YOUNG PRESIDENTS' ORGANIZATION - DALLAS CHAPTER
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP89G00720R000700960002-7
Release Decision:
RIFPUB
Original Classification:
K
Document Page Count:
13
Document Creation Date:
December 27, 2016
Document Release Date:
March 21, 2013
Sequence Number:
2
Case Number:
Publication Date:
February 16, 1988
Content Type:
MISC
File:
Attachment | Size |
---|---|
![]() | 459.97 KB |
Body:
Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
YOUNG PRESIDENTS' ORGANIZATION ? DALLAS CHAPTER
16 FEBRUARY 1988
LOOKING AT STRUCTURAL CHANGE
BY ROBERT M. GATES
DEPUTY DIRECTOR OF CENTRAL INTELLIGENCE
AT CERTAIN POINTS IN HISTORY, ABRUPT CHANGES IN THE
DIRECTION OF A NATION, A GROUP OF NATIONS, OR THE WORLD HAVE
BEEN SO PROFOUND AS TO NAME AN ERA. ARCHEOLOGISTS SPEAK OF THE
"BRONZE AGE" OR THE "IRON AGE." HISTORIANS SPEAK OF THE "AGE
OF DISCOVERY" OR THE "INDUSTRIAL REVOLUTION." IN EACH OF THESE
CASES, A NEW TECHNOLOGY OR COMPLEX OF TECHNOLOGIES -- MINING,
SMELTING, NAVIGATION, THE STEAM ENGINE -- WENT FAR BEYOND
SCIENTIFIC OR ECONOMIC EFFECTS TO FORCE CHANGE IN SOCIAL AND
POLITICAL ORGANIZATION AND THE RELATIVE POWER OF CLASSES AND
NATIONS. FOR EXAMPLE, ACCORDING TO SOME HISTORIANS, THE
INVENTION OF THE STIRRUP MADE KNIGHTHOOD -- AND EUROPEAN?STYLE
FEUDALISM -- POSSIBLE, THE INVENTION OF FIREARMS MADE IT AN
ANACHRONISM.
IN RECENT CENTURIES, THESE "STRUCTURAL CHANGES" HAVE
ACCELERATED. TECHNOLOGIES RISE, FLOURISH, DECLINE, AND ARE
SUPERSEDED WITHIN A FEW DECADES, AND THE CHANGES FORCED UPON
SOCIETIES AND NATIONS ARE EQUALLY RAPID. POLICY DECISIONS MADE
1
Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
TODAY IN BUSINESS OR GOVERNMENT MAY BE PLAYED OUT UNDER
RADICALLY ALTERED CONDITIONS. IN THESE CIRCUMSTANCES, THE
INTELLIGENCE COMMUNITY HAS THE TASK OF LOOKING BEYOND THE
PRESSING PROBLEMS OF THE DAY TO EXAMINE THE DANGERS AND
OPPORTUNITIES OF THE DECADES TO COME -- TO SEE WHERE THE WORLD
IS GOING DESPITE AS WELL AS BECAUSE OF THE INTENTIONS OF THE
MAJOR PLAYERS.
TODAY, I WOULD LIKE TO SKETCH OUT SOME TRENDS -- STRUCTURAL
CHANGES -- THAT APPEAR TO BE UNDER WAY AND ASSESS HOW THEY MAY
PLAY OUT. I OUTLINE THESE TRENDS WITH CONSIDERABLE HUMILITY
AND SOME TREPIDATION, GIVEN THE BACKGROUND AND UNIQUE TALENTS
AND INSIGHTS OF MANY IN THIS ROOM ON THESE ISSUES. I WILL
DISCUSS THEM FROM THE VIEWPOINT OF AN INTELLIGENCE OFFICER IN
TERMS OF THEIR POLITICAL AND ECONOMIC MEANING.
