The New International Economic Order and the Rebirth of Hope

by Meghna Chandra

Declaration on the Establishment of a New International Economic Order, 1974 at the United Nations

​In his Nobel Prize acceptance speech, Dr. Martin Luther King expressed a profound optimism for the future of humanity. He spoke of how the Civil Rights movement was but one part of a zeitgeist of the darker nations moving towards a new world order. This new order would turn its back on conquest and move towards freedom and justice. He spoke of the contradiction of poverty alongside technological advancement, and called for wealthy nations to use their resources to “develop the underdeveloped, school the unschooled, and feed the unfed”. He spoke of the interrelation and interdependence of the rich and the poor in a single garment of destiny, and the indispensability of peace for the survival and flourishing of mankind.

Dr. King delivered his speech in the same year that the darker nations came together to found the United Nations Conference on Trade and Development (UNCTAD) and the Group of 77. These African, Asian, and Latin American nations including Afghanistan, India, Indonesia, Ecuador, Ghana, Jamaica, Lebanon, Yugoslavia, Somalia, and Tanzania came together to fight for the development interests of the Global South. It has since expanded to 133 countries, comprising over 80% of world humanity and two thirds of UN membership. UNCTAD and the Group of 77 sought to transform the economic relations between the West and non-Western countries to a relationship of equality. They crystallized their demands for justice in the form of the resolution for a New International Economic Order. 

The Birth of a New World
The New International Economic Order was a vision for a global economy planned for the needs of many, rather than the profits of few. The NIEO was founded after the close of the first UN Development Decade from 1960-1970, a decade that did not yield the outcomes developing countries hoped for. The darker nations realized they had to consolidate political independence with economic independence and use their collective leverage to rewrite the rules of the international economic system. On May 1st, 1974, the Group of 77 convened the Sixth Special Session of the General Assembly to study the problems of raw materials and development and to understand the common economic problems of the world community. Drawing upon the Charter of the United Nations which called for the economic and social advancement of all peoples, the declaration proclaimed a united determination to work for the NIEO based on “equity, sovereign equality, interdependence, common interest and cooperation among all States, irrespective of their economic and social systems”.

The NIEO began its declaration in the framework of the struggle for national liberation and against the continuation of colonial domination, racial discrimination, apartheid, neo-colonialism, and growing international inequality. It pointed out the outsize impact of external crises on the developing world, and the need for the developing world to have a voice in the formulation and application of decisions that concern the international community. The NIEO stressed the interdependence of all nations, and called for international cooperation towards shared prosperity.

The NIEO rooted itself firmly in the principle of sovereign equality of all states and the right to self-determination. The NIEO stood against imperialist destabilization like the 1973 coup in Chile after Allende tried to nationalize the copper industry. It firmly stated that transnational corporations had no right to interfere with the political processes of developing nation states and were subject to their regulation, and that nations had the right to adopt the economic and social system it wished without fear of discrimination. It underlined the right to nationalization and control over national resources.

On the economic front, the NIEO demanded just and equitable relationships between raw materials exported by developing countries and goods imported by them from developed countries. It aimed to rebalance the terms of trade which were skewed badly in favor of developed countries, as the prices of raw materials declined relative to foreign imports, and the purchasing power of developing countries declined during the 60’s and 70’s. This was especially important because the imperialist world system has a vested interest in keeping raw materials cheap. Also, revenue from the export of raw materials could finance industrialization and human development needed to end dependency.

The NIEO also demanded a reformed international monetary system that would finance development, and the right of developing countries to concentrate their resources for development. Finally, it called for the transfer of technology from developed countries to developing ones, and the creation of indigenous technology that would suit respective nations’ economies.

Ultimately, the NIEO was a vision for a planned global economy based on simple but revolutionary principles. It was an indictment of the profoundly undemocratic colonial order. It envisioned a new order based on true democracy, that is, the right of each nation to determine its own future rather than being decided by a white minority. It took a stand against imperialist bullying and underlined the right of nations to use their resources for the good of their own people. It fought for the producers of raw materials and for their right to recover from colonial underdevelopment and industrialize according to their own needs. Finally, it argued for the interdependence of humanity and the moral duty of all people to end poverty and inequality and unleash the potential of all.

Underlying the NIEO is the belief that sovereign nation states embody the victory of the anti-colonial struggle and will of their people for peace and development. Also underlying it is the belief that political independence is not the end of the anti-colonial struggle; formerly colonized nations must consolidate their political independence with economic emancipation. The darker nations realized they had to wield their collective strength as producers of raw materials to fight externally imposed dependency and backwardness.

