TFF Associates & Themes Blog

By Johan Galtung

For one who has worked much on the theory and practice of change from systems of hierarchy to systems of equity, June 15 1964 will never be forgotten. Those at the bottom of the world system of states, fragmented away from each other by colonial and imperial structures, marginalized, exploited, came together, 77 of them, and formed–not a very revolutionary word–a Group. In 1967 the Group was confirmed by the Charter of Algiers. They used the UNCTAD-United Nations Conference on Trade and Development as their platform.

Then the follow-up in 1974: the New International Economic Order-NIEO, and the Charter of Economic Rights and Duties of States, passed by the UN General Assembly.

A trade union of states, or their governments, had been born; today 133-states strong. Not included are almost all states that are members of the Council of Europe (which includes the EU), OECD-Organization of Economic Cooperation and Development, and CIS-Commonwealth of Independent States. A very clear North-South divide: temperate zone against the tropics.

Not only did they organize, they were even proactive. They had done their homework, not only reacting to the country always upfront with clever homework, its homework: the USA, usually on behalf of the world Northwest. The shock effect was massive; how do they dare! G77+, plus China for instance, had more power potential than they probably were aware of if they had been able to act more quickly, using voting and the UNGA-United Nations General Assembly and the Specialized Agencies, and above all their own South-South cooperation. They could have changed the world.

What went wrong, what might have been done and can still be done? That will be elaborated below; at this point only once again: G77 was already a basic change in the 1960s without any economic program, just by existing as a structural fact, weaving the world system together at the bottom. Imagine the same in the EU today: a G5 of the five peripheral countries–Greece-Italy-Portugal-Spain-Ireland–could have a shock effect on a Germany-run EU–a German goal in both WWI & II.

What went wrong was not the idea of a New International Economic Order, but basing it on terms of trade (well, there was more to it, like compensation for colonialism, now coming up again). Having worked in Santiago, Chile during the 1960s as a UNESCO-United Nations Educational, Scientific and Cultural Organization professor at FLACSO-Facultad Latinoamericana de Ciencias Sociales I was familiar with CEPAL-Comisión Económica para América Latina and the path-breaking work associated forever with the name of Raúl Prebisch on the increasing amount of raw materials, resources, needed to buy, say, one tractor. That trend of deteriorating terms should be reversed. The counter-argument was to leave that decision to the market; the market knows best.

Nonetheless, there was another counter-argument. Changing the terms of trade would mean more income to the exporters of resources and cheaper processed goods and services. The elites in the G77 countries would be better off, but there was nothing in NIEO guaranteeing that the gains would be passed on to the tillers of the soil, the banana and the coffee growers, the miners. The economies of the G77+ would still be based on export of resources, foregoing huge externalities–challenges, stimulus for the development of science and technology, higher levels of workers’ health and education, better infrastructure, more equity within and between countries–processing resources instead of merely demanding better terms of trade.

But that would have presupposed a jump from the intellectual center of G77 and NIEO in Chile to Japan, and from Raúl Prebisch to Kaname Akamatsu (1896-1974), the brain behind the Japanese miracle, the “lead goose” spreading rapidly to the “flying geese” in East and Southeast Asia. Never export resource, import them, process them at ever higher levels, invest the value-added in science and technology and in health and education for workers to do more than digging a hole in the ground, extracting something, shipping it abroad to resource-processing molochs. Learn from successes, change the whole society, lift the bottom up; way beyond Manchester liberalism and Bismarck.

Discussing this in detail with Prebisch shortly before he passed away in 1986 two things became clear: the brilliant Argentinean, expelled from his country, was more focused on America South and North and less on what had happened one or two continents away; but he was totally open to another perspective.

The two perspectives do not exclude each other, and one economic genius does not overshadow the other (an indirect compliment to both: nobody in their traditions got the, falsely termed, “Nobel Prize” in economics). Profits from better prices for resources could be invested in the ways indicated above and the whole South and East, not only BRICS (Brazil, Russia, India, China, South Africa), could already in the 1960s-70s have been transformed like Japan and the “dragons”. As it was, the Northwest could enjoy its hierarchical grip on the world economy fifty extra years.

China had been exposed to the Akamatsu formula as a part of the Japanese short lived empire and has practiced the doctrine to the letter without, it seems, recognizing its origin (which is certainly not marxist-communist; Marx-Mao did not foresee this approach either). But Akamatsu had worked for the Japanese empire in the 1930s, in other words for the enemy, not only for another economy.

Whatever were the factors standing in the way of a broader approach to a NIEO serving not only the trade union leaders, the elites, but also the ordinary workers, fully benefiting from the positive externalities (an example of negative externality being pollution), G77-133 could still embrace both perspectives.

And more: badly needed is a good theory-practice of economic equity; how do we cooperate economically for mutual and equal benefit? How can G77-133 work both for its own betterment and for a reasonable and stable relation to the former masters, the Northwest in general, and the USA in particular?

G77 at 50: not an age of retirement but of experience and wisdom to transform the world economy, for poor countries and people. Go ahead!

First published here.