A New Economic Strategy

BY BARBARA WARD

A YEAR ago, in the disturbance of Western policy after the appearance of the Sputniks, much hope was pinned upon the Paris meeting of the Atlantic powers. From this conference, it was widely believed, there would come a new initiative, a new policy to snatch the advantage back from the Communists. It would be a new starting point and mark the return to positions of strength.

Can one say that the hopes were fulfilled? In the strategic and political sense, clearly, no very cheerful conclusions can be drawn from a year that includes Iraq, Lebanon, Cyprus, the renewal of hostilities in the Formosa Strait, and the stalemate in Europe. But has there not at least been some recovery in the vital sphere of economic strategy? The signs are not unpromising. Individual statesmen have spoken of the need for a new, concerted approach to world economic problems. An impressive number of reports has appeared, all pointing to the same main components of a broad policy for world development: higher monetary reserves, stabler primary prices, a greater flow of international lending. And out of these preliminaries has come an American-sponsored proposal to increase both the reserves available to the International Monetary Fund and the lending powers of the World Bank.

These are steps which could lead to sustained international development policies on a more adequate scale. One could add to this hopeful pointer the United States’s new readiness to consider establishing a development bank for the Americas, the passage by Congress of the Reciprocal Trade Act, and joint action by the United States, Britain, West Germany, and other creditors to stave off the acute crisis which arose last summer in India’s balance of payments.

Yet these moves, however promising, leave wide open the question whether they are to lead on to a program at once large enough and permanent enough to deserve the name of a new economic strategy. The proposals for the international agencies are modest compared with the genuine scale of world need. The Indian arrangements were strictly limited and took no account of the long-term problems facing the modernization of the Indian economy. And when one turns to the possible future source of funds for any bold economic program — the parliamentary assemblies of the Western powers and their electorates — there is no trace of the intensive preparation and education necessary if money is to be forthcoming on an adequate scale. In fact, in Congress, majority opinion was not particularly well disposed either to the enlargement of the Development Loan Fund or to the separation of economic from military aid. Yet both moves are clearly of first importance in any sustained program of economic development.

Moreover, the evidence suggests that the West’s somewhat greater readiness to sponsor new economic policies in recent months does not spring from any considered Western estimate of world need, but — like the Lebanon landings or the reinforcements in Formosa — is one more reaction to Communist pressure. Three years ago, two years ago, the talk was in the main of ending foreign aid and getting the world back to normal economic methods — whatever “normal" may mean in the atomic age. The changed mood of today reflects the piling up of evidence on the scale and purposiveness of the Soviet economic offensive. Western action is not so much a strategy in its own right as a reaction to someone else’s. The initiative, as in the military sphere, rests elsewhere.

How has this curious situation arisen? For curious it is that the Western powers, led by America, should today be mainly acting and reacting to Communist maneuvers when, not much more than a decade ago, America stood at the peak of its power while Russia was decimated by invasion and slaughter and China struggled in the last throes of fifty years of revolution and civil war. So violent a change in political fortunes is not fortuitous. It points to profounder causes than any temporary confusion of policy or failure in diplomatic tactics. In fact, it can be argued that the loss of initiative in recent years springs from two of the deepest conceivable misconceptions any state or group of states can entertain. In the first place, they mistake the nature of the world in which they have to live and act. In the second place, as a result of this misjudgment, they have no real desire to act at all. If the Western powers have lost the initiative, basically it is because they have had no desire or have seen no need to keep it. Thus, before there is any discussion of the kind of concrete policies that the West might pursue to restore its position vis-à-vis Communism, there is a more fundamental issue at stake. It is to persuade leaders and voters in the West that the world, far from being a cosy self-regulated world which would roll merrily along were it not disturbed by meddlesome Communists, is on the contrary a world of violence, catastrophe, and deepening revolution and one in which whole societies will founder if they try to rely simply on the sailing charts for calm weather. Only if this reality is accepted can the Western powers push safely on through the hurricane.

FOR hurricane it is. Let us look first at the scale of the contemporary revolution. Perhaps it would be more accurate to speak of the five or six revolutions, all of which are going on simultaneously over the face of the earth. The scientific revolution, the industrial revolution, the technological revolution, the national and popular revolution — begun and now more or less tamed in the Atlantic arena — are violently at work everywhere else and under conditions which, far from taming them, inflame them further.

