Financial Alternatives to International Commodity Stabilization

Abstract

Modern societies apply certain concepts of the “social minimum” in sustaining domestic groups whose incomes are either cyclically or chronically depressed. Presumably, postwar programs of international foreign aid reflect an extension of this attitude. The first major effort in that direction, the European Recovery Program, was brilliantly successful in providing the base upon which Europe built its impressive economic performance of the past dozen years. The very success of the Marshall Plan, however, leads to a certain impatience with the comparatively unsatisfactory results of the more recent aid efforts—those directed towards accelerating economic growth in the less developed countries (LDC's). At the very time when the United States Congress is becoming increasingly disenchanted with foreign aid, the rising political power of the LDC's in the various agencies of the United Nations has been adding to the external pressures for an enlarged aid effort, as evidenced by the United Nations Conference on Trade and Development held in Geneva from March to June this year.The newer focus of foreign aid raises particularly difficult problems both of diagnosis and of prescription. On the one hand, disturbances arising from cyclical instability within individual LDC's are often compounded by those associated with structural maladjustment, and it is by no means an easy task to distinguish between these separate sources of trouble. On the other hand, because primary commodities loom so large in the export trade of the LDC's, the industrial countries can be led (by a combination of good intentions and political blackmail) to accept, in the name of foreign aid, commodity policies that are ill-conceived and self-defeating. It is just as important to resist the implementation of unwise policies as it is to develop new institutional devices appropriate to current circumstances.