The nation needs more participation or small business if its to head off crises such as those in Iran and Afghaistan during the 1980s, Deputy Commerce Secretary Luther Hodges Jr. said yesterday.

Addressing the White House Conference on Small Business, Hodges said that the nation is "moving into the 1980s driven largely by economic events. Indeed, we face a host of very serious economic problems.

"The fact of the matter is that our postion in the world and our ability to continue in a leadership role depend upon the strength of our economy," Hodges continued. "You and I know that the economic future of America depends in large measure on the prospects and performance of small business."

"The entire economy today, small business included, is as I have suggested, confronted with serious challenges," Hodges said. "We can no longer pretend that we're so strong. We can no longer pretend that we're okay."

Hodges stressed that the nation's economy, leadership and national security are interrelated and persons from those groups should work together.

"The current events in the Persian Gulf provide dramatic examples of this interrelationship and clearly challenge us to prompt action if we are to enjoy our new decade," he said.

The 2,000 delegates represented at the conference worked yesterday to set priorities for small business programs. Those efforts not only included special issue sessions but politicing by various groups such as minorities, veterans and women to see that their proposals for legislation or executive orders are given prominence when a final report is presented to the President.

For instance, some women's groups are fighting to see that proposals give business women federal procurement set-asides rather than just "goals," while minorities are trying to increase benefits for themselves.

Many women and minorities said they tend to favor more government intervention while many nonminority persons want to see less. That split was evident during Hodges' speech.

At one point Hodges was applauded by women for stressing women's programs and by minorities for urging more help for minorities. He was also applauded by those groups when he suggested that government intervention in the business community is necessary, while he was greeted by chants of 'No, no, no" by nonminorities.