Ecumenical Reflexions on Political Economy. A summary of ten years
of deliberations on issues of development by an informed group of
economists, sociologists, political scientists and theologians. Compiled
by Catherine Mulholland. First published by WCC Publications,
World Council of Churches, 1988. Internet edition by Dr. Robinson Rojas

2. The International Economic Order in the 1980s 

 Failure of the present world economic order

From the preceding we can have an idea of the kind of questions that the ecumenical movement has been asking about the biblical, theological and ethical adequacy of the economic systems which currently dominate the world. There are pretentious claims and assumptions which need to be demythologized, particularly in light of the results of the present economic order - which can better be described as "international economic disorder". The efforts in the 1950s and 1960s to eradicate poverty were unsuccessful. The first and second development decades failed. The quest for a new international economic order (NIEO) in the 1970s met with negative responses from the rich and powerful nations, and the expectations of the developing nations were frustrated. Inequalities in wealth, welfare and power have increased and an undue portion of the burden of the international crisis has been shifted to the weaker parts of the world population.

The challenge for the 1980s as identified by the AGEM is neither solely material nor simply one of values. Any proposal and any struggle for specific political economic institutional change is ultimately based on, and must be tested against, underlying values. However, such human life values - especially the values of justice, participation and sustainability -
must be embodied in structures and institutions as well as articulated in a technically competent manner.

In the 1980s, the WCC has attempted to answer the challenge to churches and Christians by engaging in reflection and critique on a number of major areas of concern in political economy. The areas sketched here are political-economic rather than technical-economic. International structures and negotiations are themselves largely political-economic and these are the arenas in which change can, and must, take place.

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Many, if not all, of these areas appeared on the agenda for the negotiations for a New International Economic Order in the 1960s and 1970s but, as a testament to the failure of these negotiations, the problems remain and, if anything, have become more acute during the 1980s. The areas include food, commodities, technology and transnational corporations, finance and money, debt and aid. Each area requires profound structural changes in order to rectify the injustices and disparities which currently characterize them and to work towards the vision of a JPSS. Some of the areas will only be outlined here while others, which have been the focus of deep reflection and critique by the AGEM, will be discussed in chapters three through six.

Structural changes

Why are structural changes necessary? Who benefits from structural changes? The answers to these questions can be best summarized by looking at the present system and who benefits from it, and then looking at the alternatives. Much of the basis of the present system can be found in the assumptions outlined above and in the tenets of neo-classical economics. Major proponents of market-centred economies and societies deny the relevance of justice as a norm for testing economic policy or performance. Their case is that the market mechanism produces the maximum possible volume of goods, distributes them in accordance with demand and affords freedom to the individual.

The normative values of those - including many Christians - who argue that distributive justice is a fundamental test of any social or economic system are radically different. They, at least implicitly, deny that economic efficiency can be determined without reference to value-determined ends or that one can evaluate production without reference to its interaction with distribution. From these values flow assertions of basic human rights to employment and participation, to food, education and health, to limits to inequality and to freedom from oppression and exclusion. Necessarily, those values lead to very different institutional, analytical, structural and policy proposals from those of the free market advocates.

The changes which are needed are profound and touch every level from international institutions to the individual at the grassroots level. Any attempt to tackle poverty on a global level requires changes in world economic relationships as well as in the institutional relationships which are a product of the present political economic order. But the changes required go to the root of the present order. Marginal concessions cannot substitute for basic reform, nor can they come to grips with the real

The International Economic Order in the 1980s 11

issues. On the other hand, neither all radical changes nor all processes of change can be seen as consistent either with participation or with a preference for the poor.

In addition, changes are needed at the grassroots level to allow more people to participate in the decision-making process that affects their lives. This is in line with the idea that true justice goes beyond the notion of distribution and involves people in decisions about what is produced and how it is produced. As people become involved in making decisions in a society, they see the need for structural change at every level, especially when questions of development are involved.

The case for structural changes is necessarily a complex one. Such changes cannot usefully be treated in isolation. They must be considered in relation to normative views, to strategic scenarios and to contexts bound by time and place. The struggle for justice - including international economic justice - transcends history, but it can only be waged in history. International structural changes are integrally related to national and regional changes. Change at one level facilitates or even requires changes at other levels. The process and forums of struggle for change are also important because they impose limitations on, and provide opportunities for, achieving specific changes.

To ensure development for the world's poor, two general conditions are necessary: significant changes in the world economic order, alongside far-reaching internal political, economic, social and institutional changes. This means that structural changes must take place in the developing countries, in the industrialized countries, and at the international level and in international institutions.

Structural changes in developing countries

Developing societies should have no doubt about the need for international structural reforms if a just, participatory and sustainable order is to be realized. Their members should understand that the struggle for liberation from the shackles of exploitation and domination has to be waged at all levels - on the national front no less than in the international arena.

