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The New International, September–October 1951

 

Jack Brad

Books in Review

Commendable Study

 

From The New International, Vol. XVII No. 5, September–October 1951, pp. 306–308.
Transcribed & marked up by Einde O’Callaghan for ETOL.

 

Economic Survey of Asia and the Far East for 1950
United Nations
New York, N.Y. $3.75.

This work, the fourth volume in the annual series which began in 1947, is by far the most complete and up-to-date report on short-term economic trends in that vast area from Korea and Japan in the north to Pakistan in the southwest, including all the Himalayan states. There is nothing to compare with it in scope and reliability of data presented. It is an indispensable handbook for every student of modern Asia.

Before reviewing the contents it would be well to note the significance of the Survey, since it is indicative of so much of the excellent technical work being done by various UN agencies in areas which were scarcely touched by modern scientific methods until recently.

Under the masterly direction of the noted Indian economist, P.S. Lokanathan, the Economic Commission for Asia and the Far East has functioned out of Bangkok, collecting and analyzing an enormous amount of information, presenting it annually in its Surveys. Now, in response to the growing needs and demand for such integrated and reliable studies, the Commission is to publish quarterly reports as well.

It has been a difficult struggle on the part of the Commission to obtain the desired statistics, first because they were often not available to the native governments themselves which simply lacked the facilities for obtaining them; secondly, statistical standards were so diverse as to be worthless for purposes of comparability, and even for ascertaining the true state of affairs within each country. This condition will not soon be remedied, being in statistics an expression of larger social ills. However, the Commission has, through a number of devices, begun to enforce scientific criteria so that the value of the figures presented by the governments has risen, become more meaningful, and useful in developing policies.

While there is much room for differing with Lokanathan as to the relative values he assigns to his facts, for the first time the facts are there in readable, interesting and trustworthy form. Time has been spent on this forward in order to point up this aspect of the UN’s activities, which are as valuable and valid for socialists as for others.

The current volume is by far the most complete of those published to date. The Commission has used its own facts together with official government releases, interpolating one with the other. Also a whole series of new studies have been added. One of the most valuable is a section on internal financing and capital formation, a universal problem throughout Asia, and a major barometer of progress.

The post-war period may be divided into three economic phases. The immediate problem in several of the nations was the achievement of independence, during which war-time chaos largely continued, with only minor efforts at reconstruction. The amount of destruction in the area is hardly appreciated here, since our eyes were so completely focused on Europe with its extensive battles and continental air-war. Asia suffered to some degree from outright battle damage, but by far the largest part of the destruction suffered was the result of dislocation; disruption of traditional trade patterns without the substitution of new ones; decay of mining, oil, industrial and transportation capital rendering much of it useless and even more of it obsolescent; breakdown of transportation over the entire continent so that raw materials could not move out to industrial centers starving for them, while credit and machine products could not move in.

Because of the initially low productive state of these societies the importance of these factors was in some ways greater than Europe’s war damage. This becomes most clear in terms of comparable reconstruction costs. It takes so very much more in Asia to restore a plant or a railroad to working order. True, while Europe has largely returned and even surpassed its pre-war levels this is not yet the case in Asia, where most governments still set their productive goals in terms of returning to the previous level.

Only to indicate some of the broader implications, the newly independent states are everywhere attempting to operate under physical and economic conditions far worse than what existed under imperialism. Not only have the aspirations of the people for higher standards of living not been fulfilled, the people are consuming less food and clothing than before. Much of the disillusionment with independence (and indeed with all politics) that is so prevalent can be traced to this root source.

The economies that will emerge at the next stage of development depends to a great degree on the kind of “restoration” that is achieved. Unfortunately, in most countries in the area the drive is simply toward achieving the output levels of former peak years by technical and material infusions. This is particularly the case in Japan and Indonesia and, of course, in the remaining colonial possessions such as Malay and VietNam. Nowhere, not even in India, is there serious consideration as to the validity for a free people of the kind of economy inherited from the former masters. (In this connection the new five-year plan issued by Nehru’s government is especially pertinent, but is beyond the scope of this study.)

By 1949, independence had largely been achieved, some measure of stability restored and a beginning made toward recovery. This was the time when most states formulated their first economic policies and plans. The Columbo plan was symptomatic of the type of thinking then current. Significantly, the Columbo plan was fathered by Britain, and to this day remains a Commonwealth project in the main. This, by contrast with the niggardly attention from Washington and even less financial intervention. Britain remains the European nation with greatest interest in Asia.

The plan called for new planning for agricultural and industrial growth, with capital made available through a common pool contributed to by the nations of the area and by Britain and other commonwealth countries. This promise of external financing acted as a catalyst and spur in much the same way as the Marshall Plan did in Europe in its first year.

Also at this time, in the metropolitan nations, production having recovered, capital goods began to flow into the channels of world trade, or as Lokanathan puts it “developmental goods” became available.

This second stage came to a rude and quick halt in the middle of 1950 with the Korean war. The effects of this war and its repercussions in the world armaments race and new international tensions have been devastating for Asia, with the possible exception of Japan. The Asian hunger for peace and a third camp is profoundly rooted in economics.

For, as Lokanathan states, Korea has “put back the clock of progress and weakens the forces of reconstruction and development in Asia.” American and European rearmament has created a shortage of capital goods and raised the costs of those items that are available. As raw-material producers the colonial countries are enjoying a boom, but it is artificial and dangerous, for these materials are no longer going into productive machinery which held the promise of future development, but into arms. With the world price of raw materials so high these items become locally scarce.

At the same time tendencies toward diversification are inhibited by the profitability of continuing to be a primary goods producer. Yet diversification is the sine qua non for a revision of the economy away from colonial forms and into modern ones. If Asia is to remain only the source for raw materials for advanced technologies elsewhere then its independence will indeed have become farcical and hopes for social reform will be dimmed for a long time to come. In addition, the favorable terms of trade now available to primary goods producers has brought in large quantities of new money, which cannot be used effectively on a world market that is scarce in just those items that need to be imported into Asia. Result: serious inflation.

The conflict between re-armament and social progress is dramatically illustrated by the facts presented in this volume of the Survey. So is the conflict between American military policy and Asia’s real needs.

Most countries have formulated some agrarian reform plans, but few have implemented them and fewer still are serious about doing so. The changes wrought since the Korean war will make such reforms more costly and difficult. Yet this remains the crying need of Asia. The statistics indicate the failure of Asiatic- feudal agriculture to feed the populations. Per capita food consumption remains lower than pre-war almost everywhere. The Bihar famine in India a few months ago is only an extreme expression of the universal ailment.

Japan alone seems to have continued the progress begun before the Korean events; yet nothing could be more deceptive. Firstly, it is an advance made in the trail of the American war and rearmament program. Secondly, Japan remains divorced from her natural markets in China and northern Asia. Thirdly, the high prices of raw materials, of which Japan has almost none of those she requires, are a direct threat to her industries and their competitive position. Fourthly, her attachment to the American economy via the arms race makes her particularly vulnerable to every changing economic breeze here. Fifth, the effects of this development are to restore in Japan the distorted type of economy which led her down the path to war – and defeat. That same cycle seems about to begin again there with all its accompanying internal implications of return of reaction, depression of labor conditions and termination of the democratic changes introduced during the occupation.

The Survey contains only the raw facts for further analysis, and therein lies its contribution. Lokanathan’s introduction is, however, an excellent essay bringing together the many strands into a few overall generalizations.

 
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