No Industrial Revelation

SURELY SOME REVELATION is at hand. Conservatives immediately proclaimed their victory in November as a watershed in American economic and social policy. They plan no less than their own New Deal to sweep out at least a decade's worth of uninspired and ineffectual liberalism. The traditional Keynesian policies of government spending and job creation sit battered on the ropes along with their Democratic sponsors. As productivity replaces equality as the nation's key objective of social policy, regulation and humanitarian programs await the scissors of congressional budget cutters.

Even if the primary proposal of the new conservative consensus, tax cuts for the wealthy, signifies a genuine concern for national welfare instead of corporate greed, "supply-side economics" cannot succeed in revitalizing America. Their atavistic prescription of freemarket policies to bolster productivity exemplifies the failure of modern economic theory to adapt to the complex problems of either an increasingly interdependent global economy or a fragmented American society.

Faced with the poverty of neoconservative and traditional liberal solutions, Ronald Muller tries to draw up a new blueprint of attack. More than an economic tract on revamping American industry; Revitalizing America looks at fundamental changes that American people and corporations must make in the decade ahead. As the title suggests, prosperity requires much more than the recrudescence of an affluent industrial elite, but a rebirth of a political spirit of cooperation and determination. Muller's scope extends beyond domestic boundaries to the problems of the Third World--a topic conspicuously absent in the discussions of most corporate zealots. He places American stagnation in the context of a world-wide downturn afflicting both Western nations as well as those trying to industrialize for the first time.

Although no longer the factory for the industrial world, the United States still carries the largest share of the burden for sparking global development. Muller attributes the stagflation that has mired national growth rates in a steady through to a vicious cricle of inflation and low productivity and likens the American scenario to the sputtering economies of less-developed countries. To combat what he calls this "Latin Americization" of the United States, he proposes concerted political efforts to both stimulate world-wide demand for American products and national consensus for greater efficiency and equity at home. Although he doesn't fall prey to the chauvinism that taints much current political discussion, Muller's proposals for dealing with the rest of the world are no less than imperialsitic. Falling back on one of the few unqualified successes of American post-war policy, the Marshall Plan, he suggests a global analogue that would spur industrial development in the Third World while buttressing markets for American corporation.

THIS NEW American-initiated Marshall Plan would involve not only a direct transfer of resources by the affluent countries, but a network of "micro-efforts" by American coporations to aid private enterprise or state-owned entrepreneurial organizations. He proposes modification of World Bank and the International Monetary Fund organizational structure to muster wasted resources currently held by OPEC or in the bloated Eurocurrency market and target them for strategic industrial projects in Third World countries. As in the original Marshall Plan mutual self-interest would provide rich and poor nations with a basis for cooperation.

But development in Brazil, Muller's favorite example of this type of cooperation, provides a frightening case of successful enterprise but mistaken priorities. The government there provided sufficient bait to attract U.S. automoblie manfuacturers and other multinationals. This bias in Brazil toward export-oriented industrial and urban development significantly diluted relief to the rural poor there. Similarly, Muller notes that after years of stangation the Indian steel industry has become an exporter. But at what cost to the millions starving in India's villages and cities? Although his global market plan may provide a boon to the United States and other technology exporters, its prospects for helping the world's poor are minimal. Taking the current activities of the World Bank as and indicator of Muller-style operation, semi-industrialized Third World countries will be favored over those which need assistance most. And in those countries targeted by Western enterprise, industrial elites will benefit unduly. Unlike the original Marshall Plan, Muller's cannot afford to ignore the social consequences of its operation: the desperation and instability wrought by increasing income inequality in the less-developed world.

AS THE UNITED STATES has become "Latin Americanized," with high inflation and low productivity, he cannot ignore the social effects of domestic policies either. Interest rates and corporate taxation may cause plenty of anguish at three-martini lunches, but the political dynamite of our society comes from chronic unemployment and inflation along with the futility of many poor neighborthoods. The current stagnation prevents both the public and private sectors from assisting the poor they once did. While Muller is right to dismiss the voguish speculation on taxation and capital formation as irrelevant to future prosperity, he provides no radical response to pressing social problems. He advocates a decentralized, grass-roots reform of labor, corporations and government relationships. Muller outlines a program of cooperation between these economic actors that would eradicate the misallocation of resources, stemming from interest group haggling. His idea is intriguing, if utopian, but it still fails to address the issue of those who are represented neither by corporation, bureaucracy or union. Muller's array of strategic planning and targeting might possibly succeed in reversing declining productivity rates and other inflationary trends. But measures based on the corporate sector, as most of his are, will not affect the prosperity of those worst off and most likely to revolt against a system that allows their poverty.

Revitalizing America is less than a revelation. Muller's solutions ultimately fail, because they do not present a new intellectual vision to the economics of poverty and prosperity. Instead, he rehashes and mixes mostly traditional ideas into a political soup so that they might have some effect. Perhaps the task ahead is too difficult for the economists. None were needed for the Western world's first industrialization. Considering the social and political problems of development both here and abroad, it is hard to imagine what solutions they provide now.