AN AUSTRALIAN PERSPECTIVE ON THE NEW INTERNATIONAL ECONOMIC ORDER Bob Catley & Bruce McFarlane

Introduction international capitalist institutions meant that the Hoors of European and US banks were closed to them and approval ot loans After 1945 there was a global restructuring denied. They joined. of capital investment and production. It was During the post-war period, 1945-71, the designed to rebuild the ex-enemy powers of Australian economy experienced its second the USA in order to contain communism and loi^g boom, the first having occurred during to defend US hegemony over the world the four decades which followed gold rushes capitalist system until such time as inter­ in the 1850s. The precondition for the post­ imperialist rivalry no longer made this war boom was rapid growth in the tenable. international capitalist economy. But it also required that the Australian state The underpinnings of the strategy were apparatuses inaugurate policies to take hundreds of US military bases, massive US advantage of the favourable external economic aid to Europe, Taiwan and South circumstances. This they carried out with Korea and a series of international some success. The post-war social agreements regulating the international democratic government joined the flow of trade and payments. Foremost American-dominated international order — among these were the Bretton Woods the World Bank and IMF, inaugurated the Agreement, the General Agreement on immigration program to provide labour for Tariffs and Trade (GATT) and the the inflowing industrial capital from the UK establishment of the World Bank and the and increasingly the USA, and tailored state International Monetary Fund (IMF). (1) policies — tariffs, subsidies, infrastructure, While Australia and New Zealand education — to the task of producing a full hesitated for a while, they soon found that to employment regime of all-round stay outside these arrangements and industrialization. NEW INTERNATIONAL ECONOMIC ORDER 7

Despite his laissez-faire, Anglophile been enthusiastic proponents; and the rhetoric, Menzies (Prime Minister 1950-63) Marxist system of social analysis received used the interventionist state for the same fewer adherents. An account of “American purposes after achieving office, and moved imperialism” (1969) centred on its global Australia out of the British into the dominance of economic activity and American orbit. By the late 1960s Australia continued expansion. (3) Yet by 1971 the was a viable industrialized appendage of the visible signs of an empire in decline were American-dominated order. During the already there for all to see. What had 1970s these conditions collapsed: occurred? unemployment, de-industrialization and In their seminal work, The Limits of stagnation are the order of the day. The Power, the Kolkos have argued that the post­ origins of this crisis, like the boom which war strategic objectives o f the Whited States preceded it, are to be found in the profound were beyond its capacity to achieve. They changes which are occurring in the conclude by referring to international economy. These may be described as a global reorganization of America’s constant, increasingly violent capital, production and trading patterns. effort to control and redirect a world moving Hence while some sectors of the world ever further beyond any nation’s mastery. In capitalist system (South Korea) boom, others that monumental undertaking to contain and (Australia) suffer sustained depression. This reconstruct the world according to its own is, of course, a classical feature of the needs, the United States was prepared to capitalist mode of production: a clean-out destroy itself — morally, socially and economically — in a deepening trauma whose and reorganization of capital coexists with a effects began to weaken American capitalism depression, for they are two sides of the same far more than the attainment of its expansive, coin. What makes the 1970s unusual is that unattainable goalB might ever have the “clean-out” is taking place on a global strengthened it. (4) scale. The bourgeoisie call it the “New International Economic Order". The post-war order began to come apart in the late 1960s, but it was from the As the country was transferred from the abandoning of the gold standard in August British to the American empire(2) so the 1971 that the decline of American hegemony repressive apparatuses of state shifted their may be dated. It occurred because the social allegiance. The military became integrated forces temporarily contained within with American strategic designs and fought American strategic objectives in the early with the US in its major military offensives 1950s presented simultaneous challenges to in Asia — Korea, Indo-China — and its power. Australia became the site of some of America’s most important military One of these social forces and a key source installations, Pine Gap and North West Cape of dissatisfaction was the Asian bourgeoisie. in particular. And the secret police, ASIO, Their import substitution industrialization established under the Labor government at programs had never got off the ground British promptings developed under without Soviet assistance and rarely with it. American auspices. Yet it is true that the Their economies continued to be dominated strategy brought an extended economic by foreign capital. And the foreign aid boom (1945-71) which standB alongside that programs had for the most part merely of the nineteenth century (1850s-1880s) in served to lock them more securely into this significance for the development of structure by being tied to policy packages Australian capitalism. which ensured it. These complaints were voiced in various international forums, As elsewhere, in Australia the boom particularly after UNCTAD in 1964, and seemed to be permanent, bringing with it grew in strength following the formation of rising living standards, a full employment the Group of 77 at the United Nations. In the regime and a rolling-back of socialist 1970s they became articulated as thedemand politics. The era of the Keynesian economist for a New International Economic Order. had arrived; social democrats swung sharply against public ownership of productive In addition, raw material exporters, capital, a policy of which they had never conscious of their vulnerability to 8 AUSTRALIAN LEFT REVIEW No. 71