The kind of structural changes needed in developing countries include the following:

- control over national natural resources and production;
- effective control over the activities of transnational corporations (TNCs) in order to work towards a process of "selective and gradual delinking" from the international market economy;

12 Ecumenical Reflections on Political Economy

- in economic thinking, the goal of general welfare, rather than the aim of higher profits;
- a policy priority for the provision of employment opportunities;
- alterations in structures of power, economic benefits, and institutions which support the system, to erase economic dualism.

New ways of looking at production and development call for:
- a plan of social ownership and participation in production as well as in investment decisions so that priorities are given to production for basic needs and to provide for an autonomous and self-sustainable development;
- the new national development strategy which gives priority to the poor with the goal of meeting basic human needs rather than percentage growth in GNP as the standard against which to judge progress.

All these changes can be summed up in the search for self-reliant development, based not on external factors but on internal potentialities to fulfill people's most urgent needs. People should be the primary instruments of development. There is need to place in the hands of the people the means to break down political structures of both external and internal exploitation and control and to bring about the needed changes.

Structural changes in industrialized countries

During the 1970s, the self-assurance of the leaders and peoples of the industrialized nations received several rude jolts, partly as a result of the tension with the third world and partly as a consequence of internal strains within the West itself. These jolts, such as the series of "oil crises", the Vietnam War and slower economic growth, have combined with the challenges coming from the third world and the instability of the international economic and political systems, to oblige the Western nations to question some of the assumptions underlying present political, economic and other ties of their nations with those of the third world.

There has been an eroding of the long-held, highly-valued faith in "progress" and the capacity of science to "solve" problems and a growing awareness that the Western social, economic and political system is not a desirable model even for the Western people themselves. Yet, despite these changes and self-doubts, there have been no widespread positive changes in attitudes among the political and economic leaders of these nations.

The populations and the leadership of industrialized countries must recognize that the growing internal problems within the industrial countries cannot be met by recourse to measures that may have been useful in

The International Economic Order in the 1980s 13

the past, nor can poverty and marginality in the third world be overcome by integrating parts of developing nations into the Western-dominated international economic system. Nothing less than wide-ranging structural reforms within the industrialized countries themselves is needed. These structural changes should include the following:

1) a policy of "energy for my neighbour" whereby developing nations participate in the development of new technologies in energy and resource use;

2) international cooperation on the basis of mutual interests to create means of income adjustment in favour of the weaker nations along the lines of the Western nations' welfare and security systems; and therefore

3) new but reliable and regular political processes and instruments effectively incorporating methods of securing people's participation;

4) finding new ways of assuring work opportunities for all;

5) aid and support or compensation for those most likely to be adversely affected by restructuring in Western countries;

6) a generalized process whereby people can carefully examine objectives and methods of industrial (and agrarian) production in the light of human and humane values; questions should be asked about the social usefulness of the final product and the waste involved in rampant consumerism;

7) the development of a practice of self-reliance and reduction of their dependence on natural resources and food supplies from developing countries in order not to encourage third-world nations to use precious agricultural land for growing industrial or luxury food to be exported to the developed countries.

International structural changes

International structural changes are integrally related to national and regional changes as national and international structures constrain and mould each other. Who benefits from international structural changes depends very much on the nature of national societies and power structures. By the same token the international structural setting in a large measure penetrates and shapes as well as constrains and limits national structures. Change at one level facilitates or even requires changes at other levels.

In 1980 AGEM surveyed the major international intergovernmental forum for dialogue about change, the Tenth Special Session of the UN General Assembly, and assessed the prospects for change as the United

14 Ecumenical Reflections on Political Economy

Nations entered the "Third Development Decade" (DD3). They found little ground for optimism and instead remarked on the lack of propitious national and international settings for reaching agreements, the meagre results of the agreed formulations of DD1 and DD2, and the lack of new departures, insights and substance in the preparatory documents for DD3. The analysis pointed to the dichotomy of approaches between the 77 and the Non-Aligned on the one hand and the OECD member states on the other, and feared that the Special Session would be a dialogue of the deaf.

This critique of the international forum for dialogue highlights the problems in achieving profound structural changes at all levels. Meetings of the major actors involved in the development dialogue can only be meaningful if, at the end, they represent more than a paper agreement which bridges in words a gaping chasm in attitudes and intended actions. Targets must be set which can be related to performance and to obligations of specific actors - states, international agencies, TNCs. An essential part of DD3, as much today as in 1980, is a detailed set of targets for action by each UN family organization (including the World Bank and the International Monetary Fund) over the next decade and a mechanism for annual reporting on results to the General Assembly. Included in such targets should be substantive negotiations on structural changes.

But one major meeting at the international level cannot "achieve development". It is important to underline the necessity for a series of meetings, dialogue and actions at the international level which build on their predecessors. This must be accompanied by the same at other levels, regional and national, so that development is set in the context of sustained exploration, dialogue and struggle for justice and participation.