AT PRESENT I SEE THREE LONG?TERM TRENDS IN THE
INTERNATIONAL ECONOMY THAT, TAKEN TOGETHER, CONSTITUTE A MAJOR
STRUCTURAL CHANGE. THESE THREE TRENDS ARE: THE LONG?TERM
RELATIVE DECLINE IN THE VALUE OF MANY COMMODITIES; THE
INTERNATIONALIZATION OF PRODUCTION; AND THE GLOBALIZATION OF
FINANCIAL MARKETS. I WOULD LIKE TO TREAT EACH OF THESE IN TURN
AND THEN SPECULATE A BIT ABOUT HOW THEY WILL PLAY OUT IN
SOCIETY AND INTERNATIONAL POLITICS.
2
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
? Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
,
FIRST, THE DECLINE IN THE VALUE OF COMMODITIES. A FEW
MONTHS AGO I READ AN ARTICLE IN THE SCIENTIFIC AMERICAN
ENTITLED "BEYOND THE ERA OF MATERIALS." ACCORDING TO THIS
ARTICLE BY LARSON, ROSS, AND WILLIAMS, THE INDUSTRIAL COUNTRIES
"ARE NOW LEAVING THE ERA OF MATERIALS, WHICH SPANNED THE TWO
CENTURIES FOLLOWING THE ADVENT OF THE INDUSTRIAL REVOLUTION,
AND ARE MOVING INTO A NEW ERA IN WHICH THE LEVEL OF MATERIALS
WILL NO LONGER BE AN IMPORTANT INDICATOR OF ECONOMIC
PROGRESS." THE AUTHORS GIVE FOUR REASONS FOR THIS:
-- THE SUBSTITUTION OF COMMON FOR RARE MATERIALS.
-- THE INCREASED EFFICIENCY OF MATERIALS USE.
-- THE SATURATION OF MARKETS.
-- THE LOW MATERIALS CONTENT OF EVOLVING NEW MARKETS.
THEY BELIEVE THAT MARKET SATURATION IS THE MOST IMPORTANT
OF THESE REASONS -- AND THEY ARGUE PERSUASIVELY THAT REPLACING
AND MAINTAINING ESTABLISHED NETWORKS OF HOUSING, FACTORIES, AND
ROADS CANNOT PROVIDE THE KIND OF LONG?TERM STIMULUS THAT WAS
ONCE PROVIDED BY THEIR CREATION.
3
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
OUR OWN STUDIES DONE SUPPORT THIS VIEW -- THOUGH PERHAPS
GIVING MORE EMPHASIS TO TECHNOLOGICAL CHANGE AND LESS TO MARKET
SATURATION. SINCE THE END OF WORLD WAR II, THE PRICES OF
EVERYTHING FROM OIL TO URANIUM, FROM COPPER TO BAUXITE, FROM
SUGAR TO WHEAT HAVE RISEN LESS RAPIDLY THAN OVERALL INFLATION.
WHILE THE VALUE OF SOME COMMODITIES SUCH AS TIN AND ZINC HAS
ONLY FALLEN BY ABOUT 10 PERCENT, THE VALUE OF LEAD FELL A FULL
50 PERCENT. IN MINERALS, TECHNOLOGY HAS MAINLY ACTED TO REDUCE
DEMAND FOR TRADITIONAL COMMODITIES: IN AGRICULTURE, IT HAS
ACTED TO INCREASE THEIR SUPPLY.
CERTAINLY THE TREND WILL NOT BE ONE OF STEADY DECLINE.
INDEED, REBOUNDS AND COLLAPSES WILL LIKELY LITTER THE LONGER
TERM PATH. NEVERTHELESS, DESPITE THE RECENT BOLSTERING OF
MINERALS AND AGRICULTURAL PRICES -- AS NOTED IN THIS MORNING'S
WALL STREET JOURNAL, COMMODITY PRICES ARE STILL 30 PERCENT
BELOW THEIR 1980 LEVELS, AND FEW OBSERVERS BELIEVE CONTINUED
PRICE RISES ARE IN THE CARDS.