international price fluctuations and long­ Japan and North America merely constitute term downward movement, began the a conspiracy. What is clear is that its formation of commodity cartels. In 1971 the extensive list of publications represents an oil cartel, OPEC, won a significant price rise opportunity to witness some of the by collective action giving a spur to others. discussions undertaken by the American foreign policy elite as it reconsidered its New Planning for Global Restructuring strategy in the 1970s. Since its membership in the 1970s has included a few Rockefellers, Carter, Vance, Schlesinger, Mondale and Faced with growing threats to the Brezezinksi — apart from numerous but not international order which it had established quite so influential Europeans and Japanese in the post-war period, American ruling — we must credit it also with considerable circles in the 1970s undertook a influence. reconsideration of their global posture. This was made more urgent by what was widely We do not wish to undertake a detailed termed a crisis of credibility concerning its review of the Trilateral Commission or of its political institutions among the American practical influence and refer the interested public itself. The Nixon-Kissinger reader to the research findings of an administration in its dying years moved in Australian, (6) David Marcus. In four areas, three direction. First, under Kissinger’s however, its debates are o f interest to this intellectual guidance it sought to evolve a study. First, its organizational basis classical halance of power situation represents an effort on the part of the involving the US, Soviet Union, West American elite to reconstitute the world order Europe, Japan and China with scant regard under the joint direction of the EEC, Japan to their domestic regimes. Interests not and the US. It is an attempt, buttressed by ideology would be determinant as the new the annual heads of government economic Metternich secretively spun his new summit conferences, to paper over the inter­ Realpolitik. Trade war with the EEC and imperialist cracks. Secondly, with respect to Japan, and trade deals with the Soviets and the Third World it advocates integrating the China resulted. Secondly, an administration most powerful of its elites into the global without ideals would uBe national interest, management structure by acceding to some media manipulation and political repression of the demands contained in the New to maintain political stability without an International Economic Order, Thirdly, it reaffirms the objectives o f detente but with adequate mask of ideology — since abroad all were potential allies. Thirdly, Third other tactics. On the one hand, communist World states could be policed by time- regimes should be carefully distinguished from those of the capitalist world and honoured techniques — a torturers’ coup in suitably discredited by selective use of Chile, carpet bombing in Hanoi and perhaps human rights propaganda. And on the other, an occupation of the Persian Gulf to secure the more “moderate" elements in the oil supplies, all directed personally by Nobel political elites of those countries should be Peace laureate, Kissinger. But such offered material incentives to increase their techniques and strategies were already under question within American ruling economic ties with the capitalist world markets. In the Soviet case, the incentive circles. would be access to food supplies; in the We may now refer to the Shoup and Min ter Chinese case — where opportunity followed study of the Council on Foreign Relations. (5) hard on the heels of intention — the lure They have used the publications of this would be the transfer of capital and influential American institution, whose technology. Finally, the Commission had members included politicians, academics, considered the political crisis of the 1970s military men and corporate capitalists, to within many of the advanced capitalist illustrate the debate about post-war strategy countries themselves and advocated none in American ruling circles. In the 1970s a too implicitly an all-round reduction in those new institution emerged to supplement if not democratic liberties which it argued had replace the Council — the Trilateral been extended sufficiently to threaten the Commission. We do not suggest its three authority of the capitalist state itself. The hundred members drawn from West Europe, transition from Nixon/Kissinger to NKW INTERNATIONAL ECONOMIC ORDER 9

Carter/Brzezinski heralded the adoption of since “today almost 70 per cent of Australia’s this Trilateral strategy by Washington. (7) exports and 60 per cent o f our import trade Before turning to the Pacific Rim Strategy, are directed towards Asian and Pacific we must consider policy changes in the countries, including the United States. OECD member states. About three-quarters of capital inflow is from North America and Japan and private '['he fear involved in these reports is that national efforts to offset recession by capital outflow is directed almost entirely to the Western Pacific” . (10}This represents the protectionism could spread, collapse world reorganization of the Australian economy trade and deepen depression, as in the 1930s. (8) To some degree, its recommendations within a new regional division of labour — the Pacific Rim Strategy. were taken on board by OECD member states, and to that extent represent a Australia and the Pacific Rim Strategy consensus among capitalist states on appropriate public policy. The Pacific Rim Strategy represents the The Lome convention is an example of a application to the Asia-Pacific region of the partnership between