III The Economic Commission for Europe

Ill The Economic Commission for Europe JIHE Economic Commission for Europe is a regional commission established by the United Nations to deal with the special economic problems of Europe and contribute to raising the standards of living. It collaborates with many other international bodies in bringing about important aims of the United Nations: economic and social progress and development; solutions to international economic, social, health and related problems; full employment. The Commission, popularly called ECE, was created in December 1946 with headquarters in Geneva through a decision of the United Nations General Assembly. The annual plenary sessions of ECE are attended by representatives of all the countries of Europe—United Nations members and nonmembers alike, except Spain. The United States of America is also a member of ECE. ECE's Task. The particular task of this Commission is "to maintain and strengthen the economic relations of the European countries both among themselves and with other countries of the world."1 It is to promote government cooperation in European economic reconstruction and recovery from the appalling destruction and disorganization of the war. The economic conditions in Europe, it is said, reveal the close relationship of each country's problems with the problems and policies of other countries. The Commission therefore received broad powers from its parent body and was authorized to negotiate formal as well as informal agreements on national policies to conform to international goals. But it must refrain from study and action with respect to any country without the agreement of that country. With permission of the gov1 United Nations, The Economic Commission for Europe, June 1953, p. 2.

166 THE ECONOMIC COMMISSION FOR EUROPE 167 ernments concerned the representatives of ECE may study the over-all European economic situation, review progress made by member governments, assign work to committees and working parties of experts, discuss difficulties of cooperation, and, finally, bring about agreement on measures to remove the difficulties. Fostwar Emergency Activity. Numerous shortages in basic services and materials after World War II, due to price controls and other government regulations, hampered reconstruction everywhere. State-owned public utilities and transport industries had to be entirely reestablished; coal, steel and timber output, largely regulated by governments, had fallen significantly and had to be raised. All kinds of raw materials for reconstruction falling within the allocation and distribution programs of governments had become very scarce. At this time ECE committees and expert groups working singly or together went into operation. They often succeeded in obtaining government agreements on the distribution of scarce supplies and on special allocations of certain raw materials to certain countries and industries. ECE, for example, effected an allocation of household coke to Sweden in order that that country might burn less timber and make more of it available to other countries for building purposes. Special allocations of coal were made to Belgium and Italy for production of more fertilizer. ECE also allocated pitprops for certain coal mines, and briquetting pitch so that coal dust could be made into usable fuel. Some ECE specialists collaborated to increase timber production and distribution; other experts studied and estimated each country's needs for coal mining, electric power, timber and transportation equipment; together with producers' and consumers' representatives they studied the shortages in ball-bearings, conveyor belts, ceramic insulators, and other commodities.2 Committees at Work. The Economic Commission for Europe is an organ at the service of governments promoting the development of their national economies through government planning and regulation or through government enterprise. The several committees of ECE cooperate with governments on a technical level, studying problems, and endeavoring to find solutions. The ECE Committee on Agricultural Problems, for example, has conducted studies on the problems of relative prices, the bread-grain situation, livestock production and fodder, fertilizers, and assistance to small and medium farmers. It also recommended to governments general provisions and government regulations for the commercial stand2 Ibid., pp. 5, 6.

168 STEPS TOWARD UNION ardization of grading, marking, packaging of commodities, and quality control of fresh fruit and vegetables moving in international traffic. Definite standards have been recommended for citrus and certain other fruits, and draft standards have been prepared for eggs, tomatoes, and other vegetables and fruit.3 The ECE Coal Committee seeks three goals: to secure the satisfaction of European needs in solid fuel, both as to quantity and quality; to promote the "rational" use of fuels; and to render the coal market as stable as possible. To this end the Committee has already made specific recommendations to governments to promote and enforce better utilization of fuel. Furthermore it has conducted an extensive study of a uniform system for classifying coal. After three years of work in Geneva and in the laboratories of nine European countries and the United States, ECE experts finally agreed upon a scientific and practicable system for describing all European and North-American hard coals by their characteristics. This agreement must still be approved and enforced by governments.4 The ECE Committee on Electric Power deals with problems relating to the use and development for hydro purposes of rivers and lakes belonging to two or more countries, with economic and legal problems relating to European electric needs, especially in rural areas. The ECE Housing SubCommittee aims to promote more and better building at a reduced cost. It also examines points where intergovernmental action in Europe might be useful in the field of town and country planning.

Committee studies are in progress on special aspects of housebuilding, such as: strength, stability and safety factors; the influence of laws and regulations on the cost of building; methods of awarding building contracts and placing orders; and productivity. It thus hopes to cope with the need for housing at low rental rates. The ECE Industry and Materials Committee deals with questions pertaining to the supply of primary materials and the problem of government cooperation in supply and allocation matters. It has also decided to solve the need for an up-to-date machine-tool glossary which will contain definitions and drawings for 1000 concepts in English and French, describing each product or sub-product in terms of its characteristics and functions. The study group preparing this glossary is receiving the assistance of the International Standards Organization and the cooperation of UNESCO. When completed the glossary is to be accepted by governments and enforced in respective industries. The ECE Inland Transport Com3 Ibid., p. 6.

4 Ibid., pp. 10, 11.

THE ECONOMIC COMMISSION FOR EUROPE 169 mittee endeavors to formulate a general transport policy for Europe, work out international tariffs, and coordinate private as well as public investments in the various branches of transport. It initiated agreements on refrigeration transport equipment and proposed standard conditions of transport, such as temperature control and uniform packaging for perishable foods. The ECE Steel Committee's major attention is directed to insuring a balanced development of sectors in the industry and markets for European steel products. The balanced development is to be achieved through government restrictions of certain sectors and stimulation of others. "Balance," of course, is what the ECE representatives conceive as balance. The ECE Timber Committee studied and expressed concern over the extent to which the scarcity of timber in Europe has caused timber prices to go beyond price rises for other basic materials and thereby to encourage an "abnormal use" of substitutes for wood. It urged all European governments to take appropriate action in order to insure the development of European forests and adequate timber supplies.5 ECE, GOVERNMENT AND ECONOMIC PLANNING: AN APPRAISAL The Economic Commission for Europe is to promote government cooperation in the field of economic reconstruction and development. This task obviously presupposes the existence of such a government function. It presupposes that government shall either fulfill its economic function through government-owned enterprise or through control and regulation of the economic activities of individuals—or through both. There is no other interpretation conceivable.

European governments indeed fulfill their economic function through government ownership in the means of production and through government regulation and control. We may assume with complete objectivity that about 25 per cent of the economic system of most European nations has been nationalized and transferred into the ownership of governments. The following 13 fields of basic economic activity are nationalized by either all or most European governments: 1. The Central Bank 2. Commercial banks and other large financial institutions 3. Postal service 4. Telephone and telegraph service 5 Ibid., p. 19.

170 STEPS TOWARD UNION 5. The overseas communication system—cables and wireless 6. Radio and television 7. Civil aviation 8. Railways and other means of transportation 9. Coalmines 10. Steel industry 11. Electric industry 12. Gas industry 13. Medical services In this large sector of government economy within the national economic system it is the task and function of government, as legal owner, to reconstruct and develop the enterprise. However, inasmuch as government enterprises are generally run at substantial deficits, the reconstruction and development of the government sector must necessarily be financed and facilitated through contributions by the remaining sector—the privately owned sector of the economy. These contributions are made through loans, heavy taxation, or outright inflation. Additional contributions are claimed through the system of quotas and priorities according to which raw materials are distributed. That is to say, the government sector enjoys absolute priority over the private sector in all allocations and distributions of materials. Numerous other government controls over the private sector, such as government fixing of prices, labor quotas and wages, government plans of investment and credit, etc., also favor the government sector to the detriment of the private sector.6 Government reconstruction and development thus means reconstruction of government-owned enterprise, through levies on and subsidies by private enterprise.

This conception of government reconstruction and development clearly indicates not only the nature of contemporary government policies but also the only conceivable way to genuine recovery. A successful economic policy of reconstruction and progress must contain two objectives: (1) it must endeavor to reduce the size of the government-owned economic sector and thus decrease its annual deficits; (2) it must reduce the burden and abolish the shackles on the private sector which is supporting the former. Any economic policy falling short of these objectives cannot justly be called "reconstructive" and "developing." The Economic Commission of Europe is a United Nations organ 6 The main difference between the various national economies in Europe lies in the extent of government control over the private sector. As to the government sector, a general conformity exists.

THE ECONOMIC COMMISSION FOR EUROPE 171 at the disposal of governments conducting socialist or interventionist policies. It collaborates in the planning of government interference with private enterprise; it designs systems of allocation and distribution; it endeavors to promote the government-owned sector of economy by restraints on the "unessential" private sector; it urges government to take appropriate steps of planning and coercion; it seeks to direct the economic development according to its own pattern of balance; it criticizes the "abnormal" use and consumption of materials according to its own conception of normality, etc. In all these actions and endeavors ECE deliberately and willfully runs counter to the laws of the market economy and to the choices and wishes of the millions of consuming Europeans. The structure of production and distribution in a market economy is determined by the choices and preferences of consumers. Any planning and coercion on the part of government or any other institution toward a diverging structure necessarily run counter to the will of consumers.

Since planning of divergencies can be realized only through force and coercion of the individual, ECE, in the last analysis, advocates government coercion of the individual to actions which ECE deems fit. In other words, ECE advocates substitution of government coercion for the freedom of the individual. The Economic Commission for Europe derives its task and authorization from its parent body "the Economic and Social Council" of the United Nations. In discussing the Economic Commission for Europe we may not withhold our analysis and judgment regarding the nature of the parent organization which provides the framework within which ECE operates. International Economic Cooperation and United Nations. Article 55 of the Charter of the United Nations provides for the promotion of the following objectives: "a. higher standards of living, full employment, and conditions of economic and social progress and development; "b. solutions of international economic, social, health and related problems; and international cultural and educational cooperation; and "c. universal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language, or religion."

In Article 62 the Economic and Social Council is authorized to "make recommendations for the purpose of promoting respect for, and observance of, human rights and fundamental freedoms for all." These are the most significant and illustrative economic provisions 172 STEPS TOWARD UNION of the United Nations Charter. They are two kinds of provisions whose fundamental natures are diametrically opposed to each other. One kind provides for the attainment of international cooperation, peace, and prosperity; the other kind promotes economic nationalism, which brings about economic war and international conflict. One kind of provision is incompatible with the other. Let us look at the provisions under Article 55 a and h. The member governments are to promote "higher standards of living/' What does that mean? It means that the signatory governments have pledged to interfere actively with the economic actions of their citizens for the "common good." And how does a government promote "higher standards of living?" To improve the living conditions of farmers, for example, it endeavors to raise farm prices through restriction of farm production and reduction of foreign imports and competition. The latter step is identical with economic nationalism.

In order to promote the living conditions of the workers, governments burden employers with additional social and labor costs which put them at a disadvantage towards foreign competition and bring about unemployment. In order to avoid these undesirable but inevitable effects, imports are restricted. This too is an act of economic nationalism which means international conflict. Member governments are to promote "full employment." What does this mean? It means one of two things: A government either inflates and depreciates its domestic currency, which leads to foreign exchange control, import quotas, and other import restrictionsall measures of economic nationalism and international conflict; or, in order to promote full employment, a government merely restricts imports. In order to promote full employment in the watch manufacturing industry, for example, a government merely restricts importation of watches from abroad. Such a restriction of imports constitutes a means of economic nationalism and ultimate international conflict.

Member governments are to promote "conditions of economic and social progress and development." What does this mean? It means that governments through active interference are to bring about conditions which governments conceive as "progress" and "development." As these conditions differ from those of an unhampered market economy, imports must be restricted in order to protect the domestic conditions of "progress" and "development." This protection, too, is an act of economic nationalism and international conflict. All these United Nations objectives require still another means of THE ECONOMIC COMMISSION FOR EUROPE 173 economic nationalism. In order to promote higher standards of living and bring about full employment as well as conditions of economic and social progress and development, governments restrict the free migration of people. This too means economic nationalism with its attendant international conflict.

Member governments are to promote "solutions of international economic and social problems." What does this mean? It means that governments are to conclude agreements on the stabilization of prices of certain raw materials and foodstuffs. In other words, production is to be restricted and world market monopoly prices are to be established. Since such agreements favor the producing countries and harm the importing countries, international conflicts are created. This is the one kind of provision, which, if carried out, can lead only to economic war and international conflict. The other kind apparently endeavors to promote international cooperation, peace, and prosperity. Article 55 c, for example, speaks of "universal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language, or religion." And Article 62 authorizes the Economic and Social Council to "make recommendations for the purpose of promoting respect for, and observance of, human rights and fundamental freedoms for all." Of course, we must take into consideration that this provision allows a manifold interpretation which even permitted the communist signatories to accept this provision. But if we disregard the ambiguity of the terms under the cloak of which suppression of individual rights and freedom frequently reigns, we may assume the objective to be international cooperation and peace.

The United Nations organization suffers in all its aspects of existence from this double nature of incompatible foundations and objectives. While few voices are heard in favor of human rights and fundamental freedoms, a chorus of voices defends and advocates economic nationalism and economic warfare. This is especially true in the Economic and Social Council where its numerous committees have become ready instruments in the service of economic nationalism. Their voluminous studies on recent economic history are pervaded with the spirit of economic nationalism and international conflict.7 7 See ECE, Economic Survey of Europe in 1948, Washington 1949; Economic Survey of Europe since the War, February 1953; A Survey of the Economic Situation and Prospects of Europe, Geneva 1948; Economic Bulletin for Europe, published in April, July and October.

174 STEPS TOWARD UNION But can we expect it to be otherwise? We cannot, for the United Nations delegates are representatives of the very governments conducting policies of national "welfare" and economic nationalism. They receive precise instructions from their governments and represent and defend strictly national interest as public opinion conceives it. The United Nations consists of an assembly of brothers of economic nationalism before the eyes of the world. How can delegates imbued with the ideas of government welfare and economic nationalism bring about international cooperation, peace, and prosperity? How can the representatives of the United States, for example, successfully defend the cause of world cooperation when their own employer, the U. S. government, prohibits the import of foreign grain, sugar, potatoes, butter, or cheese? Or when it holds huge quantities of surplus goods from government storage over the world market? Of course, the representatives may continue to speak of cooperation and peace while their own governments indulge in acts of economic nationalism and warfare, but the cause of world cooperation and peace can hardly be furthered under these conditions.

The United Nations must fail, like the League of Nations has failed, because it lacks the spirit of genuine liberalism. It is a convention in which academic talks on world peace, humanity, and cooperation are held while economic warfare continues. Insofar as the United Nations organization is an organ at the disposal of an ideology that is hostile to a world economy and world cooperation, its every step and every move further its own liquidation.