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Waiting for the New Order

The Vast Majority: A Journey to the World’s Poor

by Michael Harrington
Simon and Schusion, 281 pp., $3.95 (paper)

The Evolution of the International Economic Order

by W. Arthur Lewis
Princeton University Press, 81 pp., $2.45 (paper)

1980s Project of the Council on Foreign Relations: Rich and Poor Nations in the World Economy

by Albert Fishlow, by Carlos Diaz-Alejandro, by Richard R. Fagen, by Roger D. Hansen
McGraw-Hill, 288 pp., $6.95 (paper)

Reducing Global Inequalities

by W. Howard Wriggins, by Gunnar Adler-Karlsson
McGraw-Hill, 176 pp., $5.95 (paper)

I

Three years ago, as Western statesmen were girding themselves to do battle at the Seventh Special Session of the United Nations under the banner of that intrepid knight in armor, Henry Kissinger, a sense of expectancy, even of excitement, filled the air. At last, it seemed, the poor, destitute, backward countries were beginning to make headway with the demand for a more equitable reordering of the world economy which they had been pressing since 1964. Some feared the prospect; others welcomed it. But everyone was alert and keyed up, awaiting the outcome.

Today, the mood is one of disillusion, boredom, almost uninterest. Even the West, although it has fonded off the “challenge” from the Third World, is not noticeably happier on that score, For the developing countries, it is generally agreed, the results have been “disappointing.”1 The most that anyone can be found to say is that they have forced their way on to the political stage, and that henceforward, and “for the indefinite future,” “the policies and economies of relations between rich and poor countries” will “remain central issues on the international agenda.”2

But even that—and it is little enough—is a dublous and questionable assertion, notwithstanding the fact that it is backed by the authority of the Council on Foreign Relations. No doubt, it depends on what you-mean by “central”; but the evidence of the past three years is scarcely encouraging. Even “the most optimistic militant in Tanzanla.” Michael Harrington observes in his book The Vast Majority: A Journey to the World’s Poor, would not agree that “a perceptible shift is taking place in the global balance of power.”3 More probably, if you were foolish enough to suggest anything of the sort, he would reply with roars of laughter.

What we have seen, in reality, during the past three years, is a progressive deterioration in the position and bargaining power of the developing countries. In 1975 their demand for a New International Economic Order (NIEO), and the threat it was alleged to pose for the West, assured them a central place on the international stage, and a good deal of the limelight as well. In 1976 and 1977 they were still able to command attention—real but peripheral—but now only because of the fear that their mounting debts-might imperil the whole international banking system.4 By 1978, when the dreaded defaults had failed to materialize, even this residual interest faded and the poor countries were edged, for all practical purposes, off the stage and back into the wings.5

The position was summed up a couple of months ago by Ralf Dehrendorf, the prestigious director of the London School of Economics. “I did not say.” he is reported to have declared, “that the developing countries may be neglected, but that they are being neglected, and, much as I deplore it, I have no doubt they will go on being neglected.”6 If that is the case—and I think it is the case—we are back, not perhaps to square one, but certainly not far from it.

What, in any case, is indisputable—you have only to turn to the columns of The New York Times and compare them with the corresponding columns in 1975 and 1976 to confirm the observation—is that the poor countries, and their relations with the West, are nowhere near the center of the “international agenda” in 1978, in fact, they scarcely figure on it at all, unless you count the happenings in Zaire as part of the story. And that, in a peculiar way, is what nobody is willing to do, although Shaba and Mobutu and Zaire have probably more to tell us about the “relations between rich and poor countries” than the interminable discussions and wranglings in UNCTAD, the IMF, and all the other much-publicized international debating societies. That is, of course, if you are interested in the realities and not simply in the theory.

Nothing could be more obvious at the moment than the fact that the governments of the main industrial states and (so far as one can judge) their constituencies view the poor countries and their problems with an indifference bordering sometimes on cynicism. Among the ordinary newspaper-reading public the cry for a New International Economic Order has gone sour, and Nixon’s “silent majority” simply wants to hear no more about it. And when, exceptionally, a Western statesman does push for a major increase in development assistance, as the West German chancellor has recently done, it turns out that the countries he has in mind are Portugal, Greece, and Turkey (not, perhaps, surprisingly, as otherwise the cost will fall largely on the Federal Republic), which is scarcely going to help the poverty-stricken peoples of Asia, Africa, and Latin America.7

The paradox is that, at the very moment when public concern has faded almost to nothing, interest in the Third World and the New International Economic Order has welled up among the inteligentsia in American academic circles, and the result has been a vast outpouring of books, treatises, and learned papers dealing with every aspect of the subject.

About this literature—or the small part of it I have seen—I shall say little in detail. Much of it is abstruse, and technical, though naturally there are exceptions. As usual, Sir Arthur Lewis, the distinguished Princeton economist, is cool, wise, and judicious, in his book The Evolution of the International Economic Order, though also perhaps a little too inclined to stand aloof from the fray. For the most part, however as Ali Mazrui complained at the conclusion of a high-powered conference in 1976, the attitude to Third World proposals expressed in this literature is “skeptical.” when not downright hostile.8 No doubt, it has clarified some issues; but in other cases, in my view at least, its tendency has been to complicate and obfuscate.9

It is also a singularly diverse literature, ranging from abstruse calculations of econometricians, who apparently think the demands of the developing countries can be disposed of by algebra, to the heart-searching of harassed liberals like Michael Harrington, who pin their hopes, desperately, on the “decency of the American people” and agonize over their inability to offer the wretched of the earth more than a “miserable, inadequate increment of change.10 But between these extremes there is a central core, whose aim (if I understand it correctly) is to reconcile the demands of the poor with the imperatives of the rich.