EEC states and fifty- New International Economic Order. One six African, Caribbean and Pacific states. former Australian Prime Minister has Signed in February 1975, its preamble called sanguinely described it in the following for “ a new model for relations between terms: developed and developing states compatible It is likely that by the year 2000 the gross with a more just and balanced international domestic product of Japan and China, economic order". All products were to have including Taiwan together with Korea, will be greater than the GDP’s of North America or duty-free access to the EEC, although 75 per the KEC. This represents one of the most cent of these exports had already achieved a momentous shifts of economic strength in “ n o duties” status under GATT world history. In the 1950s and 1960s it was arrangements. Special regulations, however, appropriate enough to describe our region the protected EEC Common Agricultural Policy moat turbulent and deprived in the world. The (eg, sugar and beef). The post-Ivome period, description will not hold in the 1980s and 1975-78, does not show any evidence of a 1990s. change in export flows, but the reverse flow If the last three centuries were pre­ from the EEC to the underdeveloped eminently the Age o f the North Atlantic, the signatories rose steadily. (9) The total 21st century will be the Age of the Pacific. (11) amount of aid that has gone out from the He went on to urge Australian integration EEC is small and its real value has been into this structure by means of tariff reduced by inflation during 1975-78. By March 1978 only 38 per cent o f the target for aid had been committed and only 10 per cent disbursed. Any improvement for non- European signatories, however, seems unlikely, because of the EEC insistence that they must keep a balance between its relationship with Ijome signatories and the Third World as a whole. Asian states are now tailoring their policies to attract the favourable attention of those corporate planners who are creating the New International Economic Order. In such circumstances, in order to fully understand the effect of the 1970s crisis on Australia, it is necessary to extend beyond an analysis of the decline of US imperialism and the generalized depression throughout the OECD area, and in uestigate the effects of the restructuring on the peripheral areas of the world imperialist system. Particularly important here is the Asia-Pacific region 10 AUSTBALIAN LEFT REVIEW No. 71 reduction and the expansion of capital in the NIEO and politicians are gearing up investment, trade and aid with the region — for the task of making the transition policies he had himself pursued when in acceptable to their population. And finally, office. in 1975, the second conference of UNIDO in The Pacific Rim Strategy springs from the Lima called for the transformation of the conjuncture of circumstances which we have capitalist world by the expansion of Third earlier described. The decline of American World industrial production from its 1975 imperialism ha8 forced on US capital a share of 7 per cent to 25 per cent by the year policy of accommodation with forces it could 2000. Since on Club of Rome estimates earlier ignore. The deliberations of the (which are conservative) by 1988 Trilateral Commission make this clear. The transnational corporations will control 41 reorganization of production in the Asia- per cent of the capitalist world’s output, it is Pacific region reflects this fact. On the one quite clear who is designing the NIEO. (15) hand, Japan has emerged as a rival and What will be its shape in the Western Pacific? cohort with large reserves of capital and foreign exchange which it haB been Basically we may say that the Pacific Rim investing throughout the region in energy, Strategy involves reorganizing the resource and industrial undertakings. This international economy of the Western has dovetailed neatly with the emerging Pacific on four tiers. The first three Peter demands of the peripheral bourgeoisie in the Wiley identified ten years ago and we have semi-colonial countries of east and Southeast made extended reference to them ourselves Asia for industrial capital to reorganize their (16): the US and Japan acting in status on the world market. Technological condominium as providers of capital, advances in transportation such as super­ technology and planning; Canada, ships and containerization — which have Australia and New Zealand delivering massively reduced the unit cost of transport foodstuffs, raw materials, energy and — and in communication and travel — deindustrializing; and the former colonial jumbos, satellites — have enabled areas of the area maintaining their role as multinational corporations to reorganize neo-colonial providers of raw commodities their industrial production on a and cheap labour, supplemented by new multinational scale with less regard to infusions of industrial capital. To these three proximity to markets. The coincidence of must be added in the 1970s a fourth: the these developments is changing the Pacific socialist countries of east Asia which are Basin’s production pattern. being invited and cajoled to join the system. Let us look at each tier in turn. We have already referred to the Trilateral Commission’s projections. It has also We have already referred to the established^ 1980s Project to determine the development o f US policy in the 1970s, But contours of the new international division of some additional observations need to be labour. (12) Other agencies have been made. The 1971 devaluation of the dollar was similarly concerned to determine the shape accompanied by certain trade restrictions on of the new world order which international Japanese imports and the later capital is creating. The International Labor announcement of Nixon’s visit to China, Organization has produced a study, The These were indeed “shokkus” for Tokyo, To Optimal International Division of Labour, them were added the inflation, recession and (13) in