Rebuilding the World: Origins of the Cold War

World War II changed how humans made, traded, and consumed goods. The war left the economies of Europe and East Asia devastated. As many as 80 million people died in the war. After the war, nations had to rebuild and rethink the global system. But, there were disagreements on how to do so. The biggest disagreements were between the United States and the Soviet Union.

These tensions sparked the Cold War, which was called a “cold” war because the two superpowers did not fight directly against one another. They each wanted to spread their economic models to other parts of the world. The Soviets were communist. They believed in state-planned economies. The Americans were capitalist, which meant that they favored free markets. Both superpowers sent large amounts of financial and military aid to their allies.

After the war, the Soviets took control of Eastern Europe. The United States feared Soviet expansion into Western Europe. It made a plan to rebuild Western European economies that were ruined by the war. The Marshall Plan was named after Secretary of State George Marshall. It sent billions of dollars in economic aid to seventeen countries in Europe. The plan was a massive success. There were economic “miracles” in countries like Germany, the United Kingdom, France, and Greece. The U.S. also aided Japan after the war.

Historian David Landes wrote about the Japanese and German recoveries. He insisted they were built on “work, education, determination,” and American financial assistance. He said the U.S. helped these countries to block the Russian threat. But sociologist Immanuel Wallerstein disagreed. Instead, he claimed that the Americans helped because the “world-economy needed the re-entry of these countries.” These countries bought and produced U.S. goods. The Americans embraced the idea of a “free world” in opposition to the communist world of the Soviet Union. They hoped that the success of their allies would convince more countries to embrace capitalism.

Decolonization and economic dependency

After the war, European countries did not have the money to keep their empires. Their empires in Africa and Asia collapsed. In 1945, over a third of the world’s people lived in a colonized nation. Between 1945 and 1970, nearly every colonial nation gained its independence.

European nations lost power in global politics. Leaders of the newly independent nations of Africa and Asia spoke out against inequality. They objected to economic exploitation and racial inequality. In the 1960s, Indian Prime Minister Jawaharlal Nehru led the Non-Aligned Movement. Countries in this movement refused to follow either the United States or the Soviet Union. Instead, they decided to invest in their own countries.

Western Europe and Japan were aided by American money. However, their economies relied on raw materials from former colonial nations. They profited from the work of people in Asia, Africa, and Latin America. Farmers there were forced to produce cash crops. These were exported to richer nations rather than consumed locally. Poorer nations, therefore, needed aid from wealthy countries. This created a system of dependency. Kwame Nkrumah, Ghana’s first president, created the term “neo-colonialism” to describe this system.

Leaders in Africa, Asia, and Latin America fought against this system of neocolonial dependency. Some nationalized industries in their countries, meaning that the government took control of private industries. For example, the leader of Iran nationalized the oil industry. It had been controlled by a British oil company.

The American government saw all foreign policy as part of the Cold War. It was suspicious of countries that
nationalized industry. It thought that they were associated with communism and the Soviet Union. The U.S. military and intelligence agencies worked against these countries. The CIA helped organize coups that removed leaders in Iran, Ghana, Chile, and other countries. They replaced them with leaders who gave the industries back to private ownership.

Consumption and inequality

There was an increased demand for consumer goods in the U.S., Japan, and Western Europe after the war. Americans moved to larger homes in the suburbs. They bought new cars, washing machines, and household products. This created a greater demand for raw materials such as oil, coffee, and rubber from poorer countries.

There were problems of inequality within wealthy nations. For example, black Americans did not have the same opportunities as white consumers. Racist Jim Crow and redlining¹ laws prevented them from moving to new suburban homes.

1 Redlining is a financial and loan practice of excluding people from certain neighborhoods and denying public services to certain neighborhoods, often with racist motivations.