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11/30/1976 - Tomorrow’s World: Concluding Thoughts for the Rich and Powerful by Jeffrey E. Race

NOT FOR PUBLICATION WITHOUT WRITER S CONSENT INSTITUTE OF CURRENT VORLD AFFAIRS JEF Post Office Box Tomorrow World Concluding Rangsit Thailand Thoughts Rich Powerful November Mr Richard H Nolte Institute Current World Affairs Fifth Avenue New York New York Dear Mr Nolte In letter I spent examining misperceptions US government world heading generalizing decade experience Southeast Asia especially years ICWA fellowship My small transition world overcoming erroneous unrealistic expectations about US power achieve perpetuate In final newsletter I conclude pointing analogous problems international business community This important because foreign business major reference group Third World leaders impressed special vigor recent military Thai To extent government leaders lacking expertise interest desires foreign business these foreign business insight shape future dangerous situation blind leading blind rather swampy terrain Thus bring about humane violent world enhancing insight realism expectations influential actors regard I think international business community constructive US government My experience Southeast Asia suggests American investors often longer perspective their government counterparts better attention minding assets their custody While Thailand victim country throw attitude US government business longer enlightened interest Thus ironically US govern which opposed liberalizing trends Thailand while forces behind democ ratization greater distributive justice rationalization economy bankers business students intellectuals This level insight universal among business community however I writing following The Changing Wqrld International Business Large multinational corporations employ sophisticated techniques critical analysis decision trees computerised control Using these methods corporate planning management control traditional methods general achieve higher rates return invested capital abroad analogous business activities their countries domicile To continue successes avoid future difficulties Jeffrey Race Institute Fellow studying institutions fZuence people behavior toward another today His current interest Southeast Asia however major international firms going apply comparable sophis tication their analysis political environment which developing their activities overseas All corporations operating outside their countries course inter reporting systems collect analyse doing thing ambassadors attaches intelligence operatives talking individuals these their regular routine Yet present internal reporting generally descriptive analysis exploit degree possible recent scientific advances about evolution Third World countries world business environment The reason simple enough corporate environment reporting extent usually additional managers accountants economists adminis trators responsibility trained professional Again reason surprising knowledge field grown damatically years there cadre available specialized manpower corporate decision maker cannot expert corporate environment studies easily trade economist market analyst Yet emerging environment business leaders deeply politico economic matrix business activities advancing beyond Simplistic formulas government understands business sophisticated comprehension tradeoffs between equally desirable often competing goals domestic business environment which foreign investor would And businessmen increasingly evaluate bility government leaders understand manage tensions arising these conflicts learning about countries leaders perhaps Given often irregular leaders chosen Third World countries leaders often understand their countries sometimes understand their interests elsewhere Indeed about shortage examples leaders advanced states following suicidal policies The International System What Changing Business Why Businesses financial institutions collect plethora economic about Third World countries often great methodological sophistication usually oblivious larger matrix which embedded Struggles economic resources businessman chosen arena struggles societies There conflicts power status these related In developing countries stable independent legal administra system exist exist formally reality nomic countries objectiveness reliability dictive devices advanced societies Hence understand political conflict since waves these conflicts frequently power fully sweep economic sphere These struggles important businessman because place fronts domestically between groups within countries against foreign investors governments agencies At opponents domestic struggle political parties bureaucracies families military factions their access foreign resources_to consolidate their domestic position The result strategists mixed common competing interests multi angular match And since match heating levels information analysis longer produce results For thing there major taking place structure inter national relations which coming years decisively affect enVironment transnational actors multinational corporations agencies govern ments themselves We since sensitive leading indica moved dramatically years namely legitimacy structure itself among those bottom Deeper trends always reveal themselves first vigorous verbal dissent those disadvantaged though first signs words books placards changes action evitably follow Thus years ahead these deeper structural changes bring major shift power against advanced enterprise tries course their enterprise economic outposts Indeed evidence quite striking century unique history world future tougher place those The reason previous years advanced countries first series technologies produc military organisation their societies administra tions peoples In