LOOKING AT LONGER TERM TRENDS, MINERAL MARKETS HAVE BEEN
HIT ESPECIALLY HARD, WITH TECHNOLOGICAL ADVANCES PROVIDING A
GROWING ARRAY OF SUBSTITUTES FOR RAW MATERIALS, PARTICULARLY
COPPER, IRON, BAUXITE, AND TIN. AS ONE EXAMPLE, COPPER WIRE IS
BEING REPLACED BY FIBER OPTICS, LINE?OF?SIGHT MICROWAVE
SYSTEMS, AND SATELLITE COMMUNICATION NETWORKS. ALTHOUGH THE
14
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
. Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
DEVELOPMENT COSTS OF THESE NEW SYSTEMS HAVE BEEN HIGH, THE
ADDITIONAL COST PER COMMUNICATION CHANNEL IS NEGLIGIBLE.
SIMILAR TRENDS ARE OCCURRING IN THE TIN AND IRON MARKETS AS
LIGHTER?WEIGHT, LOWER?COST SUBSTITUTES ARE CREATED. THESE
INCLUDE HIGH?STRENGTH PAPERS, PLASTICS, AND CERAMICS.
IN AGRICULTURE INDIA HAS GONE FROM A MAJOR IMPORTER OF
WHEAT TO A NET EXPORTER IN JUST A FEW YEARS, WHILE INDONESIA,
ONCE THE WORLD'S LARGEST IMPORTER OF RICE, HAS BECOME
SELF?SUFFICIENT. USING A VARIETY OF TECHNOLOGIES RANGING FROM
GENETIC ENGINEERING TO IMPROVED SOIL MANAGEMENT, THE
AGRICULTURAL SUPERPOWERS -- COUNTRIES SUCH AS THE UNITED
STATES, CANADA, AUSTRALIA, BRAZIL, AND ARGENTINA -- ARE
PRODUCING EVER GREATER QUANTITIES WHILE THEIR FORMER MARKETS
ARE ACHIEVING SELF?SUFFICIENCY. THE EFFECT ON PRICES IS
SELF?EVIDENT. AND SOME OF YOU KNOW TOO WELL THE EFFECT ON THE
ABILITY OF SOME LESS DEVELOPED COUNTRIES TO SERVICE THEIR DEBT.
THE SECOND TREND THAT I WOULD LIKE TO DISCUSS IS THE
INTERNATIONALIZATION OF PRODUCTION. IT CERTAINLY IS NOT A NEW
PHENOMENON. FOR DECADES AMERICAN INDUSTRY OPERATED HAND IN
HAND WITH SUBSIDIARIES AND AFFILIATES IN WESTERN EUROPE. IN
THE PAST FEW YEARS, HOWEVER, THE TREND HAS ACCELERATED AND THE
LOCUS HAS SHIFTED TOWARD ASIA AND SELECTED THIRD WORLD
COUNTRIES ELSEWHERE. TODAY, IF I BUY A VOLKSWAGEN, I FIND IT
WAS MADE IN BRAZIL. MY AMERICAN CAR IS MADE IN MEXICO OUT OF
5
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
. Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
JAPANESE PARTS, AND MY HONDA IS PUT TOGETHER IN THE UNITED
STATES. IF I DECIDE TO BE PATRIOTIC AND BUY AN "AMERICAN?MADE"
PERSONAL COMPUTER, I FIND THAT THE MONITOR IS MADE IN KOREA,
THE DISK DRIVES ARE MADE IN SINGAPORE, AND THE POWER SUPPLY,
THE KEYBOARD, HALF OF THE SEMICONDUCTORS AND THE PRINTER ARE
MADE IN JAPAN. LESS THAN A THIRD OF THE TOTAL MANUFACTURING
COSTS ARE ATTRIBUTABLE TO DOMESTIC PRODUCTION,
THERE ARE A NUMBER OF REASONS FOR THIS TREND. SOME
SMOKESTACK AND ASSEMBLY OPERATIONS HAVE MOVED TO THE MORE
ADVANCED COUNTRIES OF THE THIRD WORLD IN SEARCH OF LOWER WAGE
