I’ve written about why communism fell in broad terms, but it’s time to look at some specifics of how the political strategy of the Cold War ruined the USSR and bolstered NATO. Specifically, the Marshall Plan worked but it was always a temporary and medium-run plan, nobody wanted to make Europe a welfare state dependent on US aid. So while it kicked off reconstruction and forced trade, Europe still needed a consistent and reliable source of demand for sustained growth. In the Rubik’s cube of life, how little they knew that it would come in a godawful war in East Asia, in a country that most Europeans and Americans did not even know existed until 1950. The Korean War is, in terms of how much was gained and how much was lost, the bloodiest and most expensive war in history after the two world wars.
The Korean War had big implications for US relations with Europe. Not only had the US drawn a line in the sand and affirmed that it would no longer allow Soviet tanks to just roll over impoverished states, it created a long-term terror that Stalin and his successors were hell-bent on invading Europe. Conquering western Europe would be tremendously expensive and probably unsuccessful (and not worth the trouble if it required nuclear weapons), but nobody in the West believed that would stop Stalin.
After all, this is the same Stalin who thought the best way to deal with Hitler was to ally with him and watch him grind the West into dust. He had also encouraged Kim Il Sung to invade South Korea and encouraged Mao to double down, then he let them learn the hard way that US air superiority meant constantly marching through walls of fire and steel. Even his successors frightened US leaders – Stalin had massacred three generations of proteges and they constantly fought amongst themselves after he died, using many of the same brutal tactics. Nobody honestly believed Khrushchev was any more sane.
So the US maintained a standing army in Germany, waiting for the Soviets. The US spent .75% of its GNP on military expenditures in outflows that it would never see again – soldiers’ wages, equipment, weapons, etc. What this did to nobody’s realization is that it offset the winding down of the Marshall Plan and replaced it with a strong source of demand. GI demand for all consumer goods stimulated the European economy to production, which enriched citizens who then furthered demand into the big boom.