In Search of New Economic Structures

Article excerpt

In search of new economic structures

THE loose combination and ill-determined succession of events and situations which we term general crisis, is, we feel, inexplicable in terms of traditional concepts.

In the 1960s the major Western economy and certain others were at grips with a certain fall in productivity and perturbed by a growing perception of the formidable nature of Japanese competition.

These circumstances, accompanied by other internal and external difficulties, heralded the decision of August 1971 which ended the gold convertibility of the dollar and aggravated the damage caused by floating exchange rates, amidst conditions which were highly inimical to this policy and dangerous for the medium-sized and small nations. The United States and the industrialized market-economy countries experienced persistent, high, and increasing unemployment, very high inflation, exorbitant international liquidity and a slowdown in the growth of their gross national product (GNP). Towards the end of the 1970s inflation began to slacken off; this had a moderating effect on prices but did not reduce unemployment or provoke an upturn in the growth of GNP.

After enjoying two decades of prosperity (1945-1968), combined growth and development, the industrialized market-economy countries went on to experience fifteen years (1968-1983) of slow and in some cases negative growth punctuated by hard shocks due to rises in the price of oil (1973 and 1979) and to cessation of debt repayments at the end of the 1970s.

The observable trends of the crisis we are experiencing today may be hypothetically envisaged in terms of the content and effects of the two motors of contemporary change: industry and finance, industrialization and financing.

Industry is a structure and has a structuring power. It is simply a combination of fixed assets and trading capital coupled with teams of human agents organized hierarchically. By virtue of its two facets as an apparatus of things and as an organization of persons, it is a continuing phenomenon. The sciences and technologies that it incorporates endow it with a relative superiority over the rest of the economy, above all over agriculture, which it can carry along in its wake and, to a certain extent, shape. It wields this influence through its capacity to bring down prices, to widen flows, and through the information it disseminates. The industrial apparatus is a motor of, and currently the major centre of, innovation. Industry is concentrated and consists largely of oligopolies and groups.

Finance is understood here as a mass of financial capital, of debts falling due at different periods, which are in the power of a small number of public or private decision-makers: banks, financial intermediaries, public centres of credit distribution. The normal functioning of the economy presupposes finance to launch the productive machine and keep it turning. Credit launches and maintains the vast industrial machine and its changing structure, as new industries stimulate or replace the old. Finance, like production, is dominated by oligopolies.

Industry constitutes the major and persistent inequality between the developing countries, diverse though they are, and those countries which have long been developed. Here lies the problem; it is here that reform would be useful, if only the problem is properly perceived and the structuring power of industry is understood and turned to the benefit of the community.

The structures in the developing countries, though they may differ from one another in type and degree, have all been imposed or strongly influenced by those countries for which developed industry regularly produced machines and arms. Emotional though they often are, acts of rejection today have a solid economic basis which provokes these long-repressed revolts which help fuel the world crisis.

There can be no justifiable balance of supply and demand with a partner who is compelled to squander his human resources, who is ill equipped to deploy investment or innovation in a beneficial way, and who negotiates from a position of lasting dependence. …