Tasks in the Underdeveloped World

...A class of this order cannot develop until large-scale capital-forming enterprises resembling our Tennessee Valley Authority have operated for some time...

...I must add, which is not going to subdue the horde of institutional nay-sayers from union managers to corporate moguls without the aid of revolutionary zeal...

...Kenen puts this whole complicated discussion into perspective...

...Whether we have time enough to stop and reorganize the machinery of international agencies for the purpose seems questionable...

...Our recovery programs for Europe and Japan succeeded to such an extent that our manufacturers now run into competitors where there used to be paupers...

...and if we can, fine...

...Whether we like it or not, riches on this scale create psychological and political tensions which nothing can whistle away...

...It boasts what we usually call "comprehensive grasp," covering its field admirably, yet conveying a sense of great resources of untapped documentation and intellectual muscle...

...The second wall of Kenen's world, the real world, is America's debt...

...Without question, the most important job facing the Western world of the next generation is the construction of an "international economy" within which primary-producer countries can depend on selling at sensible prices the short list of commodities they produce...

...The vivacity of this competition, plus outlays for foreign aid, plus the American inflation, have resulted in a strengthening of foreign currencies relative to the dollar and the consequent steady outflow of gold which has alarmed conservative economists...

...My own opinion is that if we hope to salvage anything of libertarian society from the inferno of the 20th century, this task of modernizing the underdeveloped world must be immediately attacked—and attacked with surgical speed and precision...

...If I have any reservations at all in hailing this fine book they derive from doubts about emphasis rather than content...

...From time to time preposterous counsels like those of the Randall Commission demonstrate to what an appalling degree powerful sectors of "respectable" opinion still utterly misunderstand world events...

...These days professional economists understand the dynamics of this melancholy process well enough, although it has not yet become flesh-and-blood reality to the majority of us...

...There's small point either in standing forth against the "affluent society" or in disputing the Pharisiacal principles of Treasury Secretary Robert Anderson and Professor Friedrich von Hayek, because no one of any common sense at all—regardless of his outlook—can conceive of billions of men peacefully permitting themselves gradually to grow poorer and more wretched while America and Western Europe enjoy their increasingly aloof enclave...

...Third, Kenen devotes a most brilliant section in his book to an examination of the balance-of-payments deficit problem...

...A fourth subject considered by Kenen is the responses of America and the Western world to the challenges of the new economic milieu...

...Kenen also surveys the shortcomings of the Development Loan Fund, the apportionment of American aid under military and economic heads, the shriveling up of the world capital market (which is making life so bitterly tough for underdeveloped nations), the tendencies toward regional protectionism implicit in the European Common Market (and here he might also have reviewed the protectionism implicit in the establishment of "regional cartels" in competing quarters of the underdeveloped world itself, such as the Latin American Association of Free Trade at Montevideo), the World Bank, the International Monetary Fund and the sum of the random agreements rounding out the world's commercial pattern...

...First and paramount, we have the "vicious circle of impoverishment" tormenting the "emerging" peoples of the underdeveloped regions...

...Reviewed by Peter Ritner Author, "The Death of Africa" FOR THE PAST 10 years, we Americans have squatted dumbly while the men who fill the poshest leather sofas in the nation's board rooms and political offices have led us from swamp to swamp down the dark road of declining national power...

...Last spring, a study of the Stanford Research Institute showed that a major cause of our payments deficit is that Americans are buying more foreign cars while foreigners are buying fewer American cars...

...As Kenen writes, we must "redesign our commercial policies to stabilize raw-materials prices, so that the low-income countries may earn the foreign exchange they need to buy capital goods for development...

...We Americans have slept for so long, our position in the world has deteriorated so grievously in the past decade, that perhaps the truly responsible publicist or scholar is obliged to borrow the arts of the demagogue as well as simply to expose the facts—at least until the parties who contrive American policy begin to pay him some heed...

...Kenen's brilliant tract reminds me a little of a Gladstone budget...

...But if we cannot it remains our duty to ourselves to move out alone—and to move out now...