RATES AND MORE LENIENT ENVIRONMENTAL AND TAX LAWS. HIGH
TECHNOLOGY OPERATIONS ARE BEING INTERNATIONALIZED TO POOL
IDEAS, RESEARCH, CAPITAL, FACILITIES, ORGANIZATIONS, AND
MARKETS IN A SOMETIMES DESPERATE EFFORT TO STAY AHEAD OF THE
TECHNOLOGY CURVE. THE RISKS AND COSTS OF RESEARCH AND
DEVELOPMENT AND HIGH?TECH MANUFACTURING HAVE RISEN
EXPONENTIALLY IN RECENT YEARS. MEANWHILE, UNSTABLE MARKETS,
RAPID TECHNOLOGICAL ADVANCES, AND SHORTENED PRODUCT LIFE CYCLES
ARE SQUEEZING THE ABILITY OF FIRMS TO RECOUP THEIR
INVESTMENTS. MOREOVER, GOVERNMENTS ARE ERECTING, OR
THREATENING TO ERECT, TRADE BARRIERS TO PROTECT DOMESTIC
INDUSTRIES AND EMPLOYMENT FROM FOREIGN COMPETITION.
TO COUNTERACT THESE FORCES AND REMAIN COMPETITIVE -- IN
WHAT MIGHT BE CALLED A VICTORY OF CAPITALISM OVER NATIONALISM
6
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
. Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
-- BOTH U.S. AND FOREIGN COMPANIES ARE FORMING ALLIANCES
OVERSEAS. THESE ALLIANCES, SOME OF WHICH ARE ACTIVELY
ENCOURAGED BY FOREIGN GOVERNMENTS, HAVE CREATED A COMPLEX
NETWORK OF EQUITY INVESTMENTS, CONSORTIUMS, JOINT VENTURES,
LICENSING, AND AGREEMENTS FOR DISTRIBUTION AND OUTSOURCING.
THE IMPORTANT THING ABOUT THIS TREND IS NOT THAT SOME
NATIONS ARE GAINING AN ECONOMIC OR COMMERCIAL ADVANTAGE OVER
OTHER NATIONS, BUT RATHER THAT INDUSTRY IS SLOWLY BEING
DECOUPLED FROM NATIONALITY.
THE THIRD TREND THAT I WOULD LIKE TO DISCUSS IS THE
GLOBALIZATION OF FINANCIAL MARKETS. THIS IS A SUBJECT THAT HAS
BEEN ON ALL OF OUR MINDS A GREAT DEAL SINCE BLACK MONDAY -- A
TRILLION DOLLAR LOSS IN SHAREHOLDER WEALTH WORLDWIDE DOES TEND
TO CONCENTRATE THE MIND. WHILE YOU, INDIVIDUALLY AND
COLLECTIVELY, I HOPE ARE FAR MORE KNOWLEDGEABLE AND EXPERIENCED
IN THIS AREA THAN I AM, LET ME OFFER SOME VIEWS FROM A
DIFFERENT PERSPECTIVE.
SINCE THE 1970S, WE HAVE SEEN AN UNPRECEDENTED
RESTRUCTURING OF FINANCIAL MARKETS: TRADITIONAL DISTINCTIONS
HAVE BEEN BLURRED BETWEEN DOMESTIC AND INTERNATIONAL MARKETS,
BETWEEN DIFFERENT TYPES OF FINANCIAL TRANSACTIONS, AND BETWEEN
WHO IS A MARKET PARTICIPANT AND WHO IS NOT. AT THE SAME TIME,
THERE HAS BEEN AN EXPLOSIVE INCREASE IN THE SPEED, SIZE, AND
7
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
SCOPE OF INTERNATIONAL MONEY TRANSACTIONS. AS A RESULT,
INTERNATIONAL FINANCIAL MARKETS HAVE BECOME A CONNECTIVE MEDIUM
THAT LINKS POLITICAL AND ECONOMIC PHENOMENA WORLDWIDE,
THE GLOBALIZATION OF FINANCIAL MARKETS APPEARS TO HAVE BEEN
THE RESULT OF THE CONFLUENCE OF THREE FACTORS.
