Economic Integration and Freedom
SELIGMAN, BEN B.
Economic Integration and Freedom An International Economy: Problems and Prospects. By Gunnar Myrdal. Harper. 381 pp. $6.50. Reviewed by Ben B. Seligman Economist contributor, "Dissent," "Labor...
...There is an insistence on haste which makes it imperative that the objective of high consumption be postponed while savings for industrial development are in some way squeezed out of the populace...
...Its author is Gunnar Myrdal, one of the world's major economists, top executive of the United Nations Economic Commission for Europe, one time Swedish Minister of Commerce, and best known in this country for his brilliant study of our racial mores, An American Dilemma...
...Cumulative social change, which underlies many of Dr...
...One may also cite the ironic disparity between the accepted obligation to support a farming minority at home while refusing to do anything at all about sagging prices of raw materials sold by the underdeveloped countries, even when the latter's very existence depends on stability in foreign markets...
...Yet, all the plans developed after the war (such as commodity agreements or control of international cartels), which were intended to help draw these nations into the stream of advanced economies, have been fiascos...
...Myrdal argues the underlying logic of his position forcefully and convincingly...
...Only in this way, the people are told, can the shortcut to higher consumption be secured...
...The private capital market, we are told, is defunct and there are no visible signs of its revival...
...Amazingly enough, such disintegration has contrasted vividly with the growth of integration in individual industrial countries...
...International crises have continued rather than abated, and they emphasize how strong the trend has been toward disintegration...
...Furthermore, it is implied, measures that devote themselves solely to such financial matters as currency convertibility miss the point...
...What the underdeveloped nations will have to do, says the author, is simply to follow a course of Draconian self-help...
...A solution of problems like these, says the author, requires an extension of national self-interest to the international area it demands "an internationalization of national policy structures themselves...
...The goal of integration is clearly a difficult one, but it can be attained...
...Myrdal says, is catastrophe...
...While some nations, says Dr...
...Myrdal's concern may seem no more than a persuasive statement of what was once called the "four freedoms...
...He writes in a mood of impartial realism: If he knows the world communal responsibilities demand that the wealthy nations give aid and encouragement to poorer neighbors, he also knows that the "underdeveloped" nations have often been bottomless pits into which imported capital was poured for luxury consumption...
...these countries cannot dodge the need to develop relationships with less fully endowed nations...
...But an altered social system in Asia or Africa can in no sense be patterned after Western ways...
...Capital no longer seeks new sources of profit if these are overseas or across the border, unless it be in some part of an empire in which an economic enclave can be built and controlled from a metropolitan center...
...Myrdal contends that especially without the last the cause of international integration is ill served...
...People in Asia, Africa, Southern Europe and Latin America are literally seething, says the author...
...Even in Western Europe, where the Organization for European Economic Cooperation, the European Payment Union, the Coal and Steel Community and Benelux did heroic work, failure was bound to be the outcome because the approach was superficial...
...Reviewed by Ben B. Seligman Economist contributor, "Dissent," "Labor and Nation,'' "New Republic" A world that would at long last see the loosening of economic and social rigidities is the broad subject of this important, subtly argued, and eminently readable volume...
...What few people know is that Dr...
...Consequently, he is not hesitant in offering "advice to the sovereign," and his entire analysis is courageously suffused with judgments and forecasts in the best tradition of Western political economy...
...He argues that "though perfection is distant and our vision blurred, we all know at heart, though vaguely, what we are talking about, for this is the essence of sharing in a common civilization...
...Myrdal by no means ignores these fundamental economic forces, he calls primary attention to the need for deep social changes in the underdeveloped regions...
...Initially symptoms of disintegration, these dislocations, Dr...
...Nevertheless, economic development is urged upon people as a worthwhile national aim moreover, the goals are to be attained in virtually all instances through state planning...
...He seeks a growth in communal cohesion and solidarity and would like to see the members of a world community share responsibilities as well as costs...
...Myrdal's basic premises, is most evident in the advanced nations, where a fully developed industrial structure has provided the underpinning for an integrated economy...
...National labor markets are fully protected against intruders...
...Whenever savings do accumulate, they are employed for merchant capital or land speculation, while, at the same time, public loans for railroads, highways and power facilities merely add to inflationary pressures...
...An "integrated" economy is one in which all avenues are open and rewards for service are no longer based on racial, social or cultural differences...
...Myrdal shows, have become causal elements and their elimination is essential for economic health...
