286 FOREIGN RELATIONS, 1950, VOLUME I

The program will be costly, but it is relevant to recall the dispro-
portion between the potential capabilities of the Soviet and non-Soviet
worlds (ef. Chapters V and VI). The Soviet Union is currently
devoting about 40 percent of available resources (gross national prod-
uct plus reparations, equal in 1949 to about $65 billion) to military
expenditures (14 percent) and to investment (26 percent), much of
which is in swar-supporting industries. In an emergency the Soviet
Union could increase the allocation of resources to these purposes to
about 50 percent, or by one- -fourth.

_ The United States is currently devoting about 22 percent of its
@Toss national product ($255 billion in 1949) to military expenditures
(6 percent), foreign assistance (2 percent), and investment (14 per-

cent), little of which is in war-supporting industries. (As was pointed
out in Chapter V,'the “fighting value” obtained per dollar of expendi-
ture by the Soviet Union considerably exceeds that obtained’ by the
United States, primarily. ‘because of the. extremely low military and
civilian living standards in the Soviet Union.) In an emergency the
United States could devote upward of 50 percent of its gross national
product to these purposes (as it did during the last war), an increase
of several times present expenditur es for dir ect and indirect, military
purposes and foreign assistance. _ |

From the point of view of the economy as a , whole, the progr am
might not result in a real decrease in the standard of living, for the
economic effects of the program might be to increase the gross national
product by more than the amount being absorbed for additional mili-
tary and foreign assistance purposes. One of the most; significant
lessons of our World War II experience was that the American
economy, when it operates at a level approaching full efficiency, can
provide enormous resources for purposes other. than ‘civilian con-
sumption while simultaneously providing a high standard of living.
After allowing for price changes, personal consumption expenditures
rose by about one-fifth between 1939 and.1944, even though the economy
had in. the: meantime increased the amount of resources going 1 into
Government.use-by- $60-$65 billion (in 1939 prices).

This comparison between. the potentials of the Soviet Union and
the United States also holds true for the Soviet world and the free
world and is of fundamental importance in 1 considering the courses
of action open to the United States.

_ The comparison gives renewed emphasis ¢ to the fact that the prob-
lems faced by the free countries in their efforts to build a successfully
functioning system lie not so much in the field of economics as in
the field of politics. The building of such a system may require more
rapid progress toward the closer association of the free countries in
harmony with the concept of the United Nations. It is clear that our