FIRST, THE OIL SHOCKS OF THE 1970S ENABLED THE CAPITAL
MARKETS TO RECYCLE BILLIONS OF PETRODOLLARS OUT OF THE
PERSIAN GULF, THROUGH WESTERN MONEY CENTERS, TO THIRD
WORLD BORROWERS. MORE RECENTLY, THE JAPANESE HAVE
EXPORTED A LARGE SHARE OF THEIR CAPITAL SURPLUS TO THE
UNITED STATES.
SECOND, THE RAPID ADVANCES IN COMPUTER AND
TELECOMMUNICATION TECHNOLOGIES HAVE ENABLED FINANCIAL
TRADERS TO INTEGRATE AND ACCELERATE INTERNATIONAL
TRANSACTIONS.
FINALLY, A WAVE OF FINANCIAL DEREGULATION HAS SWEPT
THROUGH THE WESTERN MONEY CENTERS, BRINGING WITH IT
GREATER COMPETITIVE PRESSURES THAT HAVE LED TO
WIDESPREAD MARKET INNOVATIONS.
FINANCIAL INTEGRATION HAS NOT ONLY BEEN ACCELERATING -- IT
HAS OUTSTRIPPED ANY CORRESPONDING POLITICAL INTEGRATION OR
8
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
ATTEMPTS TO COORDINATE ECONOMIC POLICY. LET ME GIVE YOU A FEW
STATISTICS: ELECTRONIC FINANCIAL COMMUNICATION NETWORKS NOW
HANDLE MORE THAN $1 TRILLION PER DAY; INTERBANK DEPOSITS ARE
APPROACHING $2 TRILLION, THREE TIMES THE 1981 LEVEL; AND
INTERNATIONAL BANK FINANCING SOARED 80 PERCENT IN TWO YEARS.
THE NUMBER OF INTERNATIONAL BANKS IS NOW IN THE HUNDREDS, UP
FROM JUST A HANDFUL IN THE 1970S; OFFSHORE BANKS HAVE
MULTIPLIED EACH YEAR FOR THE LAST FEW YEARS; AND THE VOLUME OF
EUROMARKET TRANSACTIONS HAS PROBABLY MORE THAN TRIPLED SINCE
THE 1970S. FINALLY, NEW FINANCIAL INSTRUMENTS ARE APPEARING ON
THE MARKETS FASTER THAN EITHER TRADERS OR REGULATORS CAN FULLY
UNDERSTAND THEM.
IF WE PUT THESE THREE TRENDS TOGETHER, WHAT DO WE HAVE?
FIRST, WE MUST BE MODEST AND ADMIT THAT WE CANNOT SEE WITH
CERTAINTY HOW THESE TRENDS WILL PLAY OUT EVEN IN ECONOMICS,
MUCH LESS IN POLITICS AND SOCIETY. NO MATTER HOW PRESCIENT WE
ARE, THERE WILL BE MAJOR SURPRISES. CLEARLY THOUGH, WE HAVE A
MAJOR STRUCTURAL CHANGE IN THE WORLD ECONOMY, A TRANSFORMATION
THAT FUTURE GENERATIONS MAY SEE AS RIVALING THE INDUSTRIAL
REVOLUTION.
AS CURRENT TRENDS PLAY OUT, THE FOLLOWING MAY HAPPEN:
-- THE AGRICULTURAL SECTORS OF EUROPE AND JAPAN, NOW
SUBSIDIZED, MAY BECOME SO EXPENSIVE TO MAINTAIN THAT
9
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
. Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
THEY WILL EVENTUALLY BE ABANDONED, LEADING TO A MORE
EFFICIENT WORLD AGRICULTURAL SYSTEM. THIS WILL BENEFIT
CONSUMERS WORLDWIDE AND BENEFIT FARMERS IN COUNTRIES
SUCH AS THE UNITED STATES, CANADA, ARGENTINA, BRAZIL
AND AUSTRALIA.