which, among other things, it lists oil price rises of 1973-4. Since the US then which industries it estimates will be tended to (wrongly) blame Japan for its allocated to which country. The Club of deficit problems, relations were extremely Rome, similarly, has published a report in strained. With the inauguration of Carter which it not only calls for global and a flexible exchange rate regime this reorganization but also urges that “a tension has eased andpresent US deficits are conscious attempt must be made to organise chiefly attributable to its energy import bill intellectual and political lobbies to re­ which will be resolved only by tough internal educate international public and political policies. But the trade surpluses built up by opinion” . (14) Similarly, within each state Japan and its revalued currency placed it in “think-tanks” are busily making projections a strengthened position as a capital exporter o f the role that they will be called on to play and therefore imperial power. “Significant NEW INTERNATIONAL ECONOMIC ORDER 11 developments in the United States-Japan Third World industrialization had to be relationship over these years marked conceded, since it existed in, if limited form. decisively the end of the post-war patron- And the two pacesetters in this respect were client relationship between the two countries Taiwan and South Korea. and signalled the assumption of leadership These countries shared two important responsibilities for Japan, side by side with legacies. They had both been colonies of the United States,in the Pacific area.” (17) In Japan, whose imperial policies included a 1978 the new yen-dollar rate was jointly widespread education policy and did not determined. This inter-governmental co­ exclude industrialization in the colonies — operation was strengthened by joint both almost unique features. In addition, corporate penetration of the region, for after 1950 both states were front-line areas in example, in the area of autos where each US the US strategic policy of imperial defence. corporation has interlocking ownership or As a result the aid programs provided by the distribution systems with a Japanese US were not exclusively designed to producer. They have also combined their maintain their economic integration into the China-Viet Nam policies. imperial system. They were among the The second tier involves the former highest per capita recipients of economic colonial areas which we may consider in two assistance designed to produce showcase groups. First, Taiwan and South Korea. In states in the strategic battle with Asian socialist literature the so-called Baran-Frank communism. (21) They were both also thesis assumed dominance in accounts of the military dictatorships, Taiwan from its capitalist periphery in the 1960s. (18) On this inception and Korea from 1960. Further, they thesis the epoch of colonialism had seen the were, for reasons of strategy, military underdevelopment of the Third World. It has presence and geography, early recipients of been reorganized under the dominance of US and Japanese industrial capital. By the metropolitan capital with the result that mid-1960s both states had utilized this even after independence, post-colonial combination o f circumstances to produce an societies were essentially producers of raw export-led industrialization program, which materials exported to the metropolitan during that boom period did not encounter countries in exchange for industrial significant protectionist resistance. products. This “unequal exchange” The success of these strategies has led to maintained their underdevelopment and these states being widely touted (along with dependency which was occasionally Hong Kong whose unique features are well augmented by military power. A few settler known) as models, so some indication of their colonies — Australia, Argentina — provided character should be given. Their almost exceptions to this picture, but when Baran unique legacy and location gave them wrote his Political Economy of Growth, 1957, advantages as did their early development the m odel was a reasonable representation of as export/production platforms for reality. Indeed, Third World governments multinational capital. Domestically the took the same perspective in their growing policy has required savage repression, no demands for a NIEO. But by the early 1970s internal democracy, no trade unions, female this picture had changed. labour working a 58-hour week for 20 cents an hour in Korea, and unmatched secret In 1973 the late Bill Warren wrote his much police powers. Also when the American aid discussed article in the New Left Review program stopped providing free claiming that independent industrial infrastructure construction, the state was capitalist development was taking place in forced to borrow abroad to provide subsidies many areas of the Third World. (19) The for capital, and Korea’s external public debt figures he presented crystallized the problem stands at over $30 billion. and confirmed the lurking suspicions that manufactured goods with “Made in China or Under the impact of the apparent success Korea” stamped on them had stirred up at of the Korea-Taiwan package, and at the the local supermarket. In fact, as a quick prompting o f the World Bank (22) and response argued (20), the process was multinational corporations, each of the certainly not widespread and probably states o? ASEAN determined on a new rarely independent, but the possibility of strategy. Although the timing varied, we 12 AUSTRALIAN LEFT REVIEW No. 71