The Global Counterrevolution by the West
The demands of the NIEO rang with such moral clarity that it was difficult for developed countries to attack it directly. Furthermore, as the number of liberated nations grew, the West was outvoted on the world stage.  European statesmen like Willy Brandt and Olaf Palme joined the North-South Commission which advocated that the West remove trade barriers for developing countries, reform international institutions, and move towards disarmament. US-based think tanks like the Trilateral Commission started to speak of interdependence through peaceful cooperation, and advocated that some developing countries have a greater voice in international financial institutions. Even Henry Kissinger said his strategy towards the NIEO would be one of pragmatism and subversion, rather than blatant ideological opposition, and that “our basic strategy must be to hold the industrialized powers behind us and to split the third world”.

In response, US politician Daniel Patrick Moynihan of the infamous “Moynihan Report” wrote an article in 1975 called “The United States in Opposition” coming to terms with the changing world order. He strongly opposed a strategy of appeasement to the third world. He deplored the “tyranny of a new majority” of developing countries laying claim to the wealth of industrial nations. He rejected the idea that imperialist and neo-colonial countries should be blamed for inequality and blamed formerly colonized countries for their own backwardness. He even suggested that some parts of the NIEO movement were not looking for redistribution but for “something ominously close to looting”.

Black liberation fighter and Communist Party USA chairman Henry Winston drew a powerful comparison between Moynihan’s racist domestic policy and his racist international policy: "In his original report Moynihan denied the Black minority's rightful claim to political and economic equality in the United States by naming the Black community, not state monopoly capitalism, as the source of inequality. Now Moynihan denies the "third world" nations their rightful claim to political and economic equality by disavowing U.S. and world imperialism's responsibility for their present inequality". 

Moynihan’s racist victim blaming became mainstream thinking in the West by the 80’s with the election of Ronald Reagan and Margaret Thatcher, and underlined the reactionary economic policy that undermined the movement for the NIEO. In the 1970’s, the US faced a crisis of wage stagnation and inflation, or stagflation. This was caused by the increasing military budget as well as rising oil prices. Western propaganda blamed inflation on oil producing countries for raising their prices in defiance of imperialist designs in the Middle East, but progressive forces argued that the weakening economy was the consequence of corporate oil monopolies and the contradictions of capitalism.

Rather than cutting the military budget or cracking down on corporate oil monopolies, American technocrats implemented the Volker Shock to tackle inflation. This entailed limiting the nation’s money supply and raising interest rates, limiting liquidity. The Volker Shock led to negative growth, unemployment, and a debt crisis in the third world in which governments found the cost of their debt rising at the same time as their prices for commodity exports were decreasing. Developing countries’ exports as a share of the world trade declined sharply while commodity prices fell to 1930’s levels.

The US reasserted economic power over the Third World through the negotiation of structural adjustment loans. These loans were made upon conditions that nations would reduce government budget deficits, lift state protections on imports and exports and devalue local currencies, and privatize state owned industries. The new order came to be known as “the Washington Consensus”.

Ultimately, the Washington Consensus stood for the exact opposite of what the NIEO fought for. Instead of the right to choose their own system of production, it left countries to the dictatorship of international financial institutions. Instead of the right to nationalize natural resources, it forced nations to open their resources up for corporate plunder. Instead of financing development, international financing created more austerity and underdevelopment. Instead of scientific and technological advancement of the developing nations, it led to a brain drain of third world technicians. Instead of a monetary system accountable to the international community, it led to dollar hegemony. Instead of an indictment of imperialism and neocolonialism, it blamed developing nations for their own backwardness.

The fall of the Soviet Union in 1991 created a world atmosphere of complete Western domination. The era of the Western hegemony spelled disaster for the developing nations, from successive bankruptcies of third world governments, the war in Iraq and Afghanistan, the establishment of AFRICOM, the ruin of Libya, and ultimately, the deferral of the anti-colonial dream.

The Propaganda of History against the Third World Nation State
The NIEO’s spectacular effort to uplift the majority of humanity has been ignored or undermined by the majority of scholars writing today. The writings of W.E.B. Du Bois can help understand this glaring omission and the correct way to understand this history.

