WITH THE OPEC embargo and the quadrupling of oil prices in 1973-74, the United States stumbled over the Third World and became interested in the subject for a while. Henry Kissinger maneuvered to split the oil-rich and the oil-poor and there was even talk of going along with proposals for a New International Economic Order. But then it turned out that the transfer of funds to the Middle East was not as disastrous as originally thought (since most of it was recycled to the West) and this country could resume its normal attitude of indifference and vague hostility to the majority of humankind.
Now that Mr. Carter and the media have "discovered" a huge and populous country right on our border, a place which Americans have been visiting without seeing for years, perhaps we are in for another spasm of sympathy with the have-nots of the globe -- or at least the have-nots who find they are, like Mexico, sitting on top of a lot of oil. If that is the case, John Kenneth Galbraith's slim new book -- provocative, witty, sometimes wrong and always interesting -- could help a lot of people to orient themselves. The author is, of course, not simply that exceedingly rare species, an economist who can write elegant English, but the former ambassador to India as well.
On the critical, essential point, Galbraith is both right and compelling. "The tendency of the rich country," he writes, "is to increasing income; the tendency of the poor country is to an equilibrium of poverty." In that equilibrium of poverty, "since life is near the bare level of subsistence, there is no saving. Without saving and the resulting capital investment, there can be, from within the agricultural economy itself, no investment in improved agricultural technology.... Without investment there can be no improvement in income that allows of saving and further investment."
Within this coherent system of poverty, even a gigantic investment like the canals the British dug on the Indus Plain can become perverse. That event helped people who would have other-wise died to survive and thus increased births. And the resulting additional population required the sharing of scarce food and returned the people to a subsistence minimum. It is this integrated misery which, among other things, makes the dreams of a generation of international planners, liberals as well as conservatives, turn into nightmares. The "stages of growth" are not a universal paradigm but a description of the unique, particular experience of the capitalist West which, in any case, hauled the ladder up once it had been climbed. Our technology, population and social structure were of a piece -- but Mexico will use that oil money to buy capital intensive factories and will thus have simultaneous "wealth" and soaring unemployment.
On this point Galbraith is on target. On some others, I think I disagree with him, but I am not sure. I am uncertain because this book is short and elliptical, and theories are sometimes evoked in a single paragraph. For instance, I agree that the UN Conference on Trade and Development often exaggerates the role of negative terms of trade in perpetuating poverty in the Third World, and that a radical improvement in those terms would not necessarily do away with the structures of misery. But does that mean that one is unconcerned about the poor countries' demand for a common fund to help smooth out their wildly fluctuating export income? A change in the terms of trade is not a sufficient condition for economic dvelopment -- but it is a necessary condition.
Similarly, I suspect that I disagree with Galbraith in his estimation of the impact of colonialism. It is indeed true, as he points out, that Marx had high hopes for the progressive impact of British imperialism upon India -- but it should be noted that Marx's assumption that the "spread effects" of British capital would rapidly transform that nation turned out to be quite wrong. Imperialism, as Andre Gundar Frank has put it, "developed" under-development, i.e . it shattered coherent subsistence societies because that suited metropolitan interests but, for the same reason, did not develop potentially competitive capitalist economies on the periphery. What seem to be the distortions of "dual" societies, with islands of modernity in a sea of agricultural poverty, are quite rational and functional from the imperial point of view. They are only crazy from the perspective of most of the people who live in them.
If these matters were treated at chapter length, I suspect that some of my disagreements would disappear and others intensify. Still, I am so impressed by Galbraith's central point about the systemic (equilibrium, self-perpetuating) nature of mass poverty that I would recommend this study as an excellent first word on the subject.
If, then, we are in for another period of concern with the Third World, John Denneth Galbraith's new volume provides a thoughtful, iconoclastic view of the subject which should wake up at least some of the excessively innocent American people.