may briefly describe its essentia] elements. became a new potential source of oil and The key step in each state was the removal of other energy supplies developed by even the semblances of parliamentary multinational capital. (23) democracy which had been adopted by all during the 1950s and 1960s. This process In order to achieve this strategy, took place in different ways ranging from a quite marked changes have occurred bloody military coup in Indonesia to within the ASEAN states. Not creeping authoritarianism in Malaysia and only must labour bequiescent, it must also be Singapore. The repressive state apparatuses cheap, and since these states compete with then set about dismantling the restrictions one another for corporate capital they have on foreign capital and trade which had been each driven down wage rates to attract it. In erected either by state planners or even at the addition, they have competed to provide the behest of an embryonic local bourgeoisie. most generous state subsidies, taxation This policy was accompanied by the holidays and infrastructure. And in therural destruction of any organized labour areas they have used the repressive state movement or patriotic opposition — and, of apparatuses to break up traditional social course, savage repression of socialist patterns, where these provided an obstacle to politics. By the early 1970s, this process was the development of agribusiness or the completed and the ASEAN states undertook "Green Revolution” , thereby further strategies designed to attract the capital of destroying traditional agriculture, multinational corporations — chiefly but not increasing unemployment and worsening exclusively Japanese and US — in pursuit of per capita calorie intake. Alongside this an export-led development strategy. Two repressive process has been built the most sectors became important in this process: modern enclaves to cater for tourism and the industrial capital for the export of needs of expatriate corporate executives. manufactured goods, and agribusiness for These developments represent the domestic the further development of export-oriented face of the much vaunted New International agriculture and primary production. Economic Order. Alongside this, as Malcolm Caldwell so The enthusiastic supporters of the NIEO in perceptively documented, the region also the advanced capitalist countries see it as NEW INTERNATIONAL ECONOMIC ORDER 13 breaking up the exploitative trading their impulses they will widen and deepen patterns which had been established in the those relations. In Sri Lanka it is hoped that colonial period. Clearly there is some truth in about one-half of the present size of the this proposition — but old patterns of industrial labour force (250,000) will be exploitation are being replaced by new ones. recruited to one zone during the next five While aggregate statistics enabled Warren to years. Such zones are projected for or exist in point the finger to industrial capital all the ASEAN states. They represent the accumulation in peripheral states, he missed subservience of the post-colonial state to its the dramatic effect this is having on social master, multinational capital. And in order relations in those areas. In many cases slave to achieve this status it must not only repress labour is not uncommon: and cheapen its local labour power more thoroughly, but also expand its public debt When she was brought to Bangkok at the via loans from the World Bank or financial age of 12, Maem thought she was going on a corporations in order to provide the family outing. Instead, her father, a dirt necessary bribes. Hence the growing and farmer, sold her to an employment agency for $80. Maem ... was then sold to a factory where massive indebtedness of the Third World as a she and 58 other girls worked 15 hours a day whole. wrapping candy. They were supposed to be In order to illustrate more concretely the paid 50 cents a day, but no one received any process underway, let us take the cases of the money because the owner said they had to pay for bed and board ... Philippines and Sri Lanka. In the Philippines transition to independence, a 5,000 of the 17,000 factories and cottage stunted but lively caricature of capitalist industries in Bangkok are sweatshops; they employ mostly children and habitually violate democracy was constructed, partly to assist laws regulating working hours, sanitation in the crushing of the powerful socialist and safety. The children are usually sold to the rebellion (the “ Huks”) of the post-war period. factories for $50 to $100 to supplement their By the early 1960s some internal nationalist parents’ 75 cents a day income from the fields. development was taking place and controls (24) were established on foreign capital (by currency regulations). Under the Presidency of Marcos this was wound back in the late Export Processing Zones 1960s. Following the coup of 1972 and the imposition of martial law, the technocratic- The essence of this process is perhaps best military regime under the personal seen by looking at the industrial estates dominance of the Marcos family and coterie inaccurately known as Free Trade Zones. of associates unfolded a familiar package. This is an area set aside for industrial The entire array of democratic rights, production for export, usually ringed by however stunted, was abolished; about barbed wire or concrete walls. It is reserved 60,000 political prisoners were jailed in six for corporations prepared to export a high years; American military assistance more percentage of production and, in official than doubled; the World Bank made lavish terms, “ an enclave in terms of customs- loans available; Japanese and American territorial aspect and possibly other aspects capital flooded in; per capita calorie intake such as total or partial exemption from laws plummetted to below India’s level; and decrees of the country concerned” . (25) unemployment, despite official figures, is The zone has its own authority and its workers are subject to special repressive around 30 per cent on ILO estimates; and the ordinances and anti-combination practices. foreign public debt has leaped from $1 billion in 1972 with a service debt of 10 per cent of It is usually located near an airport or export earnings to over $8 billion in 1978, the seaport. The state provides the roads, power, labour and factory shell. For metropolitan service on which is over 25 per cent of export earnings. capital the investment credit