In the West, the Industrial Revolution slightly preceded the stupendous medical revolution of lengthened life and lowered infant mortality rates. Resources and births have increased together. In Asia and Africa, and to some degree in Latin America, the surge of births has come first. By the year 2000, whatever steps are taken to discourage further expansion, the present population of the world will have more than doubled — in itself an astounding fact, since it means that in four decades humanity will increase by the number it has taken a hundred millenniums and more to produce. The bulk of this expansion, 1.3 billion to 3.6 billion, will occur in Asia, where the pressure of population on resources is already at its heaviest.

The only hope of avoiding catastrophe in the wake of such expansion is a rapid modernization and industrialization of the rest of the world economy. But the obstacles are formidable indeed. In the Atlantic area, margins for the saving needed to underpin industrialization were available, in part because of a vast endowment of coal and iron, in part because of a dynamic agriculture and large reserves of empty land. In Asia — outside Siberia — the mineral endowment is on a smaller scale; there is no spare land; agriculture is profoundly conservative. Savings, the basis of all industrialization, are thus incomparably more difficult to accumulate.

Again, in the West, industry and science did not break in overnight almost as revelations. They grew up steadily in a society of widespread means and education. A middle class of savers, entrepreneurs, and savants existed before the technological revolution began. In Asia and Africa and large parts of Latin America, this preparation has been almost wholly lacking. The new ideas and possibilities strike into feudal or tribal societies with the force of an earthquake, throwing down old patterns and ways of thought, tearing out the familiar psychological landmarks, and creating a havoc of both hope and fear.

Above all, modern industrial society was built in the West when Western power and prestige were virtually unchallenged. At the turn of the nineteenth century, all but a few parts of the globe were under one form or another of Western control. Western prosperity expanded in a world made one by its ideas and its commerce. There never was a time when so wide a political order rested on such an unobtrusive and inexpensive foundation of power. For an expanding America, in particular, it was world order at no cost at all.

But Asia and Africa do not have to modernize among the ruins of the old system. They have to do so between the competing enmities of the Cold War, the catch cries of propaganda, the restless probings of one set of powers, the uncertain ripostes of the other. Only now, when local order and stable rule have come into question, as they have in Indonesia or Burma, can one see the relevance to economic development of internal security and steady government.

There is some realization in the West of all these separate, interwoven upheavals. What is lacking is a full appreciation of their profoundest effect. We are witnessing today a world which, thrown into such a furnace of stress and change, has become plastic, fluid, moldable to an almost inconceivable degree. At a time when everything seems to be changing, the old shapes lose their power to hold; old pieties dissolve; loyalties snap; regimes fall between midnight and morning; and one has the impression of whole societies given over to formless energies which seek some new mold to contain and channel them.

Such periods are not new in history. The collapse of medieval Christendom released energy into the new nation state. The fall of the absolute dynasties let loose the liberal and popular ideals of the American and French Revolutions. What is new is the scale of the restlessness, the degree of the upheaval, the extent to which no aspect of human existence — political, economical, social, philosophical — is left untouched. If ever the revolutionary energies of man were running free of the ancient ways and seeking to scour out new channels, the time is now, and if men in the West will only listen, they will hear everywhere the roar of troubled waters and the gale of the world rising to hurricane force.

This is the context within which to assess the true challenge of Communism. Communism is the cause of none of the world’s contemporary revolutions. Technology, medical advance, science, industrialization, rationalism, the national idea, popular claims and aspirations — all of these were invented and launched in the West and would be remaking the world even if Marx had never left the Rhineland. The significance of Communism is that at a time of extreme flux — in power, in thought, in technology — it offers the world a series of molds or patterns into which the released energies may flow. It offers formative ideas to the inchoate energy of change.

To nations facing the hard choices of industrialization, Communism presents the pattern of forced-draft saving and investment worked out in the Soviet plans. To the masses stirred by the hopes of a more abundant life, it preaches social revolution and economic equality. To nations chafing at their poverty and lack of influence, it recalls the bogy of Western imperial control and offers its own trade and aid “without political strings or concessions.” Above all, the leaders of Communism link all these separate cajoleries together within a broader picture of world liberation and unity and brotherhood and derive from it, as from a religious faith, the energy and dedication to include all people of mankind within the scope of their plans and efforts.

