BOOKS From Rags to Riches

By BRIAN CROZIER

HE assumption that dependence was the main 1 impediment to affluence was almost univer- sally made among the independent movements

in countries that have since reached sovereignty.

For a variety of reasons, this assumption had its companion: that the only road from rags to riches was through socialism of one kind or another. The strongest of these reasons was psy- chological. Many of the leaders of the 'new emerging countries'—from Nehru to Nkrumah, from Sukarno to Banda—were the products of western universities. As students, likely as not, they had encountered racial discrimination.

Those who studied in London or Paris in

the 1920s and 1930s tended to find a sympathetic audience only among Communists or left-wing

Socialists. The equation of imperialism with capitalism came naturally to them, and so did its corollary—that the removal of imperial fetters would usher in, or at least make possible, the economic millennium.

Hence the reliance on economic planning was and still remains almost universal, and a socialist ideology became a badge of independent respect- ability. Though powerful, the influence of Marxism should not be exaggerated. Many newly-independent leaders think in Marxist terms, but they don't necessarily push their Marxism to the extent of handing over power to their local Communists. African socialism, or Arab or Burmese socialism, does not necessarily imply alignment with Moscow or Peking.

It has been argued that socialism of such non- Leninist varieties takes the wind out of the sails of full-blown Communists, and that it should

therefore be welcomed as a pis-alter. I would agree, but only as a pis-aller. The illusion that

independence, by removing external exploitation, brings affluence is being dispelled by the experi- ence of the past two decades. In fact, in most cases, independence has been accompanied by a lowering of living standards. But the illusion that socialism is the key to economic advance is infinitely more tenacious.

The original psychological syndrome has now been institutionalised. With the departure of the colonisers, the independence party becomes the state. 'Jobs for the boys' means jobs in the civil service. And the lawyers, doctors and profes- sional revolutionaries of the years of struggle become the planners and bureaucrats of inde- pendent nationhood. By definition, the local capitalists tended to be foreigners and 'im- perialists.' Capitalism was thus identified with oppression, and for ideological or xenophobic reasons the locals wanted no part of it. A vested interest in socialism was thus established.

I have long been convinced that this vested in- terest and the illusions on which it rests are holding back the economic development of the new countries. It is refreshing to find this con- viction reinforced by Mr. Cranley Onslow's devastating analysis of the group of essays he himself has assembled in Asian Economic De- velopment.* This is, to my mind, an extra- ordinarily interesting experiment. Mr. Onslow has collected able and outspoken essays by lead- ing economists from Burma and Ceylon, India and Malaya, and Pakistan and Thailand, each writing about his own country's economic de-

velopment. Having .allowed each contributor his say, Mr. Onslow subjects them to a concise but comprehensive comparative analysis. He is care- ful to say that although his own conclusions often conflict directly with those in the original studies, no discourtesy was intended. What he has done, nevertheless, is to demolish pretty effectively a number of the assumptions most widely cherished in the planning departments of the new bureaucracies. Since these assump- tions are by no means confined to the bureaucracies of the new countries, and appear indeed to have been shared by successive govern- ments in London, and to a lesser degree even in Washington, the interest of Mr. Onslow's study is by no means remote. It is, in fact, of direct concern to the taxpayer, whose money, like it or not, finances foreign-aid programmes.

The most widespread of the assumptions is that development gets nowhere without planning. As Mr. Onslow points out, the term 'planning' is itself bedevilled by semantic confusion. In Malaya (and to some extent in France and even here, via 'Neddy'), planning may mean no more than the co-ordination of existing efforts, to privent waste and duplication. In India, how- ever, it means the central direction and regulation of all economic endeavour, except small-scale agriculture.

There can be little objection to Malayan-type planning, in the sense that its capacity to damage the economy is limited. Indian-type planning, on the other hand, though its evils are restricted by exposure to democratic processes, lacks this saving grace. All the less-developed countries lack trained personnel: that is one reason why they are less developed. At best, they may have enough qualified people to do the essential jobs of government, such as conducting foreign affairs, providing for national defence, main- taining law and order, admiiYistering the nation's finances, providing schools and universities, and so on. The diversion of such people to the pro- liferating bureaucracy of economic planning may give Professor Parkinson a chance to say he told us so, but it is itself counter-productive, since it will leave the essential departments, of government undermanned.