or “free trade” zones are like beachheads, ensuring Why did this happen? Despite its operations which will eventually integrate ideological rhetoric about the “New Society”, much of the economy of the host country. the Marcos regime is the agent of Moreover, these zones reproduce the wage- multinational capital and propagates the labour/capital situation of classical “trickle down” theory of foreign investment- capitalism in its pure form. As they spread led development (which it is unlikely to 14 AUSTRALIAN LEFT REVIEW No. 71 believe). With that in mind, its strategy leads executive hotel, golf course and swimming inexorably to the results described above. Its pool provided. Their products are exported. foreign public loans are designed to provide To its north stands the unfinished nuclear an infrastructure for foreign capital power plant. Around it live the 10,000 investment. Here, its projects include the workers on the government’s reserve list provision of power through the Chico Dam, which it guarantees to provide to capital as the Lake Cebu hydroelectric power scheme and when required. The entire complex is not and the nuclear power station — destroying the product o f a megalomaniac latter-day local society. US military aid and the Asiatic despot. It is the lure to attract three expansion of the armed forces are to ensure sources of capital: regional MNC its ability to cheapen labour power which is headquarters to the downtown banking now touted in its development brochures as centre; industrial, to the export processing the cheapest and most efficient in the region. zone for export and Manila for domestic In the rural areas export-oriented cash crops markets; and tourism cum conferences, to the have been further developed with a Manila Bay complex. No doubt some egos consequential decline in the availability of (and other things) will also be flattered by food and a rise in its price. (The cost structure visiting UN Security Council meetings, ADB in Manila is approximately the same as and UNCTAD conferences and American Sydney with average wage rates 5 per cent of dance and film companies. Again, this is the Australia’s.) This rural decline takes place domestic face of the New International despite a “land reform” program, the chief Economic Order. purpose of which is to transfer rural political power away from the old “oligarchs” to The government brochures which seek to Marcos’ supporters. attract foreign capital make it quite clear that the basis of the strategy is labour The centrepiece of the program is the exploitation. Certainly extensive reference is Manila Bay land reclamation project made to other facilities but: complex, the most expensive single item in the foreign debt ledger. It involves The workers at the EPZA outnumber their reclaiming 6,000 hectares of land in the bay capitalists and managers by thousands to one; at central Manila. On it already exists the they overwhelmingly comprise the people at the export zone...they are the lifeblood of the massive Philippines Cultural Centre which Zone, the hub and wheel that turn the industry rivals the Sydney Opera House, a conference at the EPZA — the mainsprings in fact that centre, some luxury hotels, a hydrafoil port, a make the cash registers ring... They are the yacht club and a floating casino. To them prime attraction that induces most companies will be added a marina, sports complex, a to converge upon Bataan. (26) mini-forest, a luxury corporate executives’ housing estate, the technocratic faculties of It is on this commodity — thoroughly the University of the Philippines, a banking exploited labour power — that the headquarters and a new Presidential palace. Philippines entry into the New International The whole area will be enclosed with a moat Economic Order is riding. and finally the international airport added. Alongside this enclave development runs Similarly, in Sri Lanka, an export “ free zone” managed by the Greater Colombo Roxas Boulevard with its luxury hotels and Economic Commission will employ 100,000 Playboy Club, and ITT and Asian workers producing manufactured exports — Development Bank offices. Behind them lie and the total industrial labour force in Sri three streets o f brothels. It is flanked to the Lanka is less than 250,000. north by the US embassy and the south by Sangley Point US military base. The first feasibility study for the free trade zone, to extend over a geographical area of 180 square miles north of Colombo City, was Across the bay, on an isolated peninsula, done in 1974. The second and major stage lies the Bataan Export Processing Zone at will be completed by 1982. Foreign investors, Mariveles linked by hydrafoil. In it work, at a except in textiles, are permitted to hold 100 dollar a day, nearly 25,000 Philippinos, per cent ownership of their enterprises; there mostly women, for foreign companies who is to be no planned transfer of assets to Sri have had the infrastructure, including an Lankan ownership. Bilateral investment NEW INTERNATIONAL ECONOMIC ORDER 15 guarantees were negotiated with well be as disruptive as the impact of governments of the main foreign investing nineteenth century colonialism, and which countries. Investing firms will set their own has already produced violent reaction in Iran guidelines on wages policy; offshore banking and elsewhere. As a progressive project it is a arrangements have been made. fraud. And it was entirely appropriate that The key aspect is that the “zone” is being the fifth UNCTAD conference in June 1979, treated administratively as if it were a which made very plain that the advanced separate country despite the fact that if it is capitalist countries would structure the New successful in terms of attracting investors, it International Economic Order, should have will have crucial economic and social been held in the $150 million convention implications for all of Sri Lanka. It will, centre on reclaimed land in Manila. under present circumstances, dominate A common theme since 1967 in US