Salient. Victoria University Student Newspaper. Volume 36, Number 10. 23rd May 1973
The World Bank on Colonialism
The World Bank on Colonialism
The inspiration for this article was a lecture given by Dr. Bavanson of the World Bank to assorted Geography and Economics III students on the topic "Industrial Technology for Developing countries" on April 11.
Usually when the subject of imperialism is mentioned or discussed, your mind turns to thinking of the activities of Multi-National Corporations (MNCs). You think of ITT spending millions of dollars financing publicity for opposition to Allende in the Chilean elections and then when failure seemed inevitable trying to organise a right-wing coup. And then you realise that a subsidiary of the same mob of gangsters runs the University cafeteria.
The economic basis for this type of imperialism is that the "profit-maximising entrepreneur" will invest his capital resources whenever they will earn the best rate of return. In general, this will be in those parts of the world where labour is cheapest (South Africa, for example, where the white bosses pay their black workers no more than that "which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race"), and where the natural resources needed for industry are most plentiful. The MNC can then export these items to the home country where the costs of production would be higher, possibly putting workers in the home country out of work. (This is becoming a genuine fear in the U.S.A.). This is an explanation for the threats made by the New Zealand management of General Motoros to its striking workers that, unless they went back to work, their cars would be imported from South Africa, where they could be produced more cheaply anyway.
But imperialism is very much associated with colonialism and neo-colonialism. It strives to stifle any independent development in the colony. The most subtle of the ways that have been developed for acheiving this is through technology, but the policy is also carried on through the control of financial systems, product designs, and managerial positions. The MNCs also build up tariffs in their home countries to prevent the colonies from competing with them with manufactured goods, and thus to force them to trade mainly in raw materials.
But the consideration of the role of technology and technical skills in colonialist policy has, to a large extent, been passed over. However, as the U.N. Secretary—General, Dr. Waldheim, has pointed out, 98% of the world's technological resources are controlled by the industrialised countries. The MNC, by the use of patent laws in the LDC (less-developed country), is able to establish a technological monopoly for itself. There are two ways by which the MNC can do this: it can establish a subsidiary or it can licence a local manufacturer. But whichever method is adopted, there is no outlet for any local technological innovation. This means that any scientists that the LDC does manage to produce must form part of the brain dram. I.B.M. is a very good example of this development.
However, it is doubtful whether, under these conditions, the LDC will be able to produce any scientists or skilled people. What incentive is there for big business to finance education in the colonies in the way that it does in developed countries like New Zealand? Any development of education can only endanger the technological monopoly of the MNC. Perhaps this is the reason for the inequality in expenditure on white and black education in South Africa. It is not worth giving the blacks any more education than the minimum necessary so that they can be taught their semi-skilled jobs in the mines and in the factories. The use by the MNC of its own skilled technicians explains why skilled jobs in South Africa are whites only, and why the Bantustans can never truely have an independent existence. It is all part of establishing the dependence of the colonial peoples on the MNCs for their livelihood.
The problem of the monopoly of technology and technical skills is not quite all, however. Because all the higher strata of management are filled by colonialists, the people of the LDC can never get any experience in managerial skills. Because the MNC has always financed industry, there are no indigenous sources of finance. (This is similiar to the problem in post-revolutionary Russia which ultimately led to the rapprochement with the capitalist powers and to N.E.P.). These problems, however, are of lesser importance to those imposed by the technological umbilical cord from New York, Tokyo or London, etc to the LDC).
How does New Zealand stand in relation to these types of neo-colonialist relationships? In terms of standard of living, New Zealand is a developed country, but from many other points of view it may be regarded as a colony. With exports of primary produce in exchange for manufactured imports at continually deteriorating terms of trade, we are protected from the rigours of neo-colonialist exploitation only by our small population which is, of course, mainly white. Except for our timber industry, almost all our heavy industry is foreign owned, managed by foreigners, and selling foreign designed products (take the motor industry, for example, or consider the case of those enterprises in New Zealand which have their accounting systems designed in London). There is very little outlet for New Zealand technological innovation, except in those industries which are export-orientated such as timber and meat-freezing. To a considerable extent, New Zealand is farmed by British and American capital, but with a certain amount of Japanese and Australian capital also.
