WASHINGTON, DC - The chattering classes here are all a twitter about the 50th anniversary of the announcement of the Marshall Plan this week. The Marshall Plan is regarded nostalgically as the apotheosis of New Dealism gone global-sort of a Tennessee Valley Authority on the Rhine.

The excitement of liberals over this anniversary is palpable, and its intended political message is obvious. Here, in this supposed "era of the end of big government," we are meant to see the Marshall Plan as a spectacular example of how big government spending can have a beneficial effect. And if we did it then, surely we can do it again today! You can bet that Robert Reich, freshly liberated from his indentured servitude in the Clinton cabinet, is up in his attic dusting off all the old doorstops on "industrial policy."

This is proving to be yet another exquisite exercise in missing the point. As the indispensable Bruce Bartlett points out in today's Washington Times, the Marshall Plan worked because "it imposed free market policies on Western Europe in return for aid." Bartlett cites a litany of economic studies showing that it was not the capital investment of the Marshall Plan that was crucial, but economic reform. This lesson has always been lost on the liberal mind, and on the foreign aid establishment that emerged in the decades after the Marshall Plan.

This does not represent a recent revisionism. Lord Peter Bauer, perhaps the most trenchant critic of foreign aid over the last generation, wrote way back in 1974 that "There is not a single instance in history when external donations were required for the economic development of a country. The Marshall Plan for Western Europe after 1945 was no exception."

Instead, as Bauer was first to point out most forcefully, the West lavished billions of dollars of aid on the Third World, with the chief result being an increase in the corruption and politicization of those nations, and negligible economic development. (In fact, the overall economic effect was probably negative.) Foreign aid was certainly a boon for President Mobutu in Zaire, who apparently made off with a couple billion aid dollars. Could he have survived so long in power without the backing of the World Bank?

International aid agencies such as the World Bank and the International Monetary Fund can be regarded as the last redoubt of the cult of Keynesian expertise. Again, Bauer's characterization of this cabal hits the nail on the head: "In aid discussions it is only advocates and administrators of aid who are termed experts; the few people who from time to time question aid are never so designated, whatever their experience or qualifications."

The anniversary of the Marshall Plan should be an occasion for focusing on the true virtue of the Plan - a free economy - and for eschewing the vices of economic planning and government control of capital.

-By Steven Hayward