. But more important was the intrusion of American firms into the European market. Between 1958 and 1961, some 843 American firms established subsidiaries on the Continent. By 1966, American investment had reached the staggering figure of $16.2 billion. European reaction was mixed, but a sense of concern over Europe's future independence was widely asserted. As one French politician remarked, the colonization of Europe by America appeared to be under way.

Behind all of this activity loomed a new corporate form: the multinationals. These companies, operating in a global market, established their own branches or subsidiaries abroad and thereby operated on a truly international scale. In 1967, for example, the largest of the lot, General Motors, had $20 billion in world sales and owned production facilities in some twenty-four countries. Chrysler, with $6.2 billion in sales, and facilities in eighteen countries, had already bought out the French automobile firm Simca and also owned the British company Rootes. In some instances, these large concerns engaged in what has been called "third-nation exchange." The Ford Motor Company manufactured parts in both Belgium and West Germany. Trade in these parts between both countries was a major element in Belgian foreign commerce. In other instances, these concerns amalgamated with European firms by buying into them. The French computer company Machines Bull, the largest independent European manufacturer, found that it had to accept financial support from General Electric because of severe IBM competition. In this manner, GE gained entry into the European computer market. Most impressive of all was the staggering statistic that 80 percent of European electronics production was owned by American firms.

There were several disturbing aspects about this new economic development noticeable at the national level. In the first place, it marked a departure from established American trading practices. Before, American goods had been primarily exported; now they were both manufactured and sold abroad. Thus, while American investment figures increased, American foreign trade declined, to the point that the United States found itself with a $10.6 billion trade deficit in 1970. As seen from the perspective of European politicians and technocrats, the multinationals were a direct threat. Although the United States did not control a majority share in any one European national economy, American firms definitely controlled those new key industries that counted in the age of the Second Industrial Revolution. It was the field of electronics and communications that American corporations dominated.

What was not lost on Europeans was the hard fact that research and development were funded far more lavishly in the United States than in Europe. It consequently seemed as if Europe was relatively underdeveloped technologically, despite the great advances it had made in the education of scientists and the establishment of research centers. For instance, France, with one-fourth of the population of the United States, spent only one-tenth of the amount that the United States invested in research.

To compound the problem, Europe endured an unexpected form of intellectual emigration. The "brain drain," as it was called, further weakened European technological progress. The expanding American economy, with its higher wages and more attractive standard of living, was an inducement to trained technocrats to leave Europe. About fifteen hundred scientists and engineers left Europe each year for America in the period 1956 to 1961.

Underlying this curious dual development of European well-being and American economic domination was the problem of capital. Despite the rapid increase in gross national product and per capita income, no European nation was able to match the enormous sums of money generated in the United States.

Whether the multinational corporation was a threat or a boon - a self- serving company bent on growth and further capital investment for its own sake, or a means to more efficient production and marketing - is a question that was hotly debated in the late 1960s and early 1970s. Historically, the advent of the multinational corporation is further proof of the globalization of national economics and the welding of bonds of gold that held Western Europe fast to the United States. Moreover, the primacy of the multinational in the 1960s suggests that the technocrats, as was predicted over a hundred years before by the Utopian Socialists, became as important, perhaps more important, than the politicians.

NEXT:  The Politics of Europe

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