expanded their influence whole world developed countries result enclavedmodern economic sector linked comfortably foreign advanced economies producing called dualistic economy This paralleled dualistic political structure national leaders generals princes potentates compradores comfortable political relationship advanced states Its stability depended political quiescence Of population backward sector dependent continued illiteracy isolation In environment those enterprises individuals access cation modern technology cheap capital could profits This clear higher return invested capital developed countries metropolitan economies living standards expatriate executives compared their counterparts All changing change With world devel opment effort consequent improvements literacy communications lation backward secto economy increasingly taking political economic national leaders being forced their earlier comfortable linkages abroad The result marked attack status entities kinds operating outside their territories In economic terms apparent documents UN Charter Economic Rights Duties States UN Declaration Program Action Establishment New International Economic Order OECD Guidelines Multinational Corporations In politi sphere dramatically illustrated change patterns UN Security Council earlier recomd never using power US string vetoes cmedit Even personally wealthy leaders presiding highly probably creasingly inegalitarian societies Philippines champion international movement contrary behaviour their predecessors office perhaps their personal preferences Hence direction clear The economic winds years transitory tempest shape things The questions What happen How How should respond produce durable eties apart increasing stressesp One implication transnational actors types especially multi national corporations going devote management attention following trends developing secure linkages within foreign societies where activities It formerly possible company general intelligence agency entire government expect things woUld managed satisfactorily their behalf bargain Recent disclosures reveal becoming possible dangerous Earlier comfortable informal linkages among leaders organizations govern ments unions corporations Way broader range explicit carefully crafted linkages going management In cases where careful analysis reveals protective linkages cannot fabricated risks crippling policy changes correspondingly higher inCor porated planning And Sociologists increasing wealth reduces social controls increases political mobilization With decline controls national leaders ictability political change decreases since people taking This within countries world whole sudden prices swept former pliability Middle Eastern states barely calculable effects whole world economic financial structure Hence implicit lesSon earlier optimistic belief devel world increasingly prosperous peoples would quieter peaceful place travel business going vindicated On trary going noisier claims counterclaims strident present Furthermore overlay unanticipated development another namely newly projected lower world growth rates increased energy There going smaller growth dividend which quiet claims disadvantaged Same those claims going become iferous capable being intimidated This going increasing tension increasing frustration simple sociological principle increasing violence There another peculiar impact world politics world economics which dictates period ahead almost certainly going inflationary since World War II Inflation social groups burden change someone monetary mechanism In situation increasingly equal power there stable solution problem something called Arrow Paradox which distributive problem given solution always defeated pairwise voting another resulting cyclical majorities In problem solved traditional value systems which stabilized prefemences social hierarchy averting endless conflict endless inflation Many groups calculate their advantage could organize enforce taking instead others See ising trend inflation rates United States United Kingdom workers investors middle class collar repetitively unsuccessfully seeking shift burden change other This pattern replicated world scene everyone organizes someone The OPEC pricing strategy adjust costs inflation industrialized countries opening salvo In World entering content erosion currencies everywhere One solution these problems which pleasant behold increas ingly authoritarian governments using conscious policies repression earlier subconscious restraints imposed unthinkingly accepted values But repression produces dilemmas The Comp Pol itic_al Matrix Conflict Wi Third World countries destined increase breaking previously comfortable economic political relationships outsiders world conflict going increase affecting coherence formerly solid blocs alliances eroding stability currencies But place everywhere Hence place successful enterprise henceforth develop increasingly sophisticated assessments international regional domestic corporate environments This management attention better attention bringing recently developed tools analysis field Business leaders advance beyond simplistic formulas government understands business realization tradeoffs genuinely plicate search equally desirable conflicting business goals security labour peace price stability coherence rnment decision making continuity government succession policies Businessmen realize government leaders themselves quently sufficient factual analytical basis assured consequences policies propose execute While their countries sometimes through distorted lenses probably breadth Of cross national experience realize tried before elsewhere apparent gains sphere compromised losses another In typical example investors decisiveness their dealings governments perhaps completely favourable decision least