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The NIEO and Development Choices

  We must recognize that most UDCs are at present highly dependent on revenue from exports of primary products and we should therefore defend their demands for fairer prices and stabilized world markets. This being said, we owe to ourselves and to those who are struggling in the Third World for greater social and political justice a critical examination of what the NIEO may mean. Which social classes in the UDCs would most benefit from it? What are its prospects for fostering real development? To what degree might the acceptance of certain UDC proposals by the wealthy nations actually result in greater manipulation and dependency of the poor countries? And while the industrialized North is allowing the peripheral South to talk itself to death in Dialogue after Special Session after International Conference, what other NIEO in the realm of food and agriculture is being surreptitiously introduced into the UDCs? These are some of the questions we shall try to address.

  The "package-deal" NIEO has not really been taken seriously by the North and all the talks to date have revolved around export incomes from primary products—which boils down to renovating the "export-led" development strategy. Third World negotiators may not be happy about it, but for the moment they are boxed into putting these particular items first on the agenda. There is, in fact, no agenda for negotiating the other measures that ought normally to make up the NIEO. So export-led development strategy it is, like it or not.

  Let us assume this strategy succeeds, that the industrialized countries recognize the demands of the Third World (those on the current agenda) and that suddenly an Integrated Commodities Program and a Common Fund become realities. This is not an entirely gratuitous hypothesis, and in the middle term may even be a likely one. We are no longer living in the age of cave-man capitalism. The Director of the US National Commission on Supplies and Shortages recently reported on his discussions with executives of companies and described "a new concern on their part for stability and continuity of supply (of Third World raw materials)—even if it means they must pay higher prices."2*

  The Trilateral Commission and Zbigniew Brzezinski have come out for "a more forward attitude" towards the demands of the Third World—even though this attitude has not yet been much in evidence in the US negotiating stance. The more sophisticated spokespeople for a renovated capitalist economic order must of course contend with the dinosaurs who see the unchecked activities of the "market" as the best allocator of resources. But it is possible that one day certain facts may filter through, even to the dinosaurs, and the facts indicate that the United States has a good deal to gain from acceding to these particular demands of the "77."

  A distinguished American economist has, for example, concluded after detailed study that "important benefits would accrue to industrial countries from price stabilization." In the United States alone, had stable commodity prices been instituted ten years ago, the economic gains for Americans (in prevented unemployment and GNP loss) would have amounted to "about $15 billion over the decade." For the same period, incremental income to UDC exporters of the core commodities would have been only about $5 billion—or three times less. Moreover, such gains could be had without aggravating inflation. Depending on how one calculates, it would take price increases for core commodities of 30% to 200% to cause even a 1% increase in the US consumer price index. Such figures are vastly above what the UDCs are actually calling for. The buffer stock scheme would even reduce inflationary pressures and this argument may well be the clincher in the US government's attitude:

  The really large gainers from international commodity stabilization programs may be the residents of the developed countries due to the amelioration of inflationary pressures. In the United States, the government is placing increasing emphasis on these gains in explaining its recent greater receptivity to the possibility of instituting new international commodity agreements.3

  Western governments may thus have a very real interest in promoting price stabilization on a world scale. More difficult to gauge precisely is the attitude of multinational corporations (MNCs) who, although they do not sit at the negotiating tables, are nonetheless heeded by those who do; their preferences may be crucial to the outcome of international talks. On the one hand, the firms which are the major users of the core commodities want stability, as risk-free a business climate as possible, and above all, predictability. They would probably prefer anything, including higher costs (to be passed along to the consumer anyway), to the establishment of effective OPEC- type cartels for primary products. But on the other hand, MNCs are certainly in the best position to profit from present fluctuations on international commodity markets and they possess the necessary information networks that enable them to take immediate advantage of particular situations. If a given country is desperate for foreign exchange and willing to sell its core commodity at bargain-basement prices, an MNC is not going to refuse. So-called "world" prices for commodities are frequently mythical and set after-the-fact; they may hide a huge number of special cases and the kinds of price heterogeneity that well-managed firms will seize upon. Price stabilization would eliminate some of the unpredictability from doing business, but it would simultaneously eliminate some of the more exciting opportunities for making coups.

  One cannot therefore flatly state that there will be a noticeable shift in US policy towards the NIEO, insofar as this policy is determined by multinationals. Things are presently (September 1978) quiet on the North-South front. Predictions are especially dangerous, as the man said, when they concern the future. Still it seems reasonable to suppose that when higher commodity prices or Third World political pressures result in serious negotiating, the industrialized countries' stance may chance.

  Naturally, there would be some advantages to UDCs (or at least to their upper classes) in wresting from the North even a truncated NIEO. Negotiators for the "77" do not, however, always appear fully aware of the disadvantages, and they do not generally object to the class structures in their own societies which prevent equitable distribution of whatever wealth there is. Put more bluntly, and assuming higher revenues for these exporting nations, who, exactly, is likely to see the money? In the most common instance, not the producers who do most of the work to supply the commodities. If we take a look at data on pie-sharing in Third World core commodity-producing countries, we find, for example, that in the Ivory Coast—a major coffee and cocoa exporter—the top 5% of the population receives 30.% of the national income, while the bottom fifth of the population gets 4%. In Brazil (coffee and sugar exports) the figures are respectively 27% for the wealthiest 5% and 5% for the poorest 20%; in Malaysia (rubber) 28% for the top and only 3.4% for the bottom; in the Dominican Republic (sugar) 26% and 5%, etc. A comparison with developed capitalist countries shows that in the USA the top 5% of the population receives 13.3% of the national income and the bottom 20% gets 6.7%; in Canada it is 14% and 6.4%.4

  People who believe in the "trickle-down" theory of development may claim that higher national incomes will eventually benefit the worst off, but even a modest knowledge of the past shows that upper classes do not cheerfully share their privileges—indeed one wonders why anyone should expect them to do so if not forced. Nor do they (in most UDCs) spend their revenues on employment generating activities but prefer speculation, Swiss bank accounts and conspicuous consumption of imported luxuries to productive investment in their own countries.

  Furthermore, there are several large and densely populated countries (especially in Asia) for whom the proposed commodity agreements would make little difference, since 20% or less of their exports are made up of the core commodities. Such nations as Burma, India, Indonesia and Pakistan—all classed by the World Bank as among the poorest—would benefit relatively little from such programs.

  Countries that stand to gain the most—those whose exports are made up of 70% or more of the ten core commodities—are Bangladesh, Sri Lanka, Zambia, Zaire, Chile and Uganda (plus a smattering of very small ones like Mauritius and Rwanda).5 One is led to ask if higher re
venues for Mobutu, Pinochet and Idi Amin Dada should be priorities for the international community. There are, of course, countries where increased export revenues would doubtless be used to better the conditions of the people as a whole; the examples of Tanzania and Jamaica come to mind. Nor should one exclude the possibility of revolutionary change in others where singularly unjust class structures prevail today.

  Still, there are reservations to be made concerning the NIEO on grounds of gross inequalities of distribution inside many Third World societies, on grounds of the repressive nature of several governments that would most benefit and because the scheme as it stands would leave many nations out in the cold. Commodities trading is not, however, the best area in which to envisage or apply political sanctions and these reservations do not imply that there should not be fairer prices for raw materials—simply that of themselves such adjustments would certainly not erase the problems of poverty and underdevelopment.