The Economics of World Tension

The Economics of World Tension

Successful co-existence of capitalist countries with the Soviet bloc depends on the realization in the former that the non-totalitarian ecnonomic system has been put on the defensive.

The rising standard of comfort and ease in rich capitalist countries and the lessening of class bitterness mask a drift toward productive inferiority in relation to the Communist bloc. Moreover, the contradictions in the non-Soviet world between the problems of the highly developed and those of the poor areas is likely to frustrate efforts to achieve stability in the former and make it difficult to bring effective aid to non-Communist governments in the latter. It is the long-run menace to the existence of the latter which is, perhaps, the most dangerous threat to the present efforts at relaxing world tension.

In the rich countries there has been a return toward the policies of the prewar period, in which rising prices lead to insistent calls for restrictive monetary action—no other weapon being available to governments which are pledged to economic “freedom” and the abolition of discriminatory controls. Internationally, this anti-inflationary polciy in highly developed areas has had the effect of undermining the earning capacity of the less developed areas by reducing the demand for their products. This exacerbates the poverty, which is basically due to shortage of equipment and to the relentless acceleration of population increase caused by improved public health policies; these have reduced mortality rates without much hope of an early fall in births. Non-Communist countries, moreover, have not mobilized their vast under-employed rural manpower for productive investment.

In comparison with these factors the problem of armaments expenditure is of minor importance. But, at any rate in the United States, this kind of expenditure is being widely encouraged as the only safe way of increasing government outlay and so sustaining expansion. To call for an increase of social expenditure on education, say, or health or the underdeveloped areas seems to be considered politically dangerous. However, armaments themselves do not make war; it is the sociological effects and moral implications of this attitude which may become damaging to the cause of the ‘West.’

These problems are not necessarily inherent in the private enterprise system as such. They could be solved without doing irremediable harm to basic individual rights or changing the character of the system. Unfortunately, there seems to be no immediate prospect of the pragmatic approach that would be needed to tackle them. The dogmatic fervor which has overtaken western governments seems to doom us to frustration and might condemn us to defeat.