...This is the conventional view of sage progressives like Kenen, but I am personally not a bit sure about it...

...A brief review can do little more than glance over the field of this author's argument...

...For years there have been rumors that a substitute for coffee was about to be synthesized...

...They are grossly inadequate...

...Lastly, Kenen eloquently presents the case for directing the bulk of funds and effort that America expends on foreign economic policy through international agencies...

...Read with care, the book comes to wear the aspect of a revolutionary broadside assailing grand spheres of thinking and acting, but—like Gladstone at his most radical—Kenen never abandons his urbanity and masterly hauteur...

...With but 6 per cent of the world's population, we are responsible for about 38 per cent of its industrial production...

...In ordinary times this would have to count a merit...

...The crux of the matter here, of course, is that for various reasons these countries cannot out of their own resources "take off" into a balanced, industrializing growth...

...The implications of the analyses are marched forth in irresistible logical order...

...Imagine the prospects of a Congressional bill which sought to set the Congo on its economic feet by "voluntarily" restricting the output of American copper mines, in order that Congolese copper—one of the very few moneymakers available to the Congolese—may earn healthy and steady profits for the financing of schools, roads and hospitals...

...It occurs to me that we may even gain something from this business...

...By all means let us try...

...in 1960 one cannot be entirely sure...

...But what Kenen fails to say in so many words is that the construction of an "international economy" to undertake this kind of world-wide stabilization implies nothing less than total and dramatic revolution in American economic philosophy and practice both at home and abroad—a revolution...

...For the most fundamental of reasons—survival—we must dedicate our ingenuity and strength to bridging the widening gulf between ourselves and the bulk of humanity, a gulf which, incidentally, is also threatening to corrode our own national morale...

...If ever times called for new men and new insights—and founders of new schools—these are those times...

...This would seem to compel reform on the automobile people...

...He shows that to halt American aid will certainly wreck our chances of holding the underdeveloped regions within the free world community, and furthermore that curtailing aid funds will not have the predicted dollar-strengthening effects...

...he is Peter B. Kenen, Assistant Professor of Economics at Columbia and a contributor to these pages...

...Our tariff policy is old-fashioned and inconsistent...

...The spectacular social transformations the poor countries now are undergoing—the most prominent feature being a non-stop population boom—mortgage their futures rather than secure them...

...Unless they choose to abandon conventional means—that is, unless they choose to imitate Communist China—they cannot themselves build a healthy economy or free their economies from dependence on the notoriously unreliable raw-material markets which service the advanced nations...

...we are "the world's largest investor, and its principal creditor...

...Luckily for us a few such new men are forthcoming...

...And as very few of us are satisfied with that industry, and even less satisfied with the principle of "forced obsolescence" on which it is increasingly relying, may we not count this costly lesson a long-run profit...

...In short, they must be imported...

...Recently, for example, the market for zinc was rocked by plastics which can replace zinc in many of its commonest uses...

...And an impressive specimen of the crop is the youthful author of Giant Among Nations, a study of the problems of United States foreign economic policy...

...Coffee is America's largest import, and if such a substitute were manufactured and were indistinguishable in taste from real coffee, the economies of a score of now-friendly nations would go into tailspins...

...This annual gold deficit, now about five years old, constitutes the principal argument against any further expansion of American aid programs...

...I regret, also, that Kenen did not elect to say more about the overall environment in which modern international commercial transactions occur—an environment little more than a whirlwind of technological change, where raw materials for which substitutes can be invented suffer particularly gravely...

...Our own trade policy is hampered by statutory leftovers from the age of protection...

...A corollary of the Technological Era, nothing much can be done about the onslaughts of technological innovation, but one may as well specify that it vastly complicates the problems of rationalizing the advanced countries' relationships with the underdeveloped regions of the world...

...And projects of this dimension are quite beyond the capability of these nations, whatever scheme of traditional financing they adopt...

...These nations cannot generate within themselves a substantial middle class which sustains itself by purchasing a diversified product from itself...