The economic and ecological disturbances of the 1970s have put thinking about economic power into confusion. The governments of rich countries have defined the “energy crisis” and other shortages of essential raw materials as problems of their own access to resources. The poor nations demand a “New International Economic Order” in which they would have much greater power and in which the terms of trade would shift sharply in their favor. Others have interpreted the difficulties of the 1970s as evidence of “limits to growth” and the need to impose controls in the interests of the biosphere. Some have even advocated letting hundreds of millions of people starve under the guise of “lifeboat ethics” or “triage.” What often emerges from such conflicting views is a vague sense of panic, tinged with fatalism. The problems seem so vast as to be beyond human control, whether they are created by technology fertility, or the iron laws of economics.
In The Lean Years, Richard J. Barnet attempts to make sense of what he calls “the age of scarcity” by analyzing the politics behind it. He tries to show that industrial growth and the exploitation of resources are determined not by impersonal markets or technology but by corporations and governments. Economic power reinforces political power and vice versa. Decisions made in corporate headquarters in New York affect people in Taipei and Sao Paulo as well as Akron. The actions of the people who run states rich in oil and other resources shape the lives of workers and consumers in the United States and Europe. Barnet therefore concentrates on organizations in the world’s political economy: not only states, but multinational corporations, which he sees as increasingly powerful. For Barnet, scarcity is produced by modern society and by the organizations that dominate it. Problems of resources, far from being beyond control, can only be solved through conscious human action.
Barnet touches on a diverse group of issues. In rapid succession, he discusses the energy crisis; the availability of minerals, food, and water; the implications of scarce resources for military action: and what he calls “the internationalization of labor” and the “world employment crisis.” Throughout his analysis is strengthened by his sense that economic and political realities stand behind what may appear to be technical problems. For instance, he makes it clear that malnutrition is not caused by a Malthusian shortage of food, but by an inequitable distribution of income: “People do not eat enough because they are poor.”
Barnet’s treatment of petroleum illustrates both the strengths and weaknesses of his book. He argues persuasively that we must drastically change our patterns of energy use. Yet in his zeal to attack the multinational oil companies, he underestimates the part the US government played in creating the present crisis. The US imposed mandatory import quotas on oil, which encouraged companies to drill and produce oil in the US even when secure supplies of foreign oil were available at low prices. This was done not at the behest of the large multinationals—which could also have benefited from importing foreign oil—but as a result of political pressure from domestic oil and coal producers. Officials in the State Department, foreseeing the consequences, fought to permit increased imports, but were overwhelmed by domestic oil interests. Even the misgivings of Presidents Truman and Eisenhower were insufficient to prevent the oil import quotas from being imposed. As a result, we “drained America first,” reducing domestic reserves and creating a situation in which the United States would be unable to assure either the supply of oil or stable prices for it. Between 1967 and 1973, American oil imports rose sharply, while domestic production leveled off and consumption continued to soar. By the time of the October war, the United States lacked an indigenous oil reserve in the form of unused capacity that could have helped to stabilize prices or guarantee supplies.
So by foolish actions that benefited only a few special interests, the US cast away its ability to manage the world oil market through economic, rather than political and military, action. This was the most disastrous US foreign economic policy of the postwar period, with far-reaching results for American security and alliances as well as for oil prices. Yet The Lean Years does not recognize this, and therefore lacks a coherent account of how the energy crisis came about. Although Barnet emphasizes that economics and politics are interrelated, he fails to assess the implications for the world oil economy of the self-inflicted decline of American oil power.
While political analysts now talk of declining national power as the key to the oil crisis, economists emphasize markets: most economists advocate higher prices to bring supply and demand into balance. The partial decontrol of oil prices in the United States has in fact helped both to reduce gasoline use and to encourage the companies to drill more extensively within the United States, both on and off shore. Those who want to conserve energy have good reason to favor higher domestic oil prices; and if higher prices are accompanied by measures to build a strategic oil reserve, so does anyone concerned with protecting US consumers from further disruption of energy supplies. Higher prices, moreover, can be accompanied by a variety of measures to compensate poorer people, who may suffer most. Yet Barnet flatly opposes decontrol of oil prices. He wills the ends—in particular, conservation and the development of new technologies—but fails to will the means, or even to examine carefully the case for those means.
Although similar examples of inconsistencies in The Lean Years could be multiplied, this would miss the point. Barnet does not claim to present a detailed and closely reasoned argument; the many facts in his book are used to show how his own values and assumptions—which are those of a populist democrat—make sense of the world. Unlike many conservatives and technocrats, Barnet has strong sympathies for the poor and the powerless, not only in the US but throughout the world. Unlike many radicals, he is also a genuine democrat, who believes that “the welfare of people can be served only if there is public governance of local resources by officials who derive their legitimacy and authority from the people they serve.” Part of the interest of The Lean Years is that it both expresses the ideology and displays the contradictions of democratic populism in the 1980s.
