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 heal...