1979 NIEO_How to Put Third World Surpluses to Effective Use.pdf

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Third World Quarterly

NIEO: How to Put Third World Surpluses to Effective UseAuthor(s): Samir AminReviewed work(s):Source: Third World Quarterly, Vol. 1, No. 1 (Jan., 1979), pp. 65-72Published by: Taylor & Francis, Ltd.

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NIEO:

HOW TO PUT THIRD WORLD SURPLUSES TO EFFECfIVE USE

Samir Amin

The demandsof the Third World states concerning he New InternationalEconomicOrder orma consistentwholewith a perfectly ntelligible ogic. Asubstantial ndlasting ncreasen rawmaterialprices,reinforced y a reductionof debt and more favourable ermsfor the transferof technologies,constitutethe best meansof improving he possibilitiesof financinga new stagein theindustrialisationf the ThirdWorld.Basedon whatconventionalwisdomclaims

to be 'comparative dvantages',his industrialisation,nvisaged rom the dualanglesof relativelycheaplabourand naturalresourcesmakingit possibletoexportto the developedworld,is seenwithin the perspective f an intensifiedweb of world trade.Opening he marketsof the developed ountries o exportsof manufacturedoodsfromtheThirdWorldwould,accordingo conventionalwisdom, servethe collective nterest,by making the internationaldivision oflabourbetteradjustedo factorendowments.Theseexportswouldalso covertheThirdWorld's ood deficit hrough mportsas opposed o reliance n aid.

1973andAfterThe raisingof the price of oil at the end of 1973 strengthenedhe credibilityof thisprogramme y highlightinghefactthat it was possible o obtaindifferentprices for raw materials,that these were certainly not 'intolerable' or thedeveloped world, and that the financial resourcesaccumulated n this waycould be used to accelerate he industrialisation f the countries benefitingfrom the higherprices.In this connection,October 1973 is a turningpoint inthe historyof internationalelations, he point whenthe ThirdWorldcountriesbecameaware,not of theirrights,butof theirpower.

Thisprogrammes perfectlyn conformitywiththeprinciples efendedbytheliberal West. It placesthe highest everpriorityon the objectiveof intensifiedlinks of worldeconomic nterdependence,asing t on comparative dvantages,a programmewhichoughtto have beendevisedandproposedby the economicsprofessors of the most conservativeacademiesrather than by governments







66 THIRD WORLD QUARTERLY

which such academies have constantly reproachedfor a penchant for out of date

'nationalism', contrary to the interests of their peoples. It is an irony of historythat this initiative came from the 'nationalist' Third World and that it was

unanimously rejected by the very people who had sanctimoniously invoked

these principlesin western academia for years.'

Beginningof the Crisis

Certainly, the demand for the NIEO coincides with the most serious 'crisis' of

the post-warperiod. Is this crisis then the reason for the rejectionof Third World

claims? It has even been arguedthat the raisingof oil prices, the first, and so far

the only measure in the implementation of the Third World programme for a

new order, was the 'cause' of the crisis. A campaign was organised on this

theme in 1973 and 1974, using all kinds of arguments, all in defiance of the

facts, namely the beginning of the international monetary crisis and the

appearance of US foreign deficits from the beginning of the 1960s; the prior

existence of 'stagflation'; the extent and persistence of rates of inflation out of all

proportion to the calculable increase attributed to oil; the still massive invest-

ment of oil funds on the western financial markets; and the modest role of

petrodollars compared to the mobile assets of the transnationals in speculative

movements.

In my view, the main cause of the present crisis lies precisely in the present

international division of labour, IDL, which is being challenged by these

demands.2It must be remembered that the present IDL confines the developing

countries to the export of primary agriculturaland mineral commodities, only

their import substitution industrialisationbeing strictly limited to their domestic

markets. Thus, IDL provided one of the bases on which the period of con-

tinuous prosperity of the last twenty five years was built. Actually, it was a

prosperity very much limited to the developed centres of the system, for while

in these centresthe period in question was markedby a high level of employment,

a continuous growth of productivity and a parallel growth of wages, in theunderdeveloped peripheries, rates of growth, notwithstanding the same

mechanisms which elsewhere ensured full employment and the improvement of

real wages, here entailed a continuous growth of unemployment and under-

employment and the stagnation or even deterioration of real wages and remun-

eration of ruralproducers.That is to say, the crisis was there all the time. Only,from the 1970s onwards the crisis began to be generalised to the whole world

The points thatfollowweredevelopedby the authorin a text published n the first issue ofthejournal of the Associationof ThirdWorldEconomists,July 1977,under the title, 'Somethoughts on self reliant development,collective self reliance and the new internationaleconomic order', IDEP/R12773.See also, 'Some preliminarynotes on oil and Afro-Arab

relations', IDEP/DlR/2654-rev. 1, December 1974; 'After Nairobi, Preparingthe Non-Alignment Summit in Colombo', An appraisal of UNCTAD IV, DIR/2747, June 1976,'A Propos de l'Eurafrique',Etudesde Politique ndustrielle, aris,Ministerede l'Industrieetde la Recherche,April1976.

2 Amin, AFarhi, MHussein, G Massiah,La Crise de IImperialisme,Ed. de Minuit,Paris,1976.







NIEO: HOW TO PUT THIRD WORLD SURPLUSESTO EFFECTIVEUSE 67

system. It began to be transmittedto the developed centresthemselves.

Revising IDL

If this is so, the best way of surmounting the crisis would be to revise the

modalities of the IDL and bring it into line with the demands of the Third

World. Third World industrialisation would provide work for a considerable

number of Third World unemployed and open up additional markets for the

capital goods industries of the developed world and redress the situation

regardingthe levels of profitability of differentindustrial activities, since the fall

in the rate of profit by which the crisis is manifested is mainly rooted in the

inadequacyof the presentinternational distributionof activities.This set of measures for revising the IDL emerges solely from the economic

logic of the system. It is its logical strength,but also its real weakness. For:

a) it is by no means certain that the world system can be reduced solely to its

'pure' economic logic, namely that of profit maximisation on the world scale,

without taking account of the division of the world into nations, which still

remainplaces wherethe essential and immediatepolitical forces operate

b) it is, therefore, by no means certain that the crisis cannot be surmounted in

another way than by the coordinated and systematic implementation of the

new IDL, or that this solution is 'the best one', bearing in mind the national

facts or, lastly, that this solution is even the most 'probable'.

The peaceful, coordinated and systematic implementation of a new IDL may be

the dream of a technocrat motivated by a single incentive: the maximisation of

profit. Curiously enough, Third World states are collectively behaving like this

hypothetical technocrat, whereas the decision makers of the West, apostles parexcellence of the philosophy of profitability, are hesitating before the logicalconsequences of their own philosophy and rejecting the industrial relocations

which it would lead to.

Rejectionbythe West

There is no doubt that the West has so far rejected the demand for a NIEO,

as witnessed by the debates of UNCTAD IV, Nairobi, 1977, the long North-South dialogue since 1976 and the more intermittent Euro-Arab dialogue.

American, European and Japanese neo-protectionism, both towards each other

in iron and steel and towards the Third World regarding the failure of the

multi-fibres negotiations, is there to remind our 'technocrat' that nations still

exist.

From this point of view, the current crisis is a definite aggravating circum-

stance for the rejection of Third World demands. This is because, in order tomove from the present IDL to the new one, it would be necessary to accept

increasing unemployment in the West and its transfer,actually a very small partof it, from the periphery to the centre of the system. But it is not a matter of

indifference to the system, as it is, whether unemployment is located at one







68 THIRD WORLD QUARTRLY

point or another.Afterall, it was assumed hatthe period1945-70hadbeena

periodof greatprosperitybecause he rateof unemploymentn the centrewaslow, aroundI to 3 percent.Therewasa crisis, t wassaid,whenthe ratein the

centreroseto 7 percent, butpeopledidnot stoptalkingaboutprosperityn the

periphery venthoughrealratesof unemploymentndunderemploymenthere

remainedbetween12percent and25 percentand keptcontinuallyworsening

after 1945.Moreover, t seemsobviousthat the governments f the world,as

constituted,arenot entirely ndifferent s to whether n the newIDL only the

Americanmultinationals et the lion's share,or whether hey are obligedto

share heirprofitswithEuropean ndJapanese apital.

Using Ol 'Surpluses'

Since there s neithera worldgovernment rganisedby the multinationalsand

the writerof theseobservationswould not rejoiceat that)nortotal subjection

of the statesof the periphery ndof national nterests o the logicof a govem-ment of that kind (and again,the writer s not sorryabout that) nor evena

necessaryabsolutesubjectionof the developedstates to the most powerful

Americanmultinationals,nor acceptanceby the workersof the developed

countriesof the 'necessary' evels of unemploymenthat would accompany

industrial elocations andthe writerdoes not deplore t) the NIEOcannotbe

implemented; at least, not seriously. It is perhaps exactly for that reason that

the NIEO, after having alarmedpeople in 1973-4, is now tendingto rally

unanimous upport.As it cannotbe achieved, t can only be 'specified' bout

withoutdanger.Thisis the context n whichwe have to situate he questionof

theuse of oil 'surpluses'.In some people'sminds, he NIEOmustbereducedo theraisingof theprice

of oil only, which was achieved n 19734 and subsequently tabilised,and,

above all, it must not involve a generalised xtensionto the other primary

exportsof the ThirdWorld.From this angle,the relocationand the export

industrymust be a limitedoperation,only acceptablewhenit is operatedby

somemultinational ackedby its government. o, in thisspirit, heoil surplusesmust be made available to the developed financial markets to support, on the

one hand, their own policy of intervention n relationsamong developedcountriesand,on the otherhand,theirmarginalupport or the 'survival' f the

old IDL in the developing ountries.The spiritof 'aid' conceivedas a safety

valveenablingheperpetuation f anunjust ystem,whichwitheachpassingday

is becoming ncreasingly njust, s then saved.At thepresent ime,the useof oil

surplusess nothingother han hat.3This perspectives not that of the ThirdWorld:neitherof the oil producers

nor of the others.Theraisingof the priceof oil in 1973-4wasrightlyregarded

by the ThirdWorldas an important ollectivestep if only because t was the

firsttimein fourcenturieshatanimportantdecisionconcerninghe worldas a

3e Morgneorm, Les CapitauxPetrolierset le Reforne de rOrdre FinancierInternational,Le MondeDiplomatique,October1976.







NIEO: HOW TO PUT TIXRD WORLD SURPLUSESTO tYEEITVE USE 69

whole had not been taken in the dominantmetropolitancountries.It had

beendemonstratedhatthis waspossible, hatthe so called'lawsof the market'whichwere nvokedonlyto explain hattheunfavourable ricesof ThirdWorldproducts ouldnot be changedwerenothingbut ideologicalspeechesdesignedto hide the reality of internationalpower relationships.The Non-AlignedMovementand the Group of 77 then embarkedon a strategyof collectivestruggle or an overallescalationof raw materialpricesand a resolutionwasadoptedin Dakar in February1975concerning he SolidarityFund and theAssociationof Producers.Thishas not beenpursued.Underpressuresromthedevelopedcountries,a strategyof 'stabilisation' as been substituted hroughUNCTAD and interminablenegotiations' nd 'dialogues' or the strategyoforganisation f producerswith a view to theircollective,unilateralf necessary,intervention.4 nd yet thegreatest esson n history n the lastcentury,at least,againconfirmedn 1973-4bythe oil battle, s that the international rder s nottheresultof a 'dialogueof wisemen',butreflectshe realbalanceof power.It ishence or thecampof developing ountrieso strengthentselfbeforehand.Thatis the conditionwhichmaythen makepossiblefuturenegotiations ruitful.Tostrengthentself,in thisconnection,meansto build a nationaleconomywhich,havinga maximumof autonomy,can better resist externalpressuresand somake t possible o negotiate orparticipationnthe IDL undermorefavourableconditions.

Delinkingrom DL

So a possibleevolutionof the NIEO mplies irstand at the startthestrengthen-ingof a self-reliant evelopmenttrategywhichcanentaila more or lessmarkedde-linkingromthe IDL. It is thenandonlythen that the developedcountriescan be forcedto carryout the internalreadjustments hich arenecessary or atrulynewinternational rder.The strategyof self-reliant ationaldevelopmentcan be reinforcedby a strategyof collectiveself-relianceby groups of Third

Worldcountriesand/or by the Third Worldas a whole. Projects of specificaction in various areas must be devised in the spirit of strengthening heautonomyof thedeveloping egionsvis-a-visthedeveloped egions.

And what about, he question of the possible uses of oil surpluses?If theThirdWorld ountries anobtainanoverallrise nthepricesof theirexports, heproblemof oil surpluseswould largelydisappear.Meanwhile, he oil surplusesof certaincountries houldbe envisagedas a meansof strengtheninghe collec-tiveself-reliance f theThirdWorld n generaland thatof each of thecountriesconstituting t in particular.5The most importantreason, however,for themeagredegree of active economiccooperation that has so far materialised

amongThirdWorldcountries s thegreatdiversitywhichprevailsamongthem.It is truethat some highlydevelopedcountries end to play up this diversity,

4An Appraisalof UNCIAD IV, articlequoted.5 FawzyMansour, TheThirdWorldRevoltandSelf-ReliantAuto-Centredtrategyof Develop-ment,IDEP/REP/406,April1977.







70 THIRD WORLD QUARTELY

classifyingcountriesinto 'more developeddevelopingcountries'and 'least

developeddevelopingcountries', resource-richnd resource-poordevelopingcountries' t cetera. The aim is to implementhe avowedpolicy of breakingupthe so called solid block of Third Worldcountries.This oughtnot to induceThirdWorldcountries o ignore he real,and evengreat,diversity f conditionsthat existsamongthem. On the contrary, his diversity houldbe broughtoutinto the open,objectively nalysedand practicalmeasures f activecooperationevolvedand mplemented.

Forces Againstthe ThirdWorld

The major forces working for differentiation mong ThirdWorld countriesrelate to the level of their economicdevelopment,especiallytheir varyingdegreesof industralisation,he natureof theirexternal conomicrelations uchas surplusversusdeficitcountries;dependencyon one or two raw materialexportsversus diversification f exports;membership f regionalgroupings;

and alignmentwith metropolitan dvanced ountriesversusrelativeeconomicindependence.The natureof the socio-economic tructures revailingn thesecountriesare also important.Some have adopteda completelyfree market

economy, some operate an important public sector within a capitalist structure,

othersarepassing hrougha periodof transitiono socialism,whilesome havealready stablished socialist ystem.Thesedifferencesrenot likely odiminish.On the contrary,they are bound to increase.Unless these factors are fullytaken into account,they arebound to lead the countries nvolved nto taking

divergentpositions,both in termsof globalrelationswiththe outsideworld,andin the matterof direct conomic ooperation mong hemselves.

CooperationDespiteDivergence

In spite of these existingdiversitiesand hence diversitiesof interestamong

ThirdWorldcountriesand the certainty hat these differenceswill multiply,theredoes exista sufficientlyolidbasisfor fruitful ooperation, othas regardsrelationswith the outside world and as regardsdirect, active cooperation.Mutualcooperation an onlymaterialise n any significantcale if two funda-mental conditionsare met to beginwith. First, a move towardscooperationshould take into accountthe varied,even divergent,nterestsof Third Worldcountries.It will ultimatelyhave to assumethe natureof a packagedeal in

which the interestsof variouscountrygroupsare balancedagainsteachother,so asto make t profitableor eachgroup o accept he dealasa whole.Secondly,each country houldbe left free to pursue he pathof socio-economic evelop-

ment it has chosenand to adopteconomicpoliciesconsistentwith the forceswithin ts own society.Any attempt o putthroughgrandbut vagueschemesof

cooperation hat would putThirdWorldcountriesn a straitjacketr set them

on a predeterminedathof socio-economic evelopment,s bound o meetwith

failure.







NEO: HOW TO PUT THIRD WORLD SURPLUSESTO EFFECTiVEUSE 71

Not onlycan thesetwoconditionsbe satisfiedbuttheycan,at the sametime,permitan amplemeasureof fruitfuleconomiccooperation mongThirdWorldcountries. f a Charter f Cooperationwere o be drawnup,thefollowingguide-linesshouldperhapsorm tsbasis:

a) tradebetweenThirdWorldcountries houldbe direct. Importsfrom, aswell asexports o, ThirdWorldcountrieswhichpassthrough heintermediaryof athirdparty houldbeprohibited;b) a systemof generalised referenceshouldbe establishedbetween ThirdWorldcountries overingransport nd nsurance;c) paymentsfrom one Third World country to anothershould not passthroughnon-ThirdWorld ntermediaries;d) Third World producers'associationswhich should decide upon pricefixationof theirexportsshouldestablisha fund to compensateother ThirdWorldcountries oradditional aymentsnvolved;e) technologydevisedin Third World countries should be made freelyavailable ratspecially dvantageouserms o otherThirdWorldcountries;f) transnationalThirdWorld firms should have preferential reatment inThirdWorldcountries.A firm n whichno ThirdWorldcapitalparticipationexistsshouldnot beconsidered transnational hirdWorld irm;g) taxes shouldbe imposedon all exports romThirdWorld to non ThirdWorldcountries nd ontheir

mports o ThirdWorld.Thetaxreceipts houldbe devotedto development.The fundthus createdshouldbe operatedby aspecialorganisation n whichall developingcountriesare represented n abasisof equality.

ConsolidatinghirdWorldPower

Changes n the present ntemationalor economicorderareessentiallya mani-festation of powerrelationships.As the currentNorth-Southdialogueamplytestifies,there is little hope for modificationof that orderunless the Third

Worldcountries onsolidate heir own economicpowerbase. Thisfundamentalassumption hould not be lost sightof through he false dichotomy which isoften drawnbetween confrontation' nd'cooperation'.As anyseriousstudentof international conomicrelations knows cooperation, nsofar as it meanssolvingissues by mutualagreement, s essentially he legal expressionof therelativepositionsof powerattainedbytheconcernednegotiatingparties.Nor isthe talkabouttheincreasingnterdependencen theworldeconomyrelevant nthis context,for the questionmustalwaysbe asked:for whosebenefitand atwhoseexpense?

Theguidelines utlinedaboveare not in conflictwith world nterdependence.

Theymerelymean a change of direction,replacingNorth-SouthrelationsbySouth-South elations.What is reallybeingattemptedas a whole is to reducevertical ntegrationand increasehorizontal ntegration, o make Third Worldlook inwardsrather hanaway fromitself and its ownproblems.This will alsoclosesome of thechannels,wellknownanddocumented y studentsof under-







72 THIRD WORLD QUARTERLY

development, through which surpluses, a great deal of which are usually

unearned,are siphoned off fromThird Worldcountries to metropolitancentres.

CooperationWithoutPrejudice

It is a programme to which all Third World countries can subscribeirrespective

of their level of economic development or of their socio-economic structure.What is important is that they believe in the principleof mutual cooperation asan overriding factor in their own development. More specifically, free marketThird World countries, socialist Third World countries, Third World countries

with a well developed public sector, can all subscribeto this programme withoutprejudiceto theirchosen paths of development.

An essential principle of this programme is that cooperation between Third

World countries should not be the occasion or vehicle for reproducing betweenThird World countries the relations of hegemony and subordination which

exist between metropolitan and Third World countries. Nor, of course, shouldit be the backdoor through which these relations are maintained or forced uponcountrieswhich attempt to liberatethemselvesfrom them.

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