Wherever there is an opening for influence or trouble, there the Communists are at work: with arms and dams for Egypt, with aid and barter for Burma and Ceylon, with recognition and offers of capital for Guinea on the eve of independence, with massive offers of trade and credits in Latin America. More pertinent even than the aim itself is the unrelenting perseverance with which it is pursued. There are no isolationist Communists. The troubled, changing, violent, catastrophic, contemporary world is their chosen field of operation. Indeed, they welcome the chaos on which they can more easily stamp the pattern of their faith. The prophets of materialism are, in the last analysis, the most profoundly devoted to the triumph of the Idea.

Here is matter enough for the ironists of history. But there is a greater irony still. The Western powers themselves launched every one of the world’s contemporary revolutions. They carried them across the oceans and round the world. They set in motion the vast forces of contemporary change and in doing so never doubted that what they did was of profound concern to the entire human race. Yet today, wealthy, complacent, unimaginative, they appear indifferent to the stirring, protean world of change and revolution in which three quarters of the human race is struggling for the forms of a new life. There is not a single Western initiative that embraces change, not one idea or policy for which the sustained Western dedication is forthcoming. In our contemporary world, in short, the idealists of the West appear to think of nothing beyond their material interests, while the materialists of the East seek to remake the face of the earth by the force of their ideas.

THE present Western failure in energy and dedication is tragic and ironic not only in comparison with Communist effort and vision. A further irony is that it contradicts the lessons of the West’s most recent diplomatic experience. Wherever, since the war, an element of vision and generosity has appeared in Western policies, the outcome has been effectiveness and achievement. The Marshall Plan re-created Western Europe and laid the foundations on which a new supernational unity may now be built. British readiness to grant independence peaceably has set up a multiracial family of nations in the face of the old imperial control. So long as France did nothing but fight for its colonies, it lost them; but General de Gaulle’s vision of an interdependent community may yet remake France and its African provinces together. Only where Western policy has been purely defensive and traditional, as in the Baghdad Pact, has it been a total failure. Even NATO is unstable, because it contrives to be a military alliance and nothing more.

But the greatest irony of all is that if the Western powers could bring themselves to see the need of recovering the initiative, they would have little difficulty in evolving an effective policy for doing so. The fact is that much of the theoretical groundwork has already been completed, for the simple reason that the revolution in process all around the world today practically determines by its nature the sort of policy that could be pursued.

The root of the revolution is the world’s growth of population. Only intensive modernization can create the resources to feed and clothe and house the new multitudes. Modernization in turn depends entirely upon the ability to save, to accumulate more capital than is consumed in daily living or by a growing birth rate. Here, then, is the core of policy — to help the world to save and, in political terms, to do so without the Draconian discipline of Communism. The sources of saving, which vary from land to land according to its conditions and environment, include rising export incomes, dynamic agriculture, “infra-structure" — roads, ports, public utilities, and the even more vital investment in education and training — and all the various forms of industrial growth. Effective international programs need therefore to cover trade, investment, and training.

There is nothing new in all this. Virtually every element of an effective international policy has been discussed repeatedly in the last ten years, and much invaluable experience has been gained in a great variety of experiments. Simply to pick out the main heads of agreement already reached gives the framework of a workable strategy. In the field of trade, the need is for higher working reserves to underpin world commerce — for example, by tripling or quadrupling the sums available to the International Monetary Fund — and for a bolder approach to tariff policy. Between industrialized nations it could take the form of further low tariff or free trade areas. Between industrialized and primary producing groups it could concentrate on giving greater relief to the primary producers, who at present are subject to discrimination all along the line, through revenue taxes on such exports as tea and coffee, through quotas on minerals and restrictions on farm products, and through high protection against cheap textiles, which are usually the first manufactured exports emergent economies such as India can produce.

In the sphere of capital the need is to assess the underdeveloped nation’s need for external assistance, over and above its own capacity to save, and to provide capital through appropriate agencies — public, private, or international — and in appropriate forms, among them commercial loans; World Bank advances; low-interest-rate, long-term credits; and some direct grants. At the moment the emergent territories could not usefully absorb much more than S3 billion a year in development loans, though their absorptive capacity will increase. Certainly if the wealthier nations contributed one per cent of their national incomes each year to world development, they could comfortably cover all present needs, and, if the percentage were maintained while their own incomes rose, future needs could be met as well.

