The Third World Demanded Global Redistribution in the 1970s

The New International Economic Order in the Global South forced American policy elites to engage with the demands of economic redistribution. But as a new global regime of IMF austerity and market-driven politics descended around the world, those demands couldn’t take hold.

Henry Kissinger and Daniel Patrick Moynihan at a meeting of the United Nations in 1975. (Photo via @DanielPMoynihan)

Nearly a half century ago, decolonized nations around the world united behind a United Nations Declaration for the Establishment of a New International Economic Order (NIEO). The 1974 declaration asserted the right of developing nations to make their own sovereign economic policies, advancing an ambitious set of proposals to address global inequality. These included such measures as granting developing countries preferential treatment under international trade rules, the reform of the international monetary system to emphasize development needs, and technology transfer from the wealthy industrialized North.

Looking back, of course, we know that what happened was nearly the exact opposite of the NIEO. The debt crisis that erupted soon thereafter rapidly diminished developing nations’ bargaining power. The UN was sidelined as a site for policy dialogue between North and South, replaced by the International Monetary Fund (IMF) — which, unlike the UN, was controlled by the North and dominated by the United States. Rather than more financing for development, there were years of IMF austerity. Rather than economic self-determination, there was policy conditionality aimed at removing government interference in markets and creating a friendly investment climate. And rather than making special accommodations for developing countries, international trade rules were standardized to institutionalize the advantage of wealthy countries.

Yet American policy elites in the 1970s could foresee none of this, and they experienced the NIEO as a significant challenge. A new book by historian Michael Franczak, Global Inequality and American Foreign Policy in the 1970s, traces how the American policy establishment responded to the NIEO challenge, drawing on research from seven different archives as well as multiple interviews with key informants. This compelling and original story is told as a multilayered narrative made up of loosely related subplots and featuring a compelling cast of characters.

The leading character is Henry Kissinger, the secretive and powerful secretary of state who dominated the foreign policy landscape of the 1970s. Kissinger is perhaps most remembered for his promotion of détente with China, as well as for his apparent indifference to human rights — as evidenced by his support for the secret bombings in Cambodia and his involvement in the CIA-backed toppling of Salvador Allende, the democratically elected president of Chile. Behind Kissinger’s achievements and atrocities was his realist worldview, which inspired a pragmatic (if sometimes brutal) approach to foreign policy.

Kissinger’s Cold War realism had its blind spots. While negotiating America’s exit from the decades-old war in Vietnam, he and President Richard Nixon ramped up military actions to extract concessions from the North Vietnamese. Ostensibly aimed at achieving a “peace with honor” that left the United States’ hegemonic reputation intact, this strategy was a dismal and bloody failure. Yet according to Franczak, Kissinger subsequently experienced a major change in perspective. After decades of viewing the Third World through the lens of great power politics, Kissinger became convinced that global inequality was an issue that merited attention in its own right.