foreign industrial strategy instead of promoting policy, and later in the Trilateral industrialization as one amongst a number Commission and in the OECD, has been to of industrial projects and employment- re-integrate the socialist states, particularly generating policies. of Asia, into the international capitalist economy. At a time of the decline of the New International Economic Order and American empire, this was seen as a way of A ustralia helping to prolong American hegemony by use of offsetting boosts such as expanding The New International Economic Order is markets, investment outlets and cheap- being widely portrayed as a progressive labour based manufacturing export development, even in some socialist circles. platforms and tourism. In fact it represents a strategy, already touted by the Trilateral Commission, of The “four modernizations” program of the coopting restive peripheral ruling classes Teng Tsiao-Ping section of the Chinese into the new international division of labour leadership was particularly welcomed as a which the multinational corporations were way of enabling this program to be in any case, for their own reasons, implemented: joint ventures, foreign undertaking. TTie first demand by the Third investment in two free-trade zones and military/security co-operation. Despite World states, for industrial capital, will be met by raising the Third World share of recent political opposition to the speed of the capitalist world industrial output from its new Chinese program (and consequent scaling down of targets and massive foreign 1970s level o f 7 per cent to 25 per cent at the borrowing), the new economic policy in end of the century. This was declared at the 1975 Lima conference. Much of this will China was widely welcomed as a harbinger remain under the control of metropolitan of future re-integration of China’s economic capital and serve to improve profit rates. system with the international law of value. “ Progressive” peripheral ruling classes will Some Asian Development Bank officials, deliver the labour input. The second demand, Manila planners and Canberra economists for a stabilization of commodity prices via a note the dangers also posed by this Common Fund, will again serve the need of development for other tiers (such as Australia) in that China provides even metropolitan capital, still conscious of the 1972-3 commodity and energy price cheaper labour and subsidies for explosion. The third, for larger foreign aid manufacturer’s exports — a development programs, will be met by public capital which makes China competitive not only transfers (mostly loans) to provide the with Australia but with South Korea and infrastructure for corporate investment to Hong Kong. ensure the further integration into the world Viet Nam’s refusal to join the trend to re­ market on the lines described in the integration, its tough foreign investment Philippines. The New International laws, its initial refusal to disavow a Economic Order is a shorthand for the plans revolutionary foreign policy was one of the for further expansion of capitalism into the first obstacles, and helped to sponsor peripheral areas on terms still dictated by Washington’s attempt to make Viet Nam an metropolitan capital’s needs and with social international pariah by using the boat- and political effects in many cases that may people fraud. The aim, especially since the 16 AUSTRALIAN LEFT REVIEW No. 71

Brzezinski visit to Peking in May 1978, has progressively seized a larger share of the been to destroy Viet Nam’s post-war domestic market. At first, the principal reconstruction policies and remove any source of these employment-displacing “force of example” (socialist revolution in imports was Japan which reflected not only agricultural property relations, its growing trade surpluses but also the nationalization of private trade) for people in decline of American and British Thailand and Malaysia. manufacturing industries in Australia, for the lead sectors of manufacturing capital in Australia’s Future in the Pacific Basin the country were owned by those declining E conom y imperial powers. Later, the export-oriented industrialization programs of the poor Asian Australia stands, with Canada and New states had their effect. For the one year, 1976­ Zealand, as a distinct tier in the emerging, 7, it has been estimated that 20,000 persons reconstituted Pacific Basin economy. As were unemployed by ASEAN imports alone, sparsely populated, high-productivity contributing to the 80,000 jobs “ shed” each economies with abundant natural resources, year in the manufacturing industry since their role in the new international division of 1974. This corresponds broadly to other labour will be different from that of the estimates of a decline in manufacturing metropoles, the Third World or the socialist employment by more than 200,000 during states. It is the repercussions of that 1970-8; or, to put it another way, a drop of the transition which provide the key to percentage of the workforce employed in understanding the processes of political and manufacturing from 27 per cent to 20 per social change experienced by Australia in cent. The problem was worsened by the the 1970s. We will conclude with a broad geographic concentration of the industry in brush review of the major features of this exactly the opposite part of the country, the development. southeast of the mainland, to the new mining ventures. (27) Facilitating this shake-out of The first involves the development of new capital and labour and despite the Fraser mining and energy industries under the government’s reputation as a high control of multinational capital. This process protection one, the nominal rate of hegan in the late 1960s with coal and iron assistance (tariffs, import restrictions and providing the lead sectors for export to the subsidies) has declined quite dramatically in rapidly growing Japanese economy. These the 1970s. This is bringing Australia, with an industries are chiefly located in the states