We must now look at some of the solutions that are available, and that have been attempted to solve the problems of obtaining technological expertise without having to surrender control of part of the economy to MNCs. There is the approach of the Italians, who refuse to recognise any patents for pharmaceuticals. Thus in Italy anyone can produce and sell any drug they want to. Alternatively, the government can use its purchasing power to ensure that there is a transfer of technical knowledge every time it buys something. This is what the New Zealand government should insist upon whenever it buys railway equipment from Japan. Another possibility would be for governments to deal with smaller MNCs rather than larger ones, in order to have a stronger bargaining position when they want to wean themselves.
One of the platforms put forward by Trudeau's Liberal Party at the last Canadian election was a promise of tighter control over foreign investment. There is a lot of activity by United States MNCs in Canada — 58% of Canadian industry is foreign owned. And since the election this year the Canadian government has introduced legislation which will make subject to review any new investment by foreign enterprises or any takeoevers of existing enterprises by foreign firms. So far, this is all that has been done, but there is a possibility of "legislation concerning registration of agreements for licensing foreign technology". The net effect of such legislation will be to stop the proportion of foreign ownership of Canadian industry getting beyond 58% — perhaps! This is nothing but a compromise with imperialism, and can do little to change the situation in Canada.
One of the few countries that has made a successful acquisition of technology and technical skills without having to open itself up to the maraudings of MNCs is the People's Republic of China. For the decade before 1961, China has received about $3 billion in aid from Russia, which consisted of the construction of factories with Russian technology and skills to produce, of course, goods in the Russian mould, and Russian economic advisers. But with growing Chinese awareness of the revisionist policies adopted by Russia under Kruschev, Russian technology and professional management (neo-colonialism?) came to be viewed with rather less favour. And thus a new technical development policy was established.
Before we can properly examine the Chinese technical development policy and its suitability to Chinese conditions, we must look at the main aspects of the policy. There is every possible substitution of labour for capital. There is as much decentralisation as possible, with nodes of regional development being established in rural areas. And there is the promotion of a national technology — one that is based on Chinese conditions, and on the resources of skill and equipment that are available.
Considering China's large population, and the shortage of capital for a population of that size (compared with the United States which has the most abundent capital in the world), substitution of labour for capital in the productive process is obviously a desirable course of action. It is part of the process of adapting productive techniques to the availability of resources. The type of capital-intensive, highly mechanised productive technique prevalent in the U.S. is obviously not relevant when there is no longer the same need to economise on labour usage. The policy of decentralisation of industry is based on the thought of Mao—tse—Tung — that technical development must come from technicians and workers acting together. This emphasises the practical aspect of technical development — whatever is developed must be developed to a purpose, and where it is needed. And the emphasis on the development of a national technology is, of course, to avoid, as far as possible, the colonialist side-effects of the importation of technology.
It remains to consider the way in which Chinese technical development takes place. Chinese technology is gained essentially by the imitation of products from elsewhere in the world. But it is by no means a simple imitation. At the Chinese industrial exhibitions, such as the Canton Fair and the recent British exhibition in Peking, the potential sellers to the Chinese must display their goods (which are mainly industrial machinery), and must also have their experts on hand to explain the workings and construction. The Chinese find out how the product is built, and see whether they have the technical expertise and equipment to carry out the same productive process. Thus the Chinese may buy a tractor and use it as a model on which to produce their own design. The Westerners who are selling at such exhibitions know that they must co-operate fully or else someone else will get the deal.
Which leaves one question unanswered — why do manufacturers trade with the Chinese if all that will happen is that they will lose their manufacturing secrets? The Chinese recognise no patent laws. People trade with the Chinese because it is a Chinese policy that trade and friendship go together. In return for having to explain all the intricacies of a gas turbine over a period of several months, the Hawker-Siddely Corporation was able to sell a large number of Trident aircraft to China. The Chinese give just enough to keep their trading partners going.
Thus the stranglehold of the imperialist powers on industrial development can be defeated. Where a country can bargain strongly, it can have the MNCs at its feet, craving for business. The umbilical cord that the MNC attaches to the LDC can be broken. But this cord will not be broken by the screening of the activities of the MNCs. International capital will not surrender without a fight. The way to fight the neo-colonialist activities of the MNCs is either through action in their home country (note the effect of public pressure in Britain in the wage increases for black employees of British firms in South Africa) or by socialist revolution (Cuba, Albania, Vietnam). Only then can the industrial technology for developing countries cease to be an instrument of oppression.
By David Tripe