...These countries, all too few in number, are commonly expected to maintain their high state and it is there that integration, insofar as it means, say, high consumer standards, is achieved with the least cost in social strain...
...And what agenda shall the rest of us follow...
...They sought solutions for internal social and economic problems and by doing so strengthened psychological ties to the nation state...
...Yet, the Western powers, frequently prodded by the smaller nations, make valiant gestures such as trying to restore convertibility and will even urge at times the elimination of those restrictions and discriminations which in the last analysis are forced upon underdeveloped countries by a palpable lack of foreign exchange...
...Yet, there are certain contradictions in all this, for in the underdeveloped nations there is a visible tendency to minimize or even overleap the stage of capital accumulation...
...Myrdal, for they have values which should be preserved and developed...
...Myrdal reminds us, such ties have been heavily influenced by repeated international crises, including two world wars and a depression...
...Myrdal defines somewhat loosely as the realization of equality of opportunity in all parts of the globe...
...Here, too, the author is entirely practical: We should try to build once again, under avowedly altered conditions, an international capital market that would assure some capital inflow to the poorer countries an increased international aid program should be more widely shared among the larger nations to guarantee a greater sense of responsibility richer countries should acknowledge the legitimacy of trade restrictions by smaller ones and these same richer countries should undertake seriously to stabilize international commodity prices...
...No longer did political leaders allow domestic policies to be subject to the vagaries of an ostensibly automatic mechanism like the gold standard...
...Perhaps production should be reallocated between countries certainly inefficient plants have to be scrapped equally essential is new investment of stupendous proportions and the urgency of developing Teal mobility of capital and labor in at least regional areas cannot be overstressed...
...An integrated international economy, he avers, means that enhanced productivity need not be based solely on a home market, since a specialized product, such as Danish cheese, Finnish timber or Swiss watches, may sell even better beyond the border...
...They will have to put pressure on their peoples for a high savings level they will have to diversify their production whatever foreign exchange they have must be applied to the purchase of capital goods rather than consumer items and they will need to protect their domestic markets and exercise measured control over exchange transactions...
...It is this growing dichotomy, says Dr...
...The greatest exacerbation occurs in the "underdeveloped" nations...
...Wherever rapid growth has occurred, mainly because of oil and other mineral deposits, as in Venezuela and Saudi Arabia, there has been little concern with raising general living standards...
...Myrdal's analysis of commercial and financial policy, with its concomitant growth of protectionism and autarchy, superbly illustrates this contention...
...Few of us now believe that we can go "back to normalcy" as in the Twenties...
...This Dr...
...They have attained independence and have developed aspirations of their own, but they have only 9 per cent of the world's income...
...The central theme of this new study is "economic integration...
...The latter played a significant role in the somewhat integrated economies of pre World War I days now it is a tiny rivulet barely visible in the dried up river beds of international relations...
...Myrdal is an acknowledged authority on money and international finance he brings to his latest book an urbane expertise that will surely leave its mark on political and economic thinking for years to come...
...Dr...
...In none of these schemes was there any facing up to the deeper problems of integration the movements of labor across borders, the free flow of capital and investment, and above all the development of a sense of solidarity among different peoples...
...Myrdal is too knowledgeable, too sophisticated and too hard-headed for that...
...While Dr...
...Present patterns of labor and capital mobility and even international aid have done little to relieve their plight...
...Any attempt to eradicate them is inviting disaster...
...Integrated economies in the underdeveloped countries will differ from our own, insists Dr...
...Myrdal, which is the tragedy of our international economy...
...To some observers, much of Dr...
...And in the last 40 years, Dr...
...Myrdal, notably those in Western Europe and North America, are beginning to approach this ideal, most others by force of historical circumstance are denied even approximate access to the more desirable integrated ways...
...The alternative, Dr...
...There is no neat definition of the problem here: Myrdal is interested at bottom in economic development, but integration, he stresses, is a complex and many sided problem that goes beyond mere economics his international economy is deeply rooted in political science, sociology and social psychology...
...Between the wars, an outlook developed which sought to enhance the welfare of the nation state...
...International trade (impeded by quotas, licensing and currency limitations) has declined when viewed against the increase in production and income...
...There is a need, for example, to curtail the fabulous growth in population...
...But there is none of the woolly thinking in this book that used to afflict the devotees of "one world...
Vol. 39 • June 1956 • No. 24