of historically very successful protectionist West Australia and Queensland where they policy, into sharp conflict with the interests rapidly developed strong influence on the of the Asian bourgeoisie, the economic state apparatus and political parties to program of which is the “New International articulate their political objectives. Being capital-intensive they provided limited Economic Order”. employment opportunities (the mining The openness of the Australian economy workforce declined in 1978) and being export- has also ensured that within this structural oriented had less interest in the condition of remoulding, it has shared the short-term Australian aggregate demand levels than in oscillations of the world economy. In the late its currency level and inflation rates. They 1960s, it shared the growth; in 1971, demanded and got an extensive system of recession; in 1972-3, the short boom which government financial support which capital inflow and rise in commodity prices continued to grow, despite some brief ensured would both inflate domestic prices opposition by the Labor Party, during the and push the currency value up; since 1974 it 1970s. It is from their states that the lead has shared the depression. This has been sectors of Australian reaction emerged in the intensified as a result of the pronounced 1970s. decline in new foreign capital inflow in 1973­ 4, which has ensured that a major objective The other side of this coin has been the of state policy would be to create an grow ing deindustrialization of the investment climate favourable to Australian economy. This process also multinational capital. started in the late 1960s. It first surfaced as a slow-down in investment rates and than The Australian capitalist class has from 1969 on was compounded as imports similarly accommodated to this process — a NEW INTERNATIONAL ECONOMIC ORDER 17 strategy consistent with its history and one 10. P. Drysdale and A. Rix, “ Australia’s which gives little credence to the term Economic Relations with Asia and the “national bourgeoisie”. Across the board the Pacific”, Current Affairs Bulletin (Sydney), leading firms in each sector of the economy April 1979, presenting the case for are now multinational, and where this is not strengthening the Pacific Basin economy. so evident, as in banking, the interlock of 11. E. G. Whitlam, Tenth Flinders Lecture in directorships and share holdings is strong. Asian Studies, Adelaide, 25 July 1979. Not only is the Australian economy 12. Shoup and Minter, Imperial Brains Trust, Ch. unusually monopolistic but also only four of 7. ' the top ten corporations are Australian, and 13. ILO, Geneva, 1975. the two largest of those are deeply involved 14. Reshaping the International Order, a report to in joint ventures with multinational the Club of Rome, 1976, p. 177, corporations. All are transferring their 15. Reshaping the Intemntional Order, vp. 274ff. capital into energy and mining operations to take advantage of the new international ■ 16. Peter Wiley, “Viet Nam and the Pacific Rim division of labour. And, finally, they are Strategy”, reprinted Australian Left Review, joining the rush to invest their industrial August-September 1970. capital in ASEAN states. (28) 17. Drysdale and Rix, op. cit. 18. See P. Baran, The Political Economy of Growth; and A. Gunder Frank, Capitalism and Underdevelopment. Notes 19. Bill Warren, “Imperialism and Capitalist 1. For an account of this process, see G. Industrialisation” , New Left Review, Kolko, The Politics War: The World and September-October 1973. See also Bill Warren, United States Foreign Policy 1943-1945 “The Post-War Economic Experience of the (Random House, 1968), especially Ch. 11; and Third World”, Journal of Australian Political L. Shoup and W. Minter, Imperial Brains Economy, September 1978, with an Trust (Monthly Review, 1977). introduction by B. McFarlane. 2. See M. Beresford and P. Kerr, "Post-war 20. P. Me Michael et al., “Imperialism and the Reconstruction and Australia’s International Contradictions of Development”, New Left Economic Relations”, in E. L. Wheelwright Review, May-June 1974. and K. Buckley (eds.), Essays in the Political 21. H. Magdoff, Age of Imperialism, pp. 122ff. Economy of Australian Capitalism, Vol. IV 22. See H. Myint, Southeast Asia’s Economy, A (1979). Study Sponsored by the Asia Development 3. Harry Magdoff, The Age of Imperialism Bank (Penguin, 1972). (Monthly Review, 1969). 23. M. Caldwell, “ASEANisation”, Journal of 4. J. and G. Kolko, The Limits of Power: The Contemporary Asia, Vol. 4, No. 1,1974, pp. 36­ World and United States Foreign Policy, 1945­ 70; and “Oil in Southeast Asia”, in E. Utrecht 54 (Harper and Row, 1972), p. 716. (ed.), Transnational Corporations in 5. Shoup and Minter, Imperial Brains Trust. Southeast Asia and the Pacific, Vol. 2 (University of Sydney, 1978), pp. 171-255. 6. See D. Marcus, “The Trilateral Commission”, Arena (Melbourne), 52, 1979; and “The 24. Newsweek, 23 July 1979, p. 34. Trilateral Commission”, unpublished thesis, 25. Free Trade Zones and the Industrialisation of Department of Politics, University of Asia, AMPO (Tokyo, 1977). Adelaide. 26. “ The Brawn that Turn the Wheels” , 7. The relevant sources here are: Trilateral Philippine Development, 15 October 1978. Commission Task Force Reports (New York 27. See Australia Uprooted, AMSWU, 1977; and University Press, 1977), Nos. 2 and 3, and D. T. Healey, “The Implications for Australia (1978) Nos. 10 and 13; and Samuel P. of Expanded Imports from ASEAN”, paper to Huntington et ai, The Crisis of Democracy 49th ANZAAS Conference, January 1979. (1975). 28. See Kate Short, “The Dialectics of Australian 8. H. W. Arndt, The Economic Lessons of the Expansion” and “Australian Investment in 1930s. Indonesia”, in E. Utrecht (ed.), Transnational 9. Colin H. Fitzpatrick, “The Re-negotiation of Corporations in Southeast Asia and the the Lome Convention”, National Westminster Pacific, Vol. 1 (University of Sydney, 1978), Bank Quarterly Review, May 1979. pp. 105-122.