The Arms Race and Command Economies since 1945 365
not directly under their control. Insofar as their partners in such trans
actions were large corporations and governments, oligopolistic and
monopolistic market confrontations ensued. In these instances, prices
were set by diplomatic negotiation rather than by competition from
some mythical “outside.” But in transactions with private citizens and
other weakly organized market partners, corporate and governmental
buyers and sellers were usually able to set prices at levels favorable to
themselves. They did so simply by regulating supply to keep the price
of whatever they offered for sale at the level they preferred.
As long as large-scale buyers and sellers could operate in a setting of
weakly organized trading partners, a remarkable exactitude of large-
scale management became possible. Financial planning and material
planning matched up. Prosperity set in as war damages were repaired.
New investment proliferated and full employment, or close to it,
became a reality. The dysfunction of the prewar depression years
vanished thanks to a happy collaboration between skilled large-scale
corporate management on the one hand and governmental fiscal pol
icy on the other, enlightened by the new science of macroeconomics
and backed by enlarged expenditures for arms and welfare. A verita
ble managerial revolution in the leading capitalist countries seemed to
have made industrial nations masters of their collective destinies as
never before. Moreover, since the principal governments concerned
remained elective, the interests and needs of ordinary folk at home
were safeguarded by a democratic franchise.
On the other hand, when operating in poorly organized foreign
countries, large American and European corporations escaped many of
the political constraints familiar to them at home. Agricultural pro
ducers, together with lands supplying minerals and other raw mate
rials, were seldom capable of organizing themselves in such a way as to
meet foreign corporations on anything like even terms. When in 1973
governments of oil exporting countries succeeded in doing so, the
Free World’s postwar pattern of command and corporate economy
faced its first severe shock in more than two decades.^2
In the immediate aftermath of World War II, the United States took
the lead in renewing a transnational military command to safeguard
the sphere of influence that fell to the Americans with the decay of
British power. The North Atlantic Treaty Organization, established in
- Cf. the astringent exploration of the interface of politics and economics to be
found in Robert Gilpin, United States Power and the Multinational Corporation (New
York, 1975); Charles E. Lindblom, Politics and Markets: The World's Political-Economic
Systems (New York, 19^7 7); Gavin Kennedy, The Economics of Defense (London, 1975).
