Carroll Quigley - Tragedy and Hope - A History of the World in Our Time

It would be possible to state the achievement of the Alliance for Progress in terms of hundreds of thousands of housing units, schools, new hospitals, roads, additional drinking water, and experimental or demonstration farms, but such lists, however large the numbers, indicate little about the success of the Alliance. On the whole, it cannot be said that the Alliance has failed; but, even more emphatically, it cannot be said that it has been a success. Its achievement has been ameliorative rather than structural, and this alone indicates that it has not been a success. For unless there are structural reforms in Latin American society, its economic development will not become self-sustaining or even manage to keep up with the growth of population on the basis of income per capita. The failure of the Alliance for Progress to achieve what it was touted to achieve has many causes, but the chief is undoubtedly that it was not intended primarily to be a method for achieving a better life for Latin Americans but was intended to be a means of implementing American policy in the Cold War. This became clearly evident at the second Punta del Este Conference of January 22-31, 1962, where Washington’s exclusive control over the granting of funds for the Alliance was used as a club to force the Latin American states to exclude Cuba from the Organization of American States. The original plan was to cut off Cuba’s trade with all Western Hemisphere countries and to break off diplomatic relations as well. A two-thirds vote by countries was needed to make the recommendations official; it was obtained only by the minimum margin (14 votes out of the 21 members) and only after the most intense American “diplomatic” pressure and bribery involving the granting and withholding of American aid to the Alliance. Even at that, six countries, representing 75 percent of Latin America’s area and 70 percent of its population, refused to vote for the American motions. These six were Brazil, Mexico, Argentina, Chile, Bolivia, and Ecuador.

Much of the weakness of the Alliance for Progress arises from its failure to work for structural reforms that will change the patterns of Latin American life in more constructive directions. The aid, as we have said, is entirely under the control of the United States; it generally takes the form, not of money which can be used to buy the best goods in the cheapest market, but as credits which can be used only in the United States. Much of these credits goes either to fill gaps in the budgets or the foreign-exchange balances of Latin American countries, which provides a maximum of leverage in getting these governments to follow America’s lead in world affairs but provides little or no benefit to the impoverished peoples of the hemisphere. Moreover, the grants, which provide dollars to these countries, are often counterbalanced by contrary influences, such as increased tariffs or other restrictions on the flow of Latin American goods to the United States, or decreases in the prices of Latin American primary products, or (what leads to the same results) increases in the export prices of American industrial goods.

A decrease of a cent or two in the price that the United States pays for coffee can wipe out all the funds that it provides for the coffee-producing countries under the Alliance for Progress. For example, from 1959 to 1960 the price that the United States paid for its coffee fell from an average of 39¢ a pound to 34¢ a pound. This decrease of a nickel a pound would represent a decrease in the total amount the United States paid for coffee, from one year to the next, of more than $150 million for the 30 billion pounds bought in 1960. Similarly, a decrease of one cent per pound on Chile’s copper means a loss of about $11,000,000 a year. On the other hand, an increase in the prices of American television sets of one dollar each costs Latin American buyers about $15,000,000. When both occur together, so that the prices of what Latin America sells are falling while the prices that it has to pay for American goods are increasing, as has been generally true during recent years, it means that most of the funds that Washington extends to Latin America under the Alliance for Progress are evaporating before they can be used, in terms of the total amount of dollars available for Latin American purchases of goods and equipment needed to modernize the Latin American production system.

There are many other aspects of this situation that help to explain the weak achievement of the Alliance for Progress. The tax-reform projects designed to force the rich to pay a fair share of taxes and to encourage them to invest rather than simply to hoard their surplus funds have come to almost nothing. But the possibility that something of this nature might be done has caused large volumes of funds to flee from Latin America to seek shelter abroad. It is possible that the total of such Latin American funds hiding abroad may amount to as much as $20 billion, the same amount the United States promised to provide over the whole ten years of the Alliance’s projected life. While we have no accurate figures on these sums, an official report gives $4 billion as the amount of Latin American money on deposit in the United States at the end of 1961.

All of these considerations make it clear that problems of our neighbors in the Western Hemisphere are still rising more rapidly than they are being solved, a condition equally true in southern Asia, southeast Asia, and the Near East. In all of these, failure to find some answers to the problems that are rising can only lead to neutralism, eventual hatred of the Western world, and violent explosions by disappointed peoples that achieve nothing constructive either for them or for us. There are those who say that all these disappointments are inevitable because the problems of the backward areas are basically insoluble. To these skeptics we need only say: Look at the Far East, where, in vivid contrast, we can see the outstanding case where the problem of development has been solved and the most frightening example of what may happen when it is not solved.

THE FAR EAST

From the opening of the Far East to Western trade and influence, largely at the insistence of American traders, China was the recipient of American favor and protection, while Japan was regarded with suspicion and rivalry. The culmination of this process was in World War II, when China was an ally and Japan was our enemy. In fact, as Pearl Harbor showed, American intervention in the war arose over its efforts to protect China from Japanese aggression. Yet, in the postwar period, this relationship was reversed. Japan now represents the greatest success and China the greatest failure of America’s postwar foreign policy. Our policies are often praised or blamed for these discordant results, but they should not be, for it could easily be argued that we were hardly aware of what we were doing in either case, and the outcomes were the consequence of forces quite beyond our control. This almost certainly is correct in China, but the amazing success story that is to be seen in contemporary Japan may well be attributed to successful American policies in combination with the peculiar social and personality patterns of the Japanese people.

The Japanese Miracle

The word “miracle” has been applied to a number of postwar events, such as the economic upsurge in West Germany, but it is nowhere more applicable than in Japan. For Japan is the only major area outside Europe, except the United States itself, which has reached that stage in economic development which W. W. Rostow called “takeoff.” That is, it has reached a point in development where the process continues by its own momentum, accumulating and investing its own capital, with increasing production of food from a constantly dwindling farm population, a shift in diet from emphasis on “energy foods” to emphasis on “protective foods,” and a shift in industrial activity from products requiring unskilled labor in a low capital-to-labor ratio toward products requiring highly skilled labor in a high capital-to-labor ratio. The Soviet Union itself has not yet reached this point in development, so that Japan is now the only fully advanced industrial nation in Asia and has, as a consequence, taken on characteristics that are familiar to us from Western European and American experience but are totally unknown elsewhere in Asia, Latin America, or Africa. As a consequence, Japan is, for these still backward areas, a more helpful model of economic development than either the United States or Western Europe, since these two earlier examples of development did not have to face some of the problems, such as lack of resources and heavy population pressure on the land, which Japan was able to overcome. Thus a Peace Corps of missionaries for development techniques would be more helpful from Japan than the present American Peace Corps of recently graduated college students, on the ground of technical experience if not on the ground of humanitarian motivation.