THE STRAIN OF BEING A GREAT WORLD POWER

Press, Volume XCIII, Issue 27924, 22 March 1956, Page 12

THE STRAIN OF BEING A GREAT WORLD POWER

ENDS AND MEANS

(By

LYNCEUS

oj the “Economist"}

[From the “Economist' Intelligence Unit}

London. March 13.—The abrupt dismissal of Glubb Pasha from Jordan and the sudden flare-uo of the problems of the Middle East have again emphasised the meagreness of the financial and military resources with which Britain is todav endeavouring to maintain its position as a world Power. The effort involved must arouse some nostalgic but also instructive thoushts. Time was when Britain bore the responsibilities of a great Power, indeed, of the greatest Power in the world, without showing undue siens of strain The Pax Britannica svmbohsed by the British naw defended Britain s far-flung interests, and. in the process. eave some semblance of relative oeac'' and stability to the century that ended in 191 4 . British cap’tal opened un the virgin lands of the United States. Canada. Argentina. Australia, and many other countries. British factories and yards orov’ded the stool, machines. locomet ; v , 's and shins tha’ were needed for this immense task of development. The policy of free trade then opened the channels to th" produce that was thus created Chp«m wheat and meat came pnurinc into Pr’tain and f"d a growing number of industrial workers who manned what ■ was truly called “Ihe workshop of the j world.”

It was a beautifullv balanced system and. though it mav have led to some abuses, some exploitation both at home and overseas, it was. on the whole, a | growth of constructive and of mutually beneficial character. Britain. in the course of these decade*, became the b’'*g z 'st exporter of manufactured goods, ihp biggest importer of foodstuffs and r»w materials, and also the biggest creditor in the world. Building on Thrift

All this seemed easv. automatic, and well within this country's capacity. But that capacity to manufacture, nnt only for ourselves, but for others to export both the equipment and tho capital to pay for them, to invest overseas on a really large s°ale—ail these things rested on two facts or two assumptions. The first was that the people of Britain were thrifty They were prepared to save, to fnreo immediate consumption in order to invest. in order to provide for their own future and for that of thmr descendants. The second assumption, in many ways connected with the first, wr.s that we were prepared, year bv year as a nation tn buy less from the overseas world than our earnings entitled us tn buy. The difference, namely, the surplus in our balance nf payments, was the symbol nf the resources we were nouring into other countries, there to fructify, to enrich lhe borrower. and. of course, to bring the lender over here, an appropriate return.

Let us give it any name, pejorative or laudatory, let us call it capitalistic imperialism or enliehtened private enterprise development: there is no doubt that it contributed much to the enormous expansion of the world's wealth and resources in the last century. And let it be added that the diminution, if not the disappearance of this wherewithal to lend, and of the \ igour and judgment with which tha» lending was done, has left behind it a great vacuum, of which current events, including those in the Middle East, are one symptom.

The demand for this combination of resources and skill is todav greater than ever. What is more. Britain is endeavouring to satisfy that demand. We have committed ourselves to financing the development of Southeast Asia through the Colombo Plan, into which we have already poured some £100.030.000. We have, largely on the advice of the Foreign Office and in an attempt to counter Soviet infiltration, committed ourselves to honouring a blank cheoue for the verv expensive project of the new Assouan dam in Egypt. We are lending monev to. Tanganyika and to Kenya. Rhodesia has recentlv issued a loan in London and will require manv tons of millions to finance the vast Kariba hvdro-electric project on the Zambesi. We are building a great iron and steel plant in India, and the Government is being called upnn to grant extended credit to the tune of over £10.000.000 to finance this project. These are financial commitments. There are political and military commitments in Cyprus. Persia, and other parts of the Middle East, as well as in Europe, that are no less formidable.

• Britain, as the world banker, is still m business: but where are the re-

sources out of which these commitments are to be honoured’’ One snmetimes wonders whether there is any. body in London who troubles to ada up these actual and potential commitments and then looks to see what there is or the other side of the account —for the two sides must balance. What is there on the other side of the account’ There is. in the first place, the highest standard of living that Britain has ever seen—not foi every individual, of course, but for the country as a whole. There is also the highest level of production ever achieved by British industry. On this last score the picture is reassuring; the resources out of which to honoui these external commitments are undoubtedlv available. But they are not at present available in the form in which they a r e needed for that purpose. We did not in 1955 have a balance-of-pavmcnts surplus commensurate with ” ‘hese cheques that have to be hor -1. The additional resources we rr iced went straight into the home market. Indeed, the appetite of this domestic market was such that it sucked in imports nn such a scale that, when the final accounts for 1955 are completed, we shall probably find that the year as a whole finished up with a sizeable deficit. And a surplus of about £350.000.000 is needed to meet the external commitments that have to be honoured if Britain is to retain its position. Yells of Dismay

These thoughts and figures raise some fundamental questions which have not so far been put to the British electorate with the directness and candour which they deserve. Are the appetites of a democracy wedded to the principles of social security and the welfare state not such as to make it. if not impossible, at least extremelv difficult to exorcise the thrift and restraint out of which these big surpluses must be accumulated? We talk glibly about the need to help the under-developed countries: we accent as axiomatic that the cold war will now be fought on the economic front and that it will call for the pouring of resources wisely and constructively into ;he poor and uncommitted, nations of Asia and Africa. When these sentiments are advanced as generalities they can be counted upon to raise a cheer and receive unanimous approbation.

But this help and these resources cannot be conjured out of thin air They must be produced, and having been produced they must not be consumed at home. Yet when any step is taken to restrain consumption at home or to increase productivity yells of dismay go up. Does Britain want to be a great Power? Does it want to live up to its position and to its commitments as the political and economic head of the sterling family? Or is it to put the domestic consumer first? There is no question of choosing the relative ease of a second-class more-or-lcss-insulated economy, because Britain, as it is now populated and organised, can only exist as a world Power.