As has been widely reported, President Carter filled all of his top ten international policy positions from a single private group, a foreign policy consortium called the Trilateral Commission. The Commission founded in 1973 by David Rockefeller and others to encourage the industrial societies to work together more effectively in guiding the world economy and in repelling or moderating the challenges of the poor nations. Preserving vested interest by such direct means is not novel.
What is surprising, however, is such an open admission that control of the international economic order debate is up for grabs. On the surface it would not appear so. The initial challenges issued by the poor nations for a New International Economic Order during 1974 and 1975 were not well grounded in data or theory. The West was able to turn aside or co-opt most issues despite the financial growth of the oil states. That round of debates ended with the surrender by Third World financial ministers (Western-trained) on the debt moratorium issue at the International Monetary Fund meeting in Manila last September.
To see why, one must first understand where the two sides have stood in public debate. Current American policy holds to the soundness of the existing economic system, a system in which rich and poor are said to have reciprocal interests. For the poor nations to progress, the West must remain prosperous. By proposed institutional additions such as the International Resources Bank, by facilitating technology transfer, and by trade, aid, and debt concessions to the poorest nations, former Secretary of State Kissinger implied that the present as North-South interdependence will produce a “foundation of security, fairness, and opportunity to all.”
Most of the non-western world disagrees. They are joined by European states sometimes including Britain and France. The major Third World position papers articulate a very different development and strategy. They reject dependence, “natural” economic laws, and Western models in favor of policies making better use of their own re sources. That means land reform, industrialization designed to facilitate rural transformation, appropriate technology, and “full permanent sovereignity over natural resources and economic activities.” Logically such policies lead to highly selective participation in the world market and multiple cooperative arrangements among the less developed countries, including their own monetary system.
Underneath this international theater an essential battle is going on, a battle for the minds of the policy makers and the informed public. It is the core battle that will decide the future of the world economy. The participants fight largely by trying to control the parameters of discussion, the analytic models, the availability of data, and the meaning of words. At stake is the nature of human development and how it could or should improve the lot of societies at different historical stages. By becoming familiar with a range of typical players in this intellectual battle--their positions, assumptions and prescriptions-- one can surmount the kind of indirect jabs and one-handed clapping that fills the American scene, and place in global and historical frameworks the initiatives of the new administration as they evolve.
The majority of visible contestants are tied together by the cultural and ideological assumptions underlying mainstream capitalist economics. In brief, poverty is associated with laziness and moral failure and wealth with virtue and work. It is not primarily resources or the exploitation of others but the “free market” system, technological advance, and efficiency of production and organization that accounts for our high standard of living. International trade has proven mutually beneficial. This demonstrates the continued validity of the theory of comparative advantage that underlies it.
Few would make the overall argument as baldly as did two Hudson Institute authors in “Don’t blame the U.S.” for world poverty (New York Times Magazine, November 7, 1976). In their view there is poverty because “the world has been poor, and the process of changing it isn’t finished yet.” The West learned how to get rich first and the others are still learning. Even the Times is not usually given to dignifying that degree of historical improvisation.
Most of the debaters instead proceed without any historical analysis at all.
The poverty of the Third World is just there by act of God and Nature. One identifies a particular region, blockage, or industry and applies an ameliorative program of monetary and technical aid.
The major spokesmen of these views are the development organizations and lobbies which deal with these programs. The Agency for International Development’s views come through clearly in its annual summary (Development Issues) and in congressional presentations. The World Bank, less publicly prolific, produces much of the core development data and analyses used by all aid efforts. Supporting private groups, such as the Overseas Development Council with its annual Agenda for Action, help to guide public discussion in the West.
The $8 - $10 billion a year of foreign aid does not flow purely out of charity. Western trade and investment in the Third World is not unprofitable, and business is urged by the Treasury and Commerce departments to see development loans to poor nations as U.S. business opportunities. With saturated markets and falling profit rates at home, it takes little urging. The International Monetary Fund, as international economic policeman, works to re-stabilize national economies that run too big a trade imbalance, fall behind in debt payments, or bog down in any way that might jeopardize Western interests.