Like other populist democrats Barnet dislikes big organizations; but he sometimes exaggerates the influence of multinational corporations, and he excoriates them for sins that are imagined as well as real. It is true, as he argues, that the major oil companies have, at various times, kept prices high either through collusion or by individually holding back supplies in anticipation of higher prices. It is harder to believe that the five major grain companies “set the prices” for grain. In making this claim Barnet fails to notice that, unlike the oil companies, grain companies such as Cargill do not control all the steps in the process of production and distribution (“vertical integration”). And he fails to recognize how diverse are the other participants in the grain market.
Again, Barnet makes a plausible case against some multinational corporations for manipulating the prices of the commodities they buy and of the goods they sell to their affiliates abroad. But he exaggerates their power when he regards them, as he sometimes does, as the main obstacles to creating a New International Order in which the poorer nations would increase their share of world income and wealth. Lack of access to capital and technology, disadvantageous terms of trade as a result of market forces, and the inadequacy of political leadership in many poor countries are all arguably more important—as are the oil price increases imposed by oil-producing countries.
Bigness is not Barnet’s only bête noire. He also dislikes what C. B. Macpherson calls “possessive individualism” in capitalist society. As Barnet puts it, “the drive to accumulate now threatens to destroy society.” This opposition to acquisitiveness explains his ambivalence toward markets, as reflected in his opposition to decontrol of oil prices. He argues that “rewarding the faster draining of America’s oil reserves does not sound like an intellectual breakthrough.” But to conserve water, he proposes that communities should “raise the price of water so that it more nearly reflects its precious nature.” The logic of one passage contradicts that of the other, but the underlying ideology explains both positions: revenue from raising water prices is received by communities, public bodies that do not seek private gain, while increased oil prices yield profits for large corporations and their acquisitive owners.
Consistent dislikes, however, do not necessarily lead to coherent public policies. Barnet does not seem to understand how useful market mechanisms can be to public authorities, within the structure of domestic law. Public purposes can be served by creating private incentives through the tax system, or through subsidies, to channel energies in different directions. Since the motives of people and firms may be base, and since profits may flow to the undeserving and the greedy, Barnet argues against using markets on grounds of equity. He fails to recognize that adverse effects of market policies on the distribution of wealth could be mitigated by compensatory payments and credits, as in John Anderson’s plan to offset a gasoline tax by reducing social security taxes.
Instead of relying on markets, Barnet favors increased governmental intervention: a government oil import monopoly, a government-owned energy research and development corporation, perhaps nationalization of the oil companies, an internationally managed common fund for commodities, an international agency to monitor mineral corporations’ profits. He wants a nationally directed food policy to promote local and regional self-reliance.
This sounds like familiar advice from the American democratic left. But Barnet differs from many other left-wing thinkers in being suspicious of centralization, and of the federal government in particular. To make sure that planning will be accountable, he urges that “devolution of political power to local communities is a political necessity.” How such devolution of power is to be made consistent with the new national bureaucracies that Barnet also advocates is never explained. Barnet should be more favorable toward markets, whose operation could make it possible to combine decentralized decision-making with coordination of the actions of independent individuals and firms.
Democratic populists today are not usually ethnocentric: they sympathize with the needs of ordinary people outside the United States, and they deny that Americans should have disproportionate shares of world resources. But they often have ambivalent or contradictory views about collaboration with other nations on international economic questions. When the federal government engages in agreements on international trade and finance, or the law of space or the sea, for example, these actions transfer power away from voters and they make it difficult indeed to imagine how most citizens can participate directly in making such decisions. Barnet has characteristically ambivalent views. Although he favors cooperation between the US and other nations, he also believes that self-reliance of local economics should be encouraged. He is even prepared temporarily to support protectionism for US goods against imports from abroad, although he admits its inefficiency.
Unfortunately, decentralizing power may make it more rather than less difficult to deal effectively with national and international problems of scarce food, energy, and other resources. Without government regulation or a strong moral consensus on what should not be done, individuals and communities often act in ways that damage their neighbors. Common land is overgrazed; the oceans are overfished; pollution is spewed forth by factories;, taxes are evaded if the benefits of public expenditure can nevertheless be obtained. As Rousseau pointed out two centuries ago, even self-governing democratic communities will often elevate their own interests unjustly over those of others. In The Lean Years, however, the contradiction remains unresolved between global interdependence, on the one hand, and national action, on the other. In the international political economy, decentralized decisions do not necessarily lead to efficiency, since the legal structure necessary for the smooth operation of markets does not exist. Thus international coordination of policy, which diminishes national autonomy, becomes necessary, although conflicts of interests make it difficult to achieve.
