So far as the ideological debate on public versus private enterprise is concerned, several things have been happening. In Western Europe and in other industrial societies, the old banner of nationalization has faded markedly within the Social Democratic parties. Men have come to learn that Marx was wrong when he regarded the public ownership of property as the only effective form of ensuring that the public interest in the economy is respected. Ways have been found for protecting the legitimate public interest in economic activities without burdening the state with heavy operating bureaucracies which, on the whole, tend to impede rather than to encourage good public as well as good economic policy. The slogans of youth are not easily surrendered, and political banners fade slowly. There is little doubt, however, that in the postwar decade the Social Democratic movements have shifted as rapidly as they safely could away from the commitment to nationalization which had grown up in the first four decades of the century.
This transition may, in time, be expected to have its impact on the politics of the underdeveloped areas, since so many of the leading figures there were strongly marked by Western Social Democratic views, and many important connections remain. More relevant, however, than the vicarious experience of Europe is the evidence accumulating in those underdeveloped areas which have gathered economic momentum: that the expansion of the local private sector, including the development of vigorous efficient modern businessmen, can constitute a valuable support to the government's larger economic and social objectives; and that, within reasonable limits, it can be made politically quite safe and economically quite wholesome to permit private foreign enterprise to operate within their countries. These trends are mainly to be observed in Latin America, but they color hopefully some American visions of the future in Asia, the Middle East and Africa; for it now appears possible that vigorous private sectors can emerge more rapidly than our somewhat static sociological analyses of entrepreneurship would suggest. Once the expectation becomes general that next year's output is likely to be larger than this year's, businessmen begin to think about plowing back profits, expanding capacity and introducing new machinery, rather than merely clinging to the older pattern of fixed output with big profit margins syphoned off to keep the family comfortable. These transitions in the outlook and operations of businessmen obviously take time; but they seem to come more quickly than many had thought, once the economy as a whole begins to gather momentum.
In this mood, a good many measures have been put forward designed to expand the role of American private direct investment in the underdeveloped areas. These include: improved administration of the govern
ment guarantee programs; more substantial tax incentives for private investment overseas; the merging of government and private funds in particular projects; the expanded use of management contracts; the more firm negotiation of treaty and other conditions designed to protect American private investment; and the spreading of information on the virtues and efficiency of private over public enterprise.
Even the most ardent of the recent advocates of private over public investment have been clear, however, about two things. One is that cetain kinds of government investment are not only required in the underdeveloped areas but are essential to create a setting within which efficient and profitable private operations can grow: notably, investment in education, health, agricultural extension work, irrigation, transport, fuel and power. The second is that American influence to encourage the strengthening of private sectors in underdeveloped areas and to enlarge the flow abroad of American private capital is a matter in which great tact must be observed. What is basically involved is that other peoples come to accept, sometimes in the face of long-held views rooted in difficult past experience, that a vigorous private sector and foreign private investment can be made to reinforce rather than to disrupt public purposes to which they are committed.
In short, it should now be possible to crystallize a clear and wellbalanced American attitude toward the issues of public and private enterprise in economic development and to mount an American policy that harnesses them in more vigorous collaboration than we have had in the past.
What such a generally hopeful perspective and policy must take into account, however, is that what we call underdeveloped areas are at very different stages on the path from traditional to modern status. The currently successful cases of private international investment tend to cluster about two extreme points along this path—that is to say, in areas which have barely moved beyond the traditional stage and where oil and other extractive foreign enterprises operate in relative (but rapidly decreasing) comfort, as in the Middle East and parts of Central Africa; and again in such new nations as Mexico which have, in fact, passed through the take-off into sustained growth and are rapidly becoming thoroughly modernized societies. Vigorous, competent businessmen have emerged in large numbers only in these latter advanced societies, and only there has the attitude towards foreign private enterprise been generally hospitable.