Introductory Statement by Charles Weiss Jr. Distinguished Professor at Georgetown University to the USAID Building Bridges Workshop, August 13, 2003
on the occasion of an award to James M. Silberman
We are accustomed to thinking of the Marshall Plan as the huge program of capital assistance — an infusion of dollars that enabled Western Europe to rebuild its infrastructure after World War II and restore its economy to prewar levels. This afternoon, we are going to hear the little-known story of the rest of the Marshall Plan: the productivity program that jump-started the Western European economies by bringing 25,000 Western Europeans and people from other countries to the U.S. on some 1500 carefully planned and managed study tours, to learn how American firms and farms were managed and how American goods were produced.
We are accustomed to think of post-War Europe as lacking only capital to spring back into action as a modern economy. This is only partly true. True, European countries in 1945 — unlike, say, post-soviet economies in 1990 — understood markets, civil society and the rule of law. But their labor productivity was only about a third that of the US. Because of the high tariffs, cartel arrangements and low wages that prevailed in Europe between the world wars, European industry had missed the revolution in mass production and mass marketing that had brought Americans cheap and varied consumer goods during peacetime and had enabled them to achieve overwhelming superiority in materiel during the war. It was urgent to raise the standard of living of average Europeans visibly and” quickly, lest they be attracted to communism. This higher standard of living could be achieved only through higher productivity.
The study tours of the Marshall Plan Productivity Program reached almost every plant in every industry, introducing them to a technology more than as generation in advance of what they had been using. Within individual enterprises, productivity commonly rose 25-50% with little or no capital investment. Overall labor productivity rose at four times the historic annual rate, long before any liberalization in trade policy or increase in foreign investment.
The total cost of the program was $300 million over 12 years for 15 European and 16 other countries, or just 1.5% of the much better known capital assistance program. About a third of this — an amount about equal to staff costs — was contributed by the participating countries.
The Productivity Program used the reverse of the now conventional approach. Instead of sending large numbers of American consultants to Western Europe, it brought large numbers of carefully chosen, carefully designed and closely supervised study tours from Western Europe to the United States, each covering a particular subsector: steel foundry, machine tools, or electric power), or a particular function (materials handling, agricultural research and extension, or laboratory instrumentation). This allowed tour members to see for themselves the requirements of a competitive business in the post-war world: new concepts of workplace organization, marketing, business operation, new products, new design and engineering functions, and new equipment.
A typical tour lasted six weeks, and consisted of 12-17 members constituting a cross-section of the people needed to make new ideas work: industrialists, managers, foremen, union leaders, Parliamentarians and government officials. Any firm was eligible to participate — even “dinosaurs” whose markets had previously been assured by cartel arrangements. Contrary to today’s received wisdom, these firms often registered dramatic productivity gains, even in the absence of effective competition. US companies were willing to accept visitors and to show them technology and management methods appropriate to their situation, although not necessarily their latest and best.
Each team wrote a comprehensive 75-100 page technical report on its findings, including photos, blueprints, plant documentation, and statistics. On their return, the teams blanketed the country with conferences, lectures and seminars, and used newspapers and trade journals to pass along their new knowledge to as many of their countrymen as possible. The Marshall Plan also offered extensive follow-up services.
Our speaker today, Jim Silberman, conceived and launched the Marshall Plan Productivity Program in 1948, promoted and negotiated the agreements with the participating countries in Europe, the Near East and the Pacific Rim, and kept on developing innovative ideas for the program until it was dissolved in 1960. A Wisconsin-trained economist, he’s 90 years old (not 92, a mistake in the newsletter) and still sharp.
Jim spent World War II as the Chief of the Productivity and Technological Development Branch of the Bureau of Labor Statistics. His job was to assess the productivity of war production plants, workstation by workstation, using measurement techniques he had developed before the war. If a given station at one plant was more productive than the same station at another one, the manager of the less efficient plant would be dispatched to learn from the practices of the stronger. Jim repeated these techniques in England and France, and convinced their leaders that there was no point in using Marshall Plan money to restore the same old-fashioned methods that they had used before the war. He’s both an old and dear friend and a living historical monument. It’s my pleasure to introduce Jim Silberman.