Economic interests, party, and ideology in early cold war era U.S. foreign policy.

Although it is widely acknowledged that economic interests influence the politics of trade policy, most research on international relations treats security issues differently. The realist paradigm prevailing in the analysis of security issues subordinates economic and other sources of domestic political conflict to the interests of the state as a unitary actor in the international system. Do conflicting economic interests shape foreign policy debate even when security issues are highly salient? I argue here that they do. The early Cold War era was a time of intense bipolar rivalry when security questions might have been expected to override all other concerns. I will present evidence that, even during this period, major political actors' positions on many foreign policy issues relate to patterns of conflict among economic interests.

"National Security" and Economic Interests

In most international relations theory, national security concerns involve the protection of unitary state interests, such as political sovereignty or territorial integrity, from international threats. These interests arise from objective international conditions and the state's position within the international system. This view of national security as the survival interests of the state drives Kenneth Waltz's structural realist theory and other influential accounts of the international system.(1) Incentives for political action on security questions differ from those existing in other issue areas, such as trade policy, because they involve the common interests of the society, removing the basis for distributive conflict. Opinions may vary on classic national security issues because of individual tastes and idiosyncrasies, but there is no reason to expect political conflict over it to be related to more enduring social cleavages.

Although this understanding of national security may be a reasonable description of security concerns in some cases, it is not universally applicable. For many great powers, security concerns have ranged far beyond the survival interests of the state. Powerful states with imperial ambitions have historically treated the preservation of access to particular sites for trade and investment as vital national interests, securing them with military means. Although this expansive "national security" policy certainly benefits some segments of the society, others may be unable to take advantage of the investment opportunities it protects. Some industries may even have to compete with goods imported from these protected areas. Despite potential domestic disagreement over their desirability, the preservation of these economic interests has sometimes been a critical goal of national security policy. Indeed, the overextension of military power to protect imperial possessions, even when doing so has made defense of the homeland more difficult, is a recurring theme in world history.(2)

In extending their foreign policy goals beyond securing the political sovereignty and territorial integrity of the state, U.S. policymakers have followed the example of many previous great powers. After World War II, American policymakers sought to establish an international system open to U.S. trade and investment, one where American power would predominate. The major policy statements of the early Cold War era acknowledge that these ambitious goals went well beyond merely coping with the Soviet military threat to the United States. One of the most important policy statements, NSC 68, noted that establishing a "healthy international community" was "a policy we would have to pursue even if there were no Soviet threat."(3) Paul Nitze, one of the principal authors of NSC 68, later recalled that when work on the report began, "our prime concern had remained with the economic situation in Europe."(4)

In principle, policies aimed at protecting the basic political sovereignty and territorial integrity of the state are distinguishable from those directed at potentially divisive economic goals. Different political processes might exist side by side in these two areas. In practice, however, policymakers often use the same programs to pursue many goals. Economic and security concerns are often closely related. States give economic aid to their allies for security reasons, and industries deploy arguments about national security to gain trade protection. The recent work of Joanne Gowa, presenting evidence that states take the security externalities of trade into account when selecting their trading partners, underlines the difficulty of distinguishing between these two issue areas.(5) Conversely, a particular military posture may be necessary to establish and maintain the conditions necessary for certain kinds of investments.(6)

The analysis of conflict among firms and industries with competing interests offers one way of explaining political conflict over national security policy when its objectives are not consensual. Endogenous tariff theory links the position of various industries in the international economy to their demands for government policy. Assuming that factors are relatively immobile between industries, Timothy McKeown, Robert Baldwin, and others argue that conflict between export-oriented and import-competing sectors shapes the politics of trade.(7) Of course, as Douglas Nelson points out, not all endogenous tariff arguments assume factor immobility.(8) Some, such as Stephen Magee, William Brock, and Leslie Young treat conflict between the owners of different factors as the basis for divergent preferences on trade protection.(9) However, given the evidence that political cleavages form along sectoral lines, at least in the short run, a sector-based theoretical approach provides a reasonable starting point for empirical research.(10)

Although sectoral differences in the benefits of tariffs are well known, related conflicts extend to issues other than trade protection.(11) To the extent that the benefits of a foreign policy do not extend to everyone, those who do not expect to benefit should oppose committing national resources to these goals. Not everyone shared the Truman administration's broad foreign policy goals or favored the range of related economic and security policies these goals required. Patterns of political conflict reflected the differences in the costs and benefits of these policies to different segments of American society. Two such differences are particularly important. First, some firms and industries stood to benefit more than others from access to international markets and sites for investment. Although efforts to secure the interests of internationally oriented firms may not have directly harmed the interests of domestically oriented firms, economic interests that gained no clear benefits from these efforts nevertheless had to bear their considerable costs. Second, conflict occurred over the regional emphasis of the administration's foreign policy. Faced with limited resources, administration foreign-policymakers emphasized economic and security concerns in developed areas, especially in Europe. Not everyone shared these priorities.