Priority areas for change

In addition to identifying the levels and types of changes that are necessary for a new international economic order, there were also a number of specific issues which appeared on the NIEO agenda for discussion. The AGEM reflected on a number of these issue areas and published some of the conclusions in a first booklet: Ecumenism and a New World Order: the Failure of the 1970s and the Challenges of the 1980s (1980). Because the problems identified by the AGEM remain no less acute today than in the late 1970s, it is useful to review some of the major issue areas which remain sources of vulnerability and blocks to development for third-world countries.

The International Economic Order in the 1980s 15

Production: Because production is a necessary condition for and a central means of meeting needs as well as a basic component in the power to participate, changes in global production structures are central to any equitable, participatory, sustainable and human-oriented new international economic order. While efficiency is crucial, it must be determined with respect to goals. No change can be seen to represent an increase in efficiency unless questions like what, how, and for whom are addressed. Greater diversity, that is, balance of production and of use, as well as greater opportunity to make use of special human and natural resources through specialization, is needed. Both the balance and the specialization structures will need to be quite different from the existing ones, and will not be based on simplistic lines of labour-intensive/capital-intensive specialization and exchange as promulgated in recent years. Collective self-reliance at various levels can contribute towards reconciling structures of balance and specialization.

Commodities: The problem of commodities for the developing countries is that many, if not most, developing countries depend heavily on the production and export of raw materials which often have the following results:

- low export prices (especially when compared with manufactured goods);

- wide fluctuations in export prices;

- relatively small value-added in the productive process;

- demand increases for many commodities only with population growth;

- many developing countries are meeting increasing competition from synthetic substitutes.

The steps so far taken to reduce the developing countries' vulnerability to these problems seem to be modest. Some proposals have been made since the 1940s and have resulted in a few commodity agreements being reached. Since 1973 developing countries have been increasingly insistent in their demand for an Integrated Programme for Commodities (IPC) and some progress has been made in this direction. The Common Fund proposed to finance the programme will probably come into operation in 1988-89 but the outcome will be very modest. Over 1980-87 the commodity situation and outlook has deteriorated radically.

Manufactures: Trade in manufactured goods is necessary for developing countries because of the inherent need of industrialization in the process of economic development. Industrialization is integral to targets with respect to employment, food consumption and general welfare. It is

16 Ecumenical Reflections on Political Economy

also necessary because of the relationship between industrialization and the prospects of agricultural and other sectors of the economy.

But little progress has been made towards structural changes. Goals were set at the 1975 Lima UNIDO (United Nations Industrial Development Organization) conference to attain a share of 25 percent for the third-world countries in global manufacturing production by the year 2000, but instead of the realization of those goals we have seen the rise of a new protectionism in the industrialized countries which threatens the little progress which has been made.

Structural changes such as the following must be seriously considered:

(1) national development frameworks must be concerned with the poor, workers and farmers, and not dominated by national elites and TNCs concerned with surplus maximization; (2) a restructuring of manufacturing will require all economies to restructure employment; (3) freer trade for freer access to first- and second-world economies is necessary but not sufficient for a long-term solution to the problem of restructuring world production and trade in manufactured goods; the long-term goal is international trade managed for the benefit of all.

Aid (concessional resource transfers): Some of the problems of aid are:

- aid is inadequate in amount;

- aid is inadequate in quality - much of it being little more than export promotion credits; little is available as programme support grants for nationally determined development priorities;

- many aid allocations divert national development away from social justice and meeting basic human needs;

- aid transfers remain unilateral and often arbitrary rather than automatic and predictable.

Aid should not be seen as a permanent feature of a restructuring of the world economic order but rather as a transitional necessity until the inequalities of the old order have been lessened. Similarly, aid should not be seen as an act of charity but as mutual self-interest or solidarity, rather like unemployment or disability compensation. Because aid is at best a support for transition to an NIEO and at worst a palliative suppressing symptoms without treating structural causes, it is self-defeating to seek to make aid the main route to development, NIEO, or social justice. However, especially for very poor economies whose states are committed to social justice, aid is critical. Its presence will not bring about just, participatory and sustainable societies, but its absence or inadequacy can set back the struggle for their attainment.

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Energy: A decade and a half after the first oil shock of the 1970s, it is clear that structural changes in our attitude to as well as exploitation and use of energy sources will form a vital part of our ability to work towards development and societies that are just, participatory and, above all, sustainable. This is not solely, nor even primarily, a question of oil prices. For example, for millions of poor households - and especially of poor women - it is a question of access to wood fuel and of access on terms which neither pauperize the household nor threaten ecological sustainability

The AGEM has identified three elements of structural change which are both urgent and practicable:

1) enhanced globally supported exploration, growth and development of energy sources in third-world countries;

2) increased access of petroleum exporters to knowledge and gathering of inputs to transform their petroleum earnings into broader, long-term development at home, cooperation in the development of other third world countries, and convertability into interim financial assets whose value will not be eroded by inflation and instability;

3) research for the creation and funding for implementation of new knowledge on conservation, additional energy sources, and improvement of safety and pollution records of, for example, coal and nuclear power.

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