AS MORE INDUSTRY SHIFTS TO THE NICS AND THE DEVELOPED
COUNTRIES MOVE INTO HIGH TECHNOLOGY INDUSTRY AND
SERVICES, THESE COULD BE INCREASED PROSPERITY IN BOTH
THE DEVELOPED COUNTRIES AND THE NICS. THIS ALSO MAY
RESULT IN A LOSS OF INDUSTRIAL SELF?SUFFICIENCY IN THE
DEVELOPED COUNTRIES, A LOSS THAT COULD BE CRUCIAL IN
TIME OF WAR OR EVEN HIGH TENSION.
THE DENATIONALIZATION OF HIGH TECHNOLOGY INDUSTRY MAY
MAKE IT DIFFICULT TO MOBILIZE IN TIME OF WAR. AND THIS
TREND WILL MAKE IT EVEN MORE DIFFICULT TO PROTECT
SECURITY?RELATED TECHNOLOGY.
WHAT ELSE MIGHT WE SEE?
THE SOURCE OF CONFLICTS MAY CHANGE. NATURAL RESOURCES,
WITH THE POSSIBLE EXCEPTIONS OF WATER AND OIL, MAY
CEASE TO BE A CAUSE OF WAR. SEA ROUTES AND GEOGRAPHIC
CHOKEPOINTS MAY BECOME LESS IMPORTANT IN WORLD POLITICS.
10
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
AS NATIONS BECOME INTERDEPENDENT, A PURELY DOMESTIC
ECONOMIC POLICY MAY BECOME IMPOSSIBLE. UNCONTROLLABLE
CAPITAL FLOWS HAVE THE POTENTIAL TO SWAMP DOMESTIC
MONETARY, FISCAL, AND TRADE POLICIES.
AND DENATIONALIZED CAPITAL AND DENATIONALIZED INDUSTRY
MAY CREATE A CLASS OF DENATIONALIZED CITIZENS, WITH
MORE LOYALTY TO THE INTERNATIONAL ECONOMIC SYSTEM THAN
TO ANY NATIONAL STATE. THESE INTERNATIONALISTS COULD
TURN OUT TO BE SAINTS OR ROGUES OR BOTH.
THE RAPID GLOBAL MIGRATION OF INDUSTRY CREATES PROBLEMS AND
OPPORTUNITIES. THOSE COUNTRIES WITH FAVORABLE ENVIRONMENTS FOR
DEVELOPMENT SUCH AS THE ASIAN NICS WILL RECEIVE A
DISPROPORTIONATE SHARE OF THE BENEFITS. OTHERS WHICH HOLD TO
STATE?DOMINATED POLICIES WILL BE LEFT FURTHER BEHIND. HENCE
THE SPLIT IN PERFORMANCE BETWEEN THIRD WORLD COUNTRIES LIKELY
WILL WIDEN.
THE SAME IS TRUE FOR THE IMPACT OF THESE TRENDS ON THE
SOVIET UNION AND ITS ALLIES. THE SOVIET UNION AND OTHER
COMMUNIST COUNTRIES ARE BEING HARD HIT BY TECHNOLOGICAL
CHANGE. THE USSR SEEMS DESTINED TO FALL FURTHER AND FURTHER
BEHIND AS NEW TECHNOLOGIES TRANSFORM THE WESTERN WORLD. NO
AMOUNT OF STATE?OF?THE?ART TECHNOLOGY, EITHER DEVELOPED AT HOME
OR BOUGHT OR STOLEN FROM THE WEST, WILL CHANGE THAT FACT. AND
11
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
RUSSIA WILL DRAG THE REST OF THE COMMUNIST WORLD DOWN WITH IT.