In so far as he acknowledges that a contradiction exists, Barnet hopes for a “global consensus” to solve complex problems. To settle conflicts over minerals will require “a shared sense of history that links the industrial and the underdeveloped world from which the impulse to make amends can spring.” If development goals were clear, “an international consensus for a human rights policy on food could be developed” and progress toward democracy could be made through “a world consensus that political participation is not only a fundamental human right but one that is inextricably connected to the achievement of basic economic rights.”
These calls for “consensus” reflect wishful thinking. If the basis for agreement existed, the problems would not have become so severe, as Barnet himself recognizes when he is being more realistic: “The global struggle that stretches across the world—from the Sandinistas’ fight against Somoza in Nicaragua to the liberation movements of Africa—is a fight for redistribution of power and resources.” Real conflicts will not be resolved by a search for consensus that assumes an underlying harmony of interests.
Carter’s retreat from his 1976 pre-election rhetoric and Kennedy’s difficulties with Democratic Party voters suggest that democratic populism is on the defensive in the United States. This is partly a result of events beyond the control of a single administration, such as oil price rises and Soviet military actions. Yet the political troubles of democratic populism may reflect not merely temporary disillusionment with its programs or its leaders, but inadequacies in its ideology. Those who believe in popular control and want more equitable distribution of wealth have been unsuccessful, during the 1970s, in developing either the analytical insights or political programs appropriate to the 1980s. The political troubles of the democratic left may be due less to the myopia of the public than to the quality of its own ideas.
The Lean Years shows some of the flaws in populist thinking. To leave advocacy of market mechanisms to right-wing economists and politicians seems a serious political error. As Adam Smith pointed out, we can dislike the moral character of many who profit from the market without rejecting the workings of the market itself: in a market system, private vices may lead to public virtue. The central problem for government is not to replace the market but to reshape its structure so that private incentives will exist for people to act in the public interest.
With respect to international affairs, one problem with democratic populism is its unwillingness to accept the limitations that a highly integrated world economy imposes on local self-control. This does not mean that we must prostrate ourselves before the slogan of “interdependence”—which can be used to justify all sorts of corporate and bureaucratic aggrandizement—or that we must necessarily accept either free trade, on the one hand, or the rule of international agencies, on the other. It does mean, however, that the US will have to accept negotiated constraints on its freedom of action in the interests of international efficiency, equity, and of keeping conflicts under control. It also suggests that the devolution of power to local communities, desirable as it may be for many purposes, is not a promising approach to the solution of global resource issues.
Democratic populists have not articulated a coherent strategy for the use of power in world affairs, and Barnet is no exception. Yet no view of foreign policy that avoids questions of power and force is likely to be convincing during the 1980s, when the world will be afflicted by wars and rumors of wars, assassinations, embargoes, threats of force. Vital raw materials—in particular, oil—may be denied to the United States and its allies by military or paramilitary forces as well as by decisions of the oil-producing countries. Appeals to common interests will not necessarily be persuasive when directed at Colonel Qaddafi, the Ayatollah, or even the leaders in Moscow.
In The Lean Years Barnet consistently fails to ask what should be the function of American military power with respect to control over foreign raw materials. Yet unless explicit attention is paid to this issue, peace as well as other American interests will be in jeopardy. Failure to think carefully about the proper role of military forces can invite and prolong conflict, as in the Korean War, and lead to dangerously erratic reactions from our own government, as was recently the case in Iran. Democratic populists like Barnet would perform a needed service if they developed an approach to military security that emphasized the need to avoid overreacting to internal revolutionary changes or to military adventures by others that do not threaten vital American interests.
The scope of US commitments needs to be strictly defined, and not extended (as in the 1950s and 1960s) to virtually any regime seeking to qualify as an American protectorate. The use of military force must be carefully circumscribed and tightly controlled if it is to be effective. A doctrine suggesting concretely how this could be done would reflect the real lessons of the Vietnam war—that military power has only limited usefulness, and should not be employed to fight revolutionary social change—but would not embrace the naïve notion that US military forces are necessarily a source of disruption and conflict.
Democratic populism has been a positive force in American life since Jefferson. More than any other current ideology, it keeps alive, in books like The Lean Years, the essential values of political participation, equality, and concern for the poor and weak. Without a strong populist voice, representative government could lead to a mean-spirited and repressive system acting on behalf of privileged people who see themselves as beleaguered. But unless democratic populists develop a coherent ideology that takes into account the potentialities of markets, the pressures for global interdependence, and the political uses of military power, their voices will be weak. Government by the people requires more rigorous thinking by those who believe in it.
November 6, 1980