decision A government which promises knock heads together order quick definitive answers foreign investment proposals preferred decisive government other things being equal Yet coercion which applied within government secure degree authoritativeness outsiders legitimacy competing domestic groups increased probability reversal later In there genuine tradeoff Or another example there compromises which between short stability Foreign investors daunted popular demonstra tions vociferous student farmer labour movements expression socialistic viewpoints press Third World governments seeking attract foreign investment tempted suppress signs instability doing damage their access feedback essential steering society toward greater coherence rationalization economic political mercial infrastructures Some Hints Analysi_9_s To these conflicting demands others there universally applicable answers hence increasing sophistication assessing But there Some Universal questions among which following prominent place What motives government leaders Though sometimes formally sanctioned selected elections leaders Third World countries generally intimate direct linkages families military factions economic enterprises These linkages often direct effect their policy erences national interest They seldom discussed found found predicting behaviour For example though martial Philippines formally proclaimed preserve country against security threat actual motivations importantly sequences cannot understood apart family connections conflicts President Marcos subject seldom covered financial ptess Similarly though recent Thai military justified widely accepted protect country communist takeover reality outcome intense struggle power among conservatives The biggest losers never threat anyway particular coalition conservative businessmen bankers politicians whose economic policies severely damaged financial career prospects certain officers How great sophistication government leaders There broad variability somehow irregular methods succession individuals inferior comprehension distorted vision achieve office Again important regional example evidence indicates senior officials Thieu government Vietnam simply reduce level domestic conflict their country which urgently necessary after declining US levels Those foreign investors finan institutions relied their discretion discretion their American advisors served Do objective conditions exist support government strategy perpetuate stability Such strategies range highly repressive Indonesia Philippines moderately Malaysia those heavily weighted toward positive strategies evoking public compliance example Thailand major shift funding emphasis urban rural industry agriculture Indonesian Philippine models against labour political parties students combined aggressive military operations broad appeal among military developing countries But inspection suggests highly repressive strategies viable countries surrounded water while So country surrounded hostile commu powers ungle lands Similarly Lee Kw Yew authoritarian system frequently model island republic numerous unique advantages geography ethnic composition being prominent which model dangerous attempt under other circumstances In order assess Viability government policies moment necessary whether reinforcing working against structural trends society As I suggested JEF disasters American foreign policy Asia decade resisting ineluctable trends Or again despite enthusiasm foreign investors Philippine martial Marcos New Society severely damaged dependability legal system political matters straight commercial terms Thus there confiscations transfers corporate property which there legal recourse though confiscations transfers cover Though these measures against Marcos personal enemies might extended foreigners under certain circumstances What government This vital question Struggle power intense Outcome uncertain Indonesia frequently represented abroad military civilians associated Center Strategic International Studies Jakarta appear speak government Yet reality speak powerful policy associated generals particular religious orientation Chinese business community They Opposed another powerful policy current associated different ethnic group different religious orientation which would Very different attitudes toward foreign investment sectoral balance foreign alliances Indeed Indonesian military heavily subsidizes CSIS voice reassuring heard abroad Yet these crucial seldom investigated linkages Seldom reported financial press their implications explored Conclusion During years I impressed senior levels powerful institutions governments corporations could about future simply exploiting information available recent scientific advances understanding societies In Of governments shortfall partly distortions information processing while contrary large corporations largely inadequacy resources devoted analysis forecasting functions To extent futurist movement forcing general upgrading attention could doing better using analytic tools However certain levels insight analysis longer adequate future NOr expecta Pushing things longer Will produce lives Vietnam financial resources Lockheed disclosures reveal moral values Who prosper world entering PPwr_ physical military decisive variable deciding distribution world values But I tried point earlier means achieving preserving power shifting present Beyond access control technologies becoming crucial determinants income streams situation where crude power longer earlier impunity But finally prosper depend level insight adaptability compares competitors applies equally viduals corporations nations While always shape things prudent adapt anticipate rather resist inevi table Some things inevitable while merely possible where insight comes Sincerei Jeffrey Race Received New York January