The field of training is not yet well explored, and possibly a preliminary report on needs and opportunities would have to be completed before new decisions could be taken. But existing training schemes and the various technical missions scattered over the world could provide invaluable experience. In this, as in other fields, the pilot plans already exist. In short, there is enough material for action — if action is the aim. One comes back to the central point that the missing element is not the content of policy but the decision to have one. Once the decision is taken, however, there are useful precedents upon which to act. For instance, the United States government might repeat the technique which was used successfully in the case of a previous experiment in international cooperation: the United Nations, arranging a meeting of interested nations, led them to agree on aims and objectives and persuaded those who could afford it to pledge one per cent of national income to finance the organization which was to restore the ravages of war.

THIS approach is preferable to the preliminaries of the Marshall Plan, for then only America could afford to be a contributor, whereas the principle of any present plan should be that all the wealthy states of the world — most of them in the West play their part. But in another sense the Marshall technique is a sound analogy, for the precedent of an expert inquiry into needs and possibilities, which was adopted in 1948, might be followed again today. True, the pattern could not be so definite nor the time limit so precise; to restore a single, developed, industrial region is one thing, to encourage the beginnings or the expansion of modernization in many different parts of the world is quite another. Yet the technique of setting experts to work on a priority plan is a sound one, and it is hard to think of any other method that could launch the new policy with greater clarity and effect.

Would the new effort require new institutions as did UNRRA or the Marshall Plan? There is some danger in proliferating agencies in a world already cluttered up with so many, but methods can be evolved whereby the multiplication of extra machinery could be avoided. For instance, the conference convened by the United States might take the form of a special meeting of the United Nations General Assembly, and the commission of experts could be appointed by the Assembly itself. This approach would have the incidental advantage of compelling the Russians to make their attitude clear. If, as Mr. Khrushchev says, they do not “give a kopeck for cooperating with the imperialists,” they will be obliged to withdraw. If, on the other hand, they hesitate to flout world opinion and decide to stay in, the result will be at least some measure of international control over their program of assistance. Either way, the nations of the world will know more clearly where they stand. A further advantage of using a primarily international approach is that it would make such experienced institutions as the World Bank and the International Monetary Fund the chief agents of policy. It would probably be necessary to create one new agency — an International Development Authority — to cover long-term, low-interest-rate loans which lie outside the scope of the World Bank, but in most other fields an appropriate agency exists already. The new policy itself would probably require no more new machinery than a small permanent steering committee, possibly of the General Assembly, which would work on the same lines as did the Organization for European Economic Cooperation (OEEC) within the Marshall Plan.

An international approach on these lines does not preclude nations from continuing their own direct aid programs over and above the relatively small sum of one per cent of national income pledged to the international experiment. It interferes in no way with private business arrangements. Rather it encourages them by giving businessmen the assurance of a steadily expanding world economy.

But the international approach does play an indispensable part in what may well be the new policy’s most vital aspect. So long as any scheme or strategy can be twisted to represent nothing more than Western patronage or largess or, worse still, Western self-interest and self-defense, it will fail in its most urgent aim — that of projecting new ideas, new possibilities, and new visions into our confused and searching world. What the new program should represent, at the deepest level of meaning, is the recognition by the Western powers of their solidarity with the human race.

Nothing is harder to project. For three hundred years we in the West have ridden roughshod over the world and have emerged from this dominance wealthy beyond most people’s dreams and with an unhealthy reputation for racial arrogance and cultural complacency. All this — which is the staple of Communist propaganda — represents a formidable obstacle to human communication and hence to the projection of Western concepts of a free society, of law, of private initiative, of generosity and justice and personal responsibility. If, however, the central purpose of Western policy were now to work side by side with other peoples in the revolutionary tasks of modernization, sharing experience with them, working out jointly the strategy of progress, matching their labor with capital, opening wide the doors for training and education, then, indeed, the climate of world opinion could be remade and the Western powers might even seem to be what their Christian ethic has always told them they should be — united among themselves and bound by a common spirit of brotherhood to all mankind.