Books: The Visiting Eye

CHALLENGE TO AFFLUENCE by Gunnar Myrdal. 172 pages. Pantheon. $3.95.

Sometimes it has taken an imaginative outsider to see the U.S. plain. There were De Tocqueville and Lord Bryce, and in this century the Swedish Economist Gunnar Myrdal.

Twenty-six years ago, Myrdal was commissioned by the Carnegie Corporation to write a definitive study of the American Negro. Myrdal spent four years researching and writing and produced a masterpiece, An American Dilemma, which destroyed forever the comfortable white notion that separate could be equal. A pivotal book in the history of U.S. race relations, it influenced the Supreme Court decision outlawing segregation in the schools.

After he had completed his mammoth project, Myrdal went home to teach and write about international economics. This year he came back, took a hard look at America and declared that it had a new dilemma. The greatest problem in the world today, he asserts, is the near-stagnant U.S. economy.

“Utter Destitution.” The American people, he writes, have too easily swallowed the Galbraithian notion that the U.S. has all the production it needs. Americans have become “defeatist” about their own economy and in the last decade have settled for one of the lowest rates of growth in the world, which Myrdal calculates at a meager 1 %, a figure below the estimates of most other economists. Seven percent of the American people live in what Myrdal calls “utter destitution,” e.g., individuals with an annual income under $1,000, families with an annual income under $2,000.

If the U.S. is having trouble with its foreign policy, it is largely because of its limping economy, writes Myrdal. The U.S. cannot persuade its allies of its policies because of its continuing balance of payments deficit. Some leadership is passing to the creditor nations of Europe—an ominous trend, thinks Myrdal, since he believes that democracy is not so firmly grounded in France, Germany or Italy as it is in the U.S.

To get the American economy moving again, Myrdal offers a familiar nostrum: the coordination of greater public spending with more long-range economic forecasting. But this, Myrdal insists, does not mean more federal controls over the economy. In fact, he feels that there is already far too much federal intervention in the day-to-day working of the American economy.

Hands-Off Policy. Too many economists, writes Myrdal, seem mesmerized by the French economy, which is heavily nationalized and regimented. Sweden, he suggests, should be their model instead. Both Swedish workers and employers have voluntarily formed central organizations for collective bargaining. These groups consider the national interest when they make price and wage agreements, and they have prevented the costly strikes that harass the U.S. economy. The Swedish government follows a strict hands-off policy: it has not even had to set a minimum wage. But Myrdal admits that the voluntarism that works for small Sweden, with a population less than New York City’s, may not work for the sprawling U.S.

Myrdal is probably too pessimistic for most economists, and his proposals too far to the left for most Americans.

But it is refreshing to find a member of the European Left who is not grousing about American power in the world. Myrdal wants to see more of it.