The neglect of government to the benefit of planning might be justified if planning brought compensating advantages, but it plainly does not. Total government control of the economy over- rides consumer choice, leaves living standards stagnant and results in meaningless 'develop- ment.' Even the Russians are beginning to see this with their painful rediscovery of such hated symbols of capitalism as consumer needs and the profit motive.

* ASIAN ECONOMIC DEVELOPMENT. Edited by Cranley Onslow. (Weidenfeld and Nicolson, 36s.) MALAYSIA. By Victor Purcell. (Thames and Hud- son, 30s.)

SOUTH AND EAST ASIA SINCE 1800. By Victor Purcell. (C.U.P., 25s.)

f JAPAN'S ECONOMIC EXPANSION. By G. C. Allen. (0.U.P, for Chatham House, 50s.)

CilANGING JAPANESE ATTITUDES TOWARDS MODERNIZATION. Edited by Marius B. Jansen. (Prince- ton/O.U.P., 72s.) Ill REPORT FROM A CHINESE VILLAGE. By Jan Myrdal. Translated by Maurice Michael. (Heine- mann, 45s.) .

Similarly, the assumption that economic growth is directly proportionate to investment needs to be critically examined. The probability of waste in publicly controlled investment is far higher than where investment is in the hands of private interests that will be damaged if yields are dig"- appointing. Electoral expediency, national pres- tige and other economically irrelevant motives are too often the guiding principles of 'planned' investment, especially in the less-developed coun- tries. In Burma, as one contributor admits, 'projects were at times included for political con- siderations such as obtaining votes in an election or because of the personal preferences of one or more ministers.'

The assumption that a country needs heavy industry before light; the favouring of the in- efficient public sector at the expense of the self-correcting private sector; the supposition that 'land reform' automatically increases yields on the land—name a proved economic fallacy, the planners have it. Under the ideological direction of Nehru himself (who, it is sometimes for- gotten, headed India's planning from the first day of independence), and the mathematical guidance of Professor Mahalanobis, the Indians, in particular, have carefully repeated the major errors of. Soviet economics; though they have managed to stop short of the extreme 'socialist' experiments of the Burmese and Indonesians, who have achieved economic retrogression faster than the saddest pessimists had forecast. (Unlike the Burmese and Indonesians, to be fair, the Indians have preserved their freedom of dis; cussion: there is thus always a chance that the Indian government will abandon counter-pro- ductive policies.)

In contrast, little Malaya, at , the receiving end of Indonesia's 'neo-colonialist' jeers, has shown a striking capacity to absorb an exploding population while raising living standards—until wantonly slowed down by Indonesia's 'con- frontation.' The last two books of the late (and prolific) Victor Purcell§11 complement Mr. Lim Chang Yah's able essay on Malaya's economic development in Mr. Onslow's collection and pro- vide a useful historical conspectus of the area as a whole.

If, as I am, one is saddened by the spectacle of organised economic stagnation, or worse, whether in the United Kingdom or in poorer places, there is always the consolation in reserve of a glance in Japan's direction. Professor G. C. Allen's new book t is indeed more than a glance; it is a scholarly dissection of an astonishing suc- cess story, attributable to a credit system of extra- ordinary daring and flexibility, the revival of the paternalistic Zaibatsu—and, let it be said (for many commentators are coy on this score), to a capacity for hard work that is not always matched in the less-developed countries. To these circumstances and aptitudes must be added two factors: a thirst for modernisation (analysed from different aspects in a new Princeton sym- posiumt) and an awareness of the value of the market as the developing force par excellence, for Mr. Enoch Powell is not alone in having re- discovered a neglected verity. So have the Japanese, and so did Erhard and his predecessors, Eucken, !Woke and Rfistow, in Germany. But, unlike the Germans, the Japanese not long ago worked either in Dickensian squalor or in the deprived simplicity of the Asian village, which Jan Myrdal's painstaking but ingenuous reportf evokes in a contemporary Chinese setting. Even today, Japan's emergence from squalor is in- complete; but its march towards affluence ought to cause the planners furiously to think.