The early Cold War era offers a strong test of the argument that variation in the benefits of security policies in powerful states may generate the same distributive conflicts found in foreign economic policy. Of course, economic and security concerns were closely related in Cold War foreign policy. Its framers intended the Marshall Plan to serve the security goal of rebuilding allies as well as the economic purpose of reconstructing trading partners. Similarly, the rearmament program associated with NSC 68 was intended to provide a source of dollars to cover the European balance-of-payments deficit as well as to arm American allies against the Soviet military threat. Despite the close relationship between these two policy areas, security concerns have never been more prominent for the United States in the postwar era than they were during the early Cold War period. If political actors' national security concerns override their ties to conflicting economic interests, it should be evident during this time. In the remainder of this article, I will develop and test hypotheses about the role of divergent interests in international trade and investment in shaping political conflict over early Cold War foreign policy.

Economic Interests and Foreign Policy Preferences During the Early Cold War Era

Many crucial beliefs about the appropriate world role of the United States underlying Cold War foreign policy have become common assumptions during the last fifty years. Given the prevalence of these beliefs, it is easy to forget that many basic elements of Cold War foreign policy were controversial when first introduced. The Cold War entailed much greater global activism and a correspondingly larger commitment of resources to foreign policy than the United States had previously undertaken during peacetime. As the title of Dean Acheson's memoirs, Present at the Creation, suggests, the framers of this new policy were well aware that they were breaking with previous practice. Although few influential American political figures argued for friendly relations with the Soviet Union, there was nevertheless intense disagreement over the scope of postwar American commitments and the allocation of the resources required to meet them. The viciousness of this debate reflected the importance of the issues at stake. Those opposed to the Truman administration's foreign policy characterized both minor and important administration officials as fundamentally out of touch with the American people, or even as traitors.(12)

Despite the intensity of the political struggle over foreign policy during the early Cold War era, many historians pay relatively little attention to it. Some historical works, including those of Melvyn Leffler and John Gaddis, assume a realist perspective, downplaying domestic political conflict and focusing instead on international threats to perceived security interests.(13) These interpretations attribute opposition to the administration's foreign policy to the misunderstanding of international conditions or partisan opportunism. On the other hand, other historians, such as Michael Hogan and Bruce Cumings, relate conflict over Cold War foreign policy to deeper cleavages within American society.(14) These accounts reflect theoretical arguments about conflict among firms and industries with different foreign policy interests.(15)

The conflict over early Cold War foreign policy resembles the commonly discussed antagonism between "internationalist" and "isolationist" perspectives on American foreign policy. Because these categories are so well known, it is tempting to label the Truman administration's opponents "isolationists." This temptation should be resisted for at least two reasons. First, some of the administration's opponents favored just as much international activism but placed greater stress on securing access to less developed areas, especially in Asia. Second, because internationalists ultimately prevailed, the term "isolationist" carries a normative stigma. When the winners write history, their first concern is not with the selection of terms facilitating even-handed analysis. The term "nationalist" is probably more descriptive and is certainly less pejorative.(16)

Hogan, Cumings, and others point out the prevalence within the Truman administration of policymakers linked to internationally oriented banks and multinational enterprises located mainly in the Northeast. These policymakers sought to establish and maintain an international economic order open to U.S. trade and investment, especially in the industrialized countries of Western Europe and Japan. Preserving access to Europe and Japan entailed not only a military commitment to prevent possible conquest or intimidation by the Soviet Union but also an effort to reconstruct their devastated economies and cover their enormous balance-of-payments deficits. U.S. policymakers feared this "dollar gap" would prompt European states either to seek greater economic ties with eastern Europe and the Soviet Union or to construct quasi-autarkic arrangements with their colonial empires, sharply limiting U.S. trade and investment. After 1950, when economic aid to Europe was no longer politically viable at home, American policymakers turned to military aid to accomplish the same purposes. Concern about the reconstruction of the European and Japanese economies also drew the United States into defending their access to Third Word markets and sources of raw materials.(17)

While internationalists dominated policy making in the Truman administration, many leading Republicans, such as Robert Taft, reflected the interests of other segments of the American political economy. Domestically oriented businesses were not in a position to reap the benefits of international trade and investment and so had little incentive to support the …