International Economic Disintegration

THIS is another part which must be kept small; its very modest purpose is merely to convey an adequate idea of what is meant by the title and of the possible procedure to be followed in solving the problem.

A point has now been reached where all the detailed conclusions contained in the preceding parts make it both possible and necessary to formulate a more general conclusion on the future of world trade from the point of view of a rationally organized world economy. If the investigation outlined or already undertaken in the previous parts of this enquiry is brought successfully to a close we shall be satisfactorily informed about the great structural changes in the different parts of the world economy. We shall know what forces are driving agriculture and industry in its different branches in this or that direction and what elements, apart from the influence of violent state intervention, tend to shape the new configuration of world economy.

Now the task lying before us is to synthesize these views and thus to arrive at a fairly correct picture of what the world economy of the immediate or of the more distant future would be like, if the development were allowed to take its “natural” course and to bring about the changes which are to be considered as rational, i.e. those changes in the use and the distribution of productive forces all over the world which correspond to the changes in demand and in the technique of production and which, therefore, are likely to enhance the standard of living. This is not merely an attempt at prognostication of the innate tendencies of world economy; it is also an attempt to provide a guiding principle for constructive policies by suggesting the rational scheme of international division of labour, as distinct from the actual and distorted one and by making clear what changes are necessary in order to bring the actual state of world economy nearer to the rational one. Questions like the following may illustrate what we have in mind: how far and in what directions is it rational to-day to have less international specialization and more international diffusion of production than in the past? How far and in what directions will it be rational to have more and new specialization among the different countries and continents? How far will the newly industrialized countries take over industrial production not only for their home markets but also for some of the former export markets of the old industrial countries, as e.g. Japan in supplying the poor colonial and semi-colonial countries with the cheapest kind of consumption goods which they would perhaps be unable otherwise to buy at all? What new trade relations are likely to originate from such changes? What is likely to be the ultimate significance of the development of synthetic raw materials for the specialization or for the diffusion of production? Or of the shifts in the production of natural raw materials brought about by the exhaustion of old and the development of new reserves? What will be—to mention another point most important in connexion with the present trade-cycle worries and the propositions of the “mature economy theory”—the international investment necessities and opportunities in the near future, and what will be the most probable form in which international investments will be carried through? What will be the rôle played by items of international trade other than commodities? In what manner will all this react on the total volume of world trade and on its qualitative structure, especially on the multilateral form of international trade? Is there a natural tendency for more regional groupings in world trade, in agriculture as well as in industry? How far will it be possible in the end to maintain a really coherent and intercommunicating world economy in the face of the collectivist or semi-collectivist character of so many national economic systems? What is the maximum of real (i.e. free and multilateral) world economy compatible with the present structure of national economic systems? How great are the possibilities of re-organizing world economy on the principle of international planning? If we face in this respect insoluble contradictions with mutually exclusive alternatives what will be the rational choice or what will be the price in lower standards of living to be paid for a less rational choice?

The foregoing questions are merely meant to suggest the line of thought to be followed and to demarcate roughly the field of research. Its importance is being recognized to-day in many quarters, as is proved by the increasing literature on this subject.1

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2 Allan G. B. Fisher, The Clash of Progress and Security, London, 1935; N. F. Hall, Preliminary Investigation into Measures of a National or International Character for Raising the Standard of Living (League of Nations, A. 18, 1938, II.B.): Carl Major Wright, Economic Adaptation to a Changing World Market, Copenhagen, 1939; D. H. Robertson, “The Future of International Trade,” The Economic Journal, March, 1938: PEP Report on International Trade, London, 1937; Leonhard Miksch, Wirtschaftsgrossmächte und Nebenländer, Betrachtungen über den Umbau der Weltwirtschaft, Die Wirtschaftskurve der Frankfurter Zeitung, 1939/11.

• 1Cf. my paper “A Value Judgment on Value Judgments” in which I am explaining my attitude in this very important methodological question. It will probably be published in the “American Economic Review.”
• 2The purpose of this book is to make a new and more promising approach to the diagnostics of that long-run crisis in international economic relations which is one of the most striking symptoms of the general economic, social, and political crisis of occidental society. I believe that the urgent necessity of such an approach has been enhanced rather than diminished by the outbreak of the war. However, I would betray my own philosophy if I regarded this book as anything more than a mere beginning, an invitation to constructive criticism, and a way of opening or furthering a discussion for which the world seems to be ripe. In submitting this book to criticism, I am not afraid to expose myself as one who believes not only in the scientific legitimacy but even in the utmost scientific necessity of employing a measure of judgments, which is ultimately based on a definite conception of what is wrong with the world, and of what should be done in order to put it right again. Those who are shocked by such an attitude may be reassured that I gave more thought to this methodological problem than I am able to explain on this occasion.