These are the people of whom Richard Fugen writes in the symposium on Rich and Poor Nations in the World Economy, produced under the auspices of the “1980s Project” of the Council on Foreign Relations. In their view, it is essential that the wealthy countries should make some response to “the equity demands of the South,”11 and their sincerity and good intentions are not in question. What is questionable is whether in politics good intentions are enough. Viewed coolly and from a distance, the search (as Fagen puts it) for ways “to give fairer shares to the South without upsetting the international applecart as currently constructed,”12 looks suspiciously like still another heroic but hopeless attempt to square the circle.

In any case, such proposals as have been made to date have fallen on stony ground. At the beginning of 1977, when the new Carter administration was coming to office, the influential Overseas Development Council directed an open “Letter” to the new president, detailing the “major US options on North-South relations” and its “recommendations for US policy,”13 The response, to Judge by the administration’s subsequent actions, or failures to act, has been exactly nil.

That does not mean that the governments of the major Industrial powers are Immovable. “North-South relations” (as it is now fashionable to call them do not rank high on their list of priorities; in fact, they are probably entirely marginal, except when Southern agitation compels them to think about them. But, for all their indifference and lack of interest, Western governments expect some small modifications of the existing economic order, and are even prepared in moderation to pay for them; but they do not expect of intend them to make much difference. As the prominent American economist Albert Fishlow put it in his contribution to Rich and Poor Nations In the World Economy, there will be no “radically altered global distribution of income” and “capitalist institutions will survive,”14 That is the current Western wisdom—and it is only partially wrong.

Thus the dream of a New International Economic Order seems to have faded, and it is natural to ask: why? A favorite answer, at least among disappointed supporters of NIEO on the left, is to blame the Third World leadership and accuse it of radically faulty tactics.

There is certainly some truth in this, as we shall see, but by itself it is a superficial and inadequate explanation. What we have to recognize as well is that the situation in 1974 and 1975, when NIEO was formulated and laid on the bargaining counter, was unusually propitious for the Third World bloc, and that this favorable moment has passed. The evolution of the world economy since 1974 has at least as much to do with the selback to the poor countries’ aspirations as, the evolution of Third World policies.

Special circumstances favored the poor countries in 1975. The first factor, as everybody knows, was OPEC’s triumphant demonstration of commodity power. The second factor was OPEC support for the demands of the other developing countries. Roger Hansen, another contributor to Rich and Poor Nations in the World Economy, is certainly right when he says that they would have got nowhere at all in 1975 without “the OPEC connection.”15

But these factors, though they are the ones most talked about, are only part of the story. The third, and probably decisive, factor was the commodity boom, which sent the price of everything from copper to soybeans zooming upward. This was the factor which led the developing countries to believe that other producers’ cartels could emulate OPEC and use commodity power to put pressure on the West. It also explains Kissinger’s sudden awakening to the virtues of commodity agreements. As Sir Arthur Lewis points out in The Evolution of the International Economic Order, producers want agreements when prices are low, in order to raise them; when prices are high, consumers in the industrial world want agreements, buffer stocks, and increased production to hold them down.16

The trouble for the developing countries was that the commodity boom departed nearly as quickly as it arrived. Huge surpluses of raw materials, base metals, and agricultural produce piled up, and only lucky breaks, like civil war in Zaire and rumors of frost in Brazil, kept prices off the bottom. The effect on the developing countries was predictable. Their export earnings plummeted, while inflation in the United States and Europe pushed up the cost of their imports. In 1960 the revenues from twenty-five tons of natural rubber exports purchased six tractors; by 1975 they purchased only two.”17

  1. 1

    Cr, Sylvain Minault, The New International Economic Order: The Promise and the Reality (Society of Friends: Edinburgh, 1977), p. 5; Towards a New International Order: An Appraisal of Prospects, Report on the Joint Meeting of the Club of Rome and of the International Ocean Institute held in Algiers on October 25-28, 1976 (Algiers, 1977), p. 19.

  2. 2

    Thus Edward L. Morse and Richard H. Ullman In their foreword to Reducing Global Inequalities p. ix.

  3. 3

    Michael Harrington, The Vast Majority: A Journey to the World’s Poor, p. 230.

  4. 4

    The question was discussed at length at the time. Today it is sufficient to refer to the summary in Howard M. Wachtel, The New Gnomes: Multinational Banks in the Third World (Transnational Institute, Washington, DC, 1977), particularly pp. 18-26.

  5. 5

    Cf. Albert Fishlow, “Debt Remains a Problem,” Foreign Policy, No. 30, Spring 1978, p. 133.

  6. 6

    Le Monde, June 6, 1978.

  7. 7

    Cf. “The Summiti Schmidt Goes for Growth,” The New York Times, July 2, 1978.

  8. 8

    The New International Economic Order: The North-South Debate, edited by Jagdish N. Bhagwati (MIT Press, 1977), p. 371.

  9. 9

    Cf. also the comments of Erik Lundberg in The New International Economic Order, p. 368, who seems to take the same view.

  10. 10

    Harrington, Vast Majority, pp. 23, 254.

  11. 11

    Richard R. Fagen, “Equity in the South in the Context of North-South Relations,” in Rich and Poor Nations in the World Economy, p. 168.

  12. 12

    Ibid., p. 169.

  13. 13

    The United States and World Development: Agenda 1977 (Praeger, for The Overseas Development Council, 1977) pp. 21-141

  14. 14

    Rich Nations and Poor Nations in the World Economy, pp. 14-15.

  15. 15

    Ibid., p.224.

  16. 16

    Cf. W. Arthur Lewis, The Evolution of the International Economic Order, pp. 28-29.

  17. 17

    Cf. Orlando Letelier and Michael Moffit, The International Economic Order, Part 1 (Transnational Institute, Washington, DC, 1977), p. 16.

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