International economics-VII

International economics=7The considerations set out here concerning mobility of labour and capital are perfectly general, and are independent of whether the economies are capitalistic or socialistic. In its dealings with an under-developed country be they in respect of immigration or in respect of capital exports a socialist government would not surely behave more favorably than a capitalist one; for all you know it may behave less favorably.

Socialism may be  indeed is an  effective instrument of national economic integration; by itself it is as innocuous as any system in respect of international economic integration. To be effective in this latter context, socialism has to be internationalized.
This leads us to the crux of the matter. Not the political structure within a State, but the absence of an international authority, which could deal with individual States in the manner in which an individual State deals with its constituents, is what prevents international economic integration.

The world State, however, is still a Utopia a ‘divine event’, as Lord Robbins once put it,1 towards which the best minds of our diverse civilizations must constantly strive, but which, considering the state of human progress, is not to be realized in any near future. What then remains to be done? No doubt the under-developed countries must raise their rate of growth to the maximum permitted by their resources; help, like charity, must begin at home. It is one of the refreshing features of post-war developments that the underdeveloped countries have realized the urgency of the task and are going ahead with plans to improve their standard of living. What they have yet to realize is that their bargaining power in the international market is still weak, and that if they are to strengthen it they must ‘combine’. They have only to take a lesson from what the trade union movement has achieved by way of national economic integration. In the national sphere we have experienced countervailing balancing processes which can be just copied for application to the international sphere. So international economics is most important.

But this is not all. If it were, I would perhaps have to conclude with essentially a pessimistic note. For if the under-developed countries were to be left entirely to themselves, it would be a long way before anything approaching international economic integration could be achieved. The resources of these countries are inadequate, their saving capacity small and, each being at a low stage of economic development, they are naturally not generous enough in their relations with one another. What, however, makes one less pessimistic is the institution of International Aid—one of the m6st significant developments of the post-war era. In their endeavour to accelerate the rate of economic growth, the under-developed countries have the benefit of aid from the more advanced countries of the world. It does look as if aid for economic development is becoming one of the acknowledged principles of public finance in these countries.

The volume of aid hitherto received by underdeveloped countries is of course not adequate, considering the needs of these countries. Nor are all advanced countries equally aware of their responsibility in the matter; the main burden has been taken up by the United States of America. It is also not clear how far the institution of foreign aid is a firm institution based on a genuine sense of international co-operation or how far it is inspired by political exigencies.

The cold war renders our vision hazy and makes discrimination a difficult affair. Yet the fact that the system of foreign aid is being gradually institutionalized through the establishment of international agencies does encourage hope. So international economics is most important.

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