Du Bois entitled the last chapter of Black Reconstruction “The Propaganda of History”. He writes that despite the undeniable achievements of the freedmen, white historians wrote of Reconstruction as the collapse of civilization, and of blacks as ignorant, lazy, dishonest, and extravagant. They wrote propaganda rather than history in order to justify Jim Crow and the imperialist world system. Du Bois argued that the chief witness of Reconstruction, the emancipated slave himself, was barred from court.

The same framework applies to the writing on the New International Economic Order. Western scholars echo Moynihan’s assessment, though in more politically correct terms. They speak about the “internal cracks” in the NIEO, like the conflicting interests of oil producing countries with oil consuming countries. One scholar says it was “a combination of the oil and debt crises of the 1970s as well as corruption and authoritarianism in the Third World”, along with widening inequality within nations, that led to the failure of the NIEO.

In contrast, members of the Non Aligned Movement (NAM) laid the blame for the subversion of the NIEO squarely on the imperialist bloc. These nations struggled for unity and solidarity, and the sanctity of the nation state against imperialist destabilization. In a speech at the 34th Session of the UN General Assembly in 1979, NAM President Fidel Castro said that the actions of international financial bodies and private banks to raise interest rates and increase foreign debt amounted to financial suffocation and blackmail of developing nations. He pointed out the West used the price of energy to pit the developing world against one another, when in fact the corporate oil monopolies bore central responsibility. As he said, “transnationals simultaneously exploit producers and users, obtaining extraordinary and unjustified benefits from both of them, while at the same time wanting to blame developing countries, the oil exporters of the current situation.” He called for solidarity between oil producing and exploiting countries and that oil producer countries should use their funds to finance development. Finally, even while acknowledging that there are exploiters in poor countries, he emphasized that the fundamental problem of the non-aligned nations is neo-colonial destabilization of developing nation states.

Ultimately, the NIEO did not fail. It is the scholars who have failed to write its true history because they lack the courage to identify the enemy of humanity’s progress. These scholars wear a “postcolonial” guise, but reveal themselves in their attack on the sovereign nation state, which remains the object of imperialist attack and agent of the NIEO.

The Rebirth of Hope
The irony of the NIEO is that the world order it challenged is in crisis today–not only from the outside, but from the heartland of imperialism. After decades of deindustrialization, austerity, and anti-labor trade agreements, the downtrodden Western working class rebelled. The Donald Trump presidency rejected technocrats by stopping the Transpacific Partnership (TPP), renegotiating NAFTA, and trying to decouple from global manufacturing to rebuild industry at home. Populist movements stood against “regime change wars” and foreign entanglements.

The world situation is also changing dramatically. The rise of China represents an unprecedented economic challenge to Western hegemony. The Belt and Road Initiative, the Asian Infrastructure Investment Bank, and BRICS+ provide an alternative to Western financial institutions like the IMF and World Bank. Countries like Bangladesh, Ethiopia, Algeria, Venezuela, and even Italy have used Chinese financing to build infrastructure on much fairer terms than those of the IMF. Western propaganda cries “debt trap diplomacy” and “modern day colonialism”, but principled observers know that there is no equivalency between the centuries long cruelty of Western finance capital and the overtures of Chinese creditors.

Developing countries are moving away from dollar hegemony, spelling cracks in the Western-dominated monetary system. Russia responded to Western sanctions by selling oil to India and China in rupees and yuan. Brazilian President Lula Da Silva ran and won his election on the promise of creating a new currency in Latin America to be freed from the dollar. Saudi Arabia has applied to join BRICS and made gestures toward abandoning the petrodollar in favor of the petroyuan.

With the weakening of the forces of greed, blackmail and destabilization, the time for a New International Economic Order has returned. At a speech at a meeting of BRICS countries, a group which Algeria will soon join, Algerian President Abdelmadjid Tebboune called for a renewal of the NIEO. He said, “economic underdevelopment from which several emerging countries suffer isn’t only an internal issue but derives its roots from an obvious imbalance in the structures of the international economic relations and the hegemony exerted by a group of countries… Breaking off with this vicious circle is achieved through the spirit, the principles and the objectives of… the Declaration for the Establishment of a New International Economic Order based on equity and equality in sovereignty, as well as on the mutual and integrated interests and cooperation between all the countries…”

 Like Dr. King, we live in times that merit great optimism. In remembering the history of the NIEO, we can understand the true nature of the world situation beyond the Western propaganda of history and grasp its potential for the majority of humanity.

Meghna Chandra is a postdoctoral fellow at the Loyola University of Chicago Institute for Racial Justice and a member of the Saturday Free School.