With these overall perspectives no one has written more in the last few years than C. Fred Bergsten, once of Brookings Institute and the Trilateral Commission, now Assistant Secretary of the ‘Treasury for International Economic Affairs. A 1976 Trilateral paper, “The Reform of International Institutions,” shows his basic incremental reform approach and the underlying flavor of the Trilateral universe. The phrases “international stability,” “a world safe for interdependence,” and “the imperatives of interdependence” recur frequently. He does not see a single world economy. But the origins and perpetuation of poverty for 3/4 of the globe remain outside his vision of a system at work. His is an economics as if people do not matter, for people are not there.
Not all Western voices assume such a basic harmony of interests between the West and the Third World. Among the most substantive other Western efforts are those of the International Labor Office and the United Nations. Wassily Leontief has been directing a major project at the U.N., “The Structure of the World Economy,” about to be issued by Oxford University Press. Building on massive mathematical models, it sets out alternative scenarios for the period 1970 - 2000. One critical assumption concerns a concrete goal of greater equity, reducing the average income gap between industrial and poor countries from 12 - 1 to 7 - 1 over these three decades. While Leontief sees the need for drastic social and institutional changes, he shares the prevailing preferences for more foreign aid and trade as core parts of the solution for the poor countries.
Mahbub Al Haq, Director of Policy Planning at the World Bank, abandons these orthodoxies and many others in The Poverty Curtain (September, 1976 from Columbia University Press). He calls market forces indifferent or hostile to poor countries and the poor in a country. He argues for a strategy of self- reliance wherein a poor nation should (1) “not introduce any consumption goods which cannot be shared by the vast majority of the population at that particular stage of development; (2) make maximum use of local resources and technology; (3) make minimum use of foreign assistance; and (4) deliberately unlink itself from past dependent relationships.”
The Poverty Curtain is a remarkable document also in its intimate portrait of the intellectual growth of an orthodox classical economist when faced with the real world. Sadly, it also reflects a lack of understanding of the unfolding historical processes and how they are guided. There is not a true systematic analysis of forces at work, as is demonstrated, for example, by the approach of English sociologist-theologian Charles Elliott in his superlative book on development blockages--Patterns of Poverty in the Third World (Praeger, 1975).
There is work going outside the United States, based on far more complete historical models, which argues, therefore, far different theses to explain the creation of maldistributed wealth and power. Its roots lie predominantly in Marxist traditions, although Marx himself had relatively little to say about relations between Europe and the Third World. Such work is as yet little known in the United States.
Foremost among these analysts, and perhaps the premier Third Won scholar is Samir Amin, Director of the U.N.-sponsored African Institute for Economic Development in Dakar, Senegal. Over the last dozen years he has produced approximately 20 books, most notably Accumulation on a World Scale (English ed. 1974) and Unequal Development (English ed. 1977). The latter is a stimulating introduction to his thinking and to modern world economic history as a whole.
Samir Amin is concerned with both theoretical assumptions and the unfolding of historical processes that underlie the creation and distribution of wealth between the industrial societies (called the center) and the colonial societies of the Third World (called the periphery). In particular he is concerned with the role of unequal exchange as the most elementary process in the blockage of Third World development, especially after 1880. It is worth exploring unequal exchange both for its inherent importance and as an example of the historical and empirical basis of his work. It clearly illustrates Amin’s point about the ideological nature of classical capitalist economics.
The mutual benefit of international trade in classical economics is based on the example of Renaissance England trading cloth for the wine of Renaissance Portugal. The two societies were at roughly equal levels of development and technology. Wages and the efficiency of labor were comparable. Neither country could dominate or monopolize the market. A relatively equal exchange took place.
But in the 20th century none of these conditions exist in trade between the Third World and the industrial societies. Such exchanges are thus inherently unequal, transferring value from the less modern, low wage societies to the more modern ones. Little wonder that the core of the Western development model endlessly forced on poor nations by the International Monetary Fund and the World Bank (both controlled by the West) is to enlarge foreign trade as the way to progress.
Samir Amin is less given to prescription than to historical analysis. He reverses conventional assumptions to argue that it is more the level of wages than the nature of supply and demand that determine profits and production. Exploring the changes of wages and prices and the development of monopolies over the last century, Amin traces how the need to find new ways to raise the level of profits in industrial societies led to the export of capital to the Third World and to the structuring of those societies for the needs of the rich nations.
That structuring, called “development” today, began as early as the 16th century in parts of Latin America but not until the 20th century for parts of Africa. The West seeks minerals, agricultural goods, and cheap labor with modern means. These require modern roads, facilities, and personnel. The poor nation is drawn into investing a disproportionate capital investment into that which facilitates exporting. This leads to a new bureaucratic and economic elite who spend high salaries in part on imports (more value loss by unequal exchange) and in part on services. Urbanization happens too quickly for the food supply or urban employment to keep up. A very unbalanced, outward-directed and controlled, socially irresponsible economy results.
Thus by unequal exchange and structural domination the development of poor nations, compared to the balanced, self-generating development of the West, was and remains blocked. Third World poverty thus cannot be measurably removed without founding a new international economic order. But most such advocates do not seem to have read or understood Amin, nor is it in the personal interest of very many to do so; those who are prone to read are wealthy enough to enjoy the status quo.
There is a final school of economic thought and practice that departs even further from current Western models. It is the autarchic path of Burma and China in the 1950’s and 60’s and of Cambodia today. In Burma’s case there was no coercion applied, and virtually no progress resulted. China’s progress has been widely documented. Cambodia’s extreme dependence on U.S. aid until 1975 forced a high degree of coercion to get people back to the land. Apparently widespread starvation was avoided. Western media focuses on the totalitarian elements of this model and ignores its full social consequences. Both East and West still seek the proper balance between freedom and social responsibility. Indeed, humanity probably faces no greater dilemma.
This represents the spectrum of prevailing debate and prescription for the future of the world economy and the alleviation of world poverty. One should not expect, however, that many of the participants or decision makers have actually read very far across this spectrum or know many of the works cited. In the real world of Washington, decision makers and their aides, people don’t read or grow very much.
Why? Most of these people work for large bureaucracies. Large bureaucracies are concerned not with new ideas, but with self-justification, perpetuation and power. Toward these ends they generate endless pen-pushing work. This occupies time. As a result, time for independent inquiry disappears. The status quo goes unchallenged.
Just because the gap between rich and poor continues to grow, as the World Bank admits, that does not encourage any aid agency to penalize people for failure. No one even seems willing to try to establish some criteria to measure success. And symbiotic needs of the World Bank, the International Monetary Fund, and national governments to maintain credibility lead them to keep secret as much embarrassing economic data as possible, and thus avoid external critique.
The American people are thus left with a collection of new/old faces masking a world model--a model under increasing worldwide challenge. That model reflects the groups and forces behind the Trilateral Commission--notably multinational corporations. The pattern of domination is part the active collaboration of the self-interested and part the tacit, even unwitting, co-operation of people sharing the same values and perceptions about what constitutes a “natural” order of progress.
But is there a natural order that some, mostly Western and white, people should be rich and most, and mostly Third World and nonwhite, people should be poor? Or are there historical processes guiding world history that were created by some people, but can be changed by others? Such questions will not be raised by the Trilateral winners, who have neither incentive, time, nor intellectual tools to do so. This leaves it to the conscience of other individuals. What is required is the courage to apply creativity and ethical norms to every level and kind of political and economic discussion and decision making.
Until then, bureaucratic, economic and personal self interest will mesh comfortably to blur and then disintegrate ethical impulses. Linguistic conventions will add to the conspiracy. Curiously self-serving norms will define what is political and what is not. All of this will work against tangible action for a more socially responsible world. And one will be left with the kind of elegantly depersonalized approach to human misery exemplified by this recent World Bank discussion of Zaire: “About one-third of the rural population suffer from insufficient caloric intake; and more seriously, a grave shortage of protein is characteristic of most of the population of the country.”
So who said it would be easy?
When this article appeared, Guy Gran, formerly with the Indochina Resource Center, was a freelance consultant on international economic affairs. His article, “What price peace in Namibia?” appeared in the December issue.
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