MORE TALENTED SOCIETIES, SUCH AS EAST GERMANY, HUNGARY, AND
CZECHOSLOVAKIA, WOULD PROBABLY BE ABLE TO MAKE A NICHE FOR
THEMSELVES IN THE NEW WORLD IF LEFT ALONE. THE SOVIETS,
HOWEVER, WILL HAVE AN EVEN GREATER NEED THAN BEFORE FOR THEIR
RESOURCES AND WILL NOT BE ABLE TO LEAVE THEM ALONE.
THE SOVIET UNION WILL UNDOUBTEDLY EXPERIMENT WITH VARIOUS
TOP?DOWN REFORMS, INCLUDING AT TIMES INCREASED RELIANCE ON
MARKET FORCES -- AS WE ARE SEEING GORBACHEV ATTEMPTING TO
IMPLEMENT NOW. SUCH REFORMS MAY INCREASE THE VIGOR OF ALREADY
EXISTING SECOND ECONOMIES AND RAISE THE STATUS OF PRIVATE
ENTREPRENEURS. ALTHOUGH IN FAVORABLE CASES THESE EFFORTS MAY
BENEFIT LIVING STANDARDS AND REDUCE POLITICAL DISCONTENT, THEY
WILL DO NOTHING TO NARROW THE WIDENING GAP BETWEEN THE
COMMUNIST NATIONS AND THE POST?INDUSTRIAL NATIONS OF THE WEST.
ACCORDINGLY, THE STATUS OF THE COMMUNIST NATIONS WILL
CONTINUE TO FALL. THE CONTINUING FAILURES OF THEIR ECONOMIC
SYSTEMS WILL BE RECOGNIZED FAR AND WIDE, AS EASTERN BLOC LIVING
STANDARDS SLIP BEHIND THOSE OF THE MORE PROSPEROUS LDCS.
MARXIST ECONOMICS AND SOCIOLOGY WILL SLOWLY FALL TO THE STATUS
OF FLAT?EARTH GEOGRAPHY. ON THE OTHER HAND, THE MARXIST POLICE
STATE WILL ACHIEVE NEW POPULARITY AS A MODEL FOR SOME SORELY
BESET GOVERNMENTS, AND COUNTRIES THAT WOULD NEVER CONSIDER
IMPORTING A SOVIET TRUCK OR LATHE WILL EAGERLY IMPORT EAST
GERMAN INTELLIGENCE EXPERTS AND CUBAN PRESIDENTIAL GUARDS.
12
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7
Declassified and Approved For Release 2013/03/21 : CIA-RDP89G00720R000700960002-7
THESE SPECULATIONS ARE ONLY A FEW OF THE POSSIBLE RESULTS
OF THE ONGOING STRUCTURAL CHANGE IN THE WORLD ECONOMY. I'M
SURE YOU CAN THINK OF OTHERS.
THE IMPORTANT THING IS THAT ALL OF US TRY TO UNDERSTAND
BETTER THE LARGE SCALE ECONOMIC CHANGES GOING ON AROUND US,
ESPECIALLY THOSE STRUCTURAL CHANGES WITH THE POTENTIAL TO ALTER
SIGNIFICANTLY THE WORLD IN WHICH WE AND OUR CHILDREN WILL
LIVE. OUR ABILITY IN GOVERNMENT AND IN THE PRIVATE SECTOR TO
UNDERSTAND AND TO PROJECT AHEAD THE ECONOMIC, POLITICAL AND
SOCIAL CONSEQUENCES OF STRUCTURAL CHANGE WILL BE VITAL TO OUR
NATIONAL SECURITY AND TO OUR PROSPERITY. THE FUTURE, AS
ALWAYS, IS A REALM OF OPPORTUNITY FOR THE FAR?SIGHTED, THE
AGILE, THE PREPARED AND THE BOLD.
THANK YOU.
13
Declassified and Approved For Release 2013/03/21: CIA-RDP89G00720R000700960002-7