International economics-V

International economics=8International economic inequality is not merely a moral problem; it is also a political problem. Considering how the spirit of nationalism has crippled our vision, it is not surprising that the problem did not so long come out very much in the open. And yet as one thinks of it, one does feel a sense of awkwardness at the scant recognition that social thinkers have given to it.

Thinking has concentrated more on group (or class ?) inequalities as a national problem. And here, on the broad assumption that the marginal utility of income is greater to the poor than to the rich, economists have often gone to the length of advocating forced transfer of wealth from the rich to the poor. Anyway, as a result of pressures over the years, prevention of concentration of power and reduction of regional or group inequalities of income have been recognized by all civilized States to be a major aspect of national economic policy.

Does not the same principle apply to the international economy? Just because the different nations of the world are independent political units and there is no world government to entertain pressures arising from inequalities, the problem as such is not surely eliminated. Gross inequalities are as bad in the international sphere as they are in the domestic sphere. Pressures to reduce them are called for, too, as much when they relate to the international economy as when they relate to domestic economies. So international economics is most important.

Politically, the existence of a large under-developed area is a threat to international stability. Poverty brings discontent within these areas and may be itself a source of trouble. This, however, is not so important. For it is unlikely that the weaker nations should be able to carry their discontent far enough. Much more serious is the rivalry among stronger nations as regards the sharing of control over these under-developed markets from which they expect to derive gains through trade and sometimes also through investment. One may not choose to accept a purely economic interpretation of history. Yet it is difficult not to believe that the most important single cause of international conflict is rivalry over the so-called ‘sphere of influence’. It is no accident that modern wars—hot or cold have been the result of conflict, not between weaker nations, nor, strictly, between the weaker nations and stronger nations, but between stronger nations themselves. So international economics is most important.

We are just becoming dimly aware of this international anomaly. The awareness is partly due to the achievement of political independence by a, number of under-developed countries. Partly also it is due to the contact that has been established between different nations of the world through the many international organizations political, social and economic that have come into being in recent years. The world war, with all its destructive consequence, has not been altogether purposeless. So international economics is most important.

The under-developed countries, with their newly acquired political independence, are not only more conscious than ever before of the woeful economic stagnation that they have been through all these years; they are also confident that a breakthrough is possible. In the more advanced countries also there is growing realization that the under-developed regions of the world are an entity to be reckoned with that what happens in these regions is not altogether outside the realm of their concern and their responsibility.
Now the awareness of the problem is one thing, its solution is another. The need for some kind of a balance in international economic relations (international economic integration, as Myrdal would call it) is great, but the task is enormous. It has been estimated by Dr V. K. R. V. Rao that, on the assumption that under-developed countries have on the average a population growth of 2 per cent per year and an increase in gross national product of 8 per cent per year, they would attain by the year 1974 a standard of living which is less than a fifth of the 1956 level of the Western Hemisphere and about a third of Western Europe.

Further, even if these countries have a growth rate of 15 per cent per year for another fifteen years, they will still be at a level just about a tenth of the 1956 level of the United States and Canada and a fourth of the United Kingdom and France.1 The figures are revealing. And when regard is had to the fact that our under-developed world comprises no less than 70 per cent of the human race, the problem of international economic integration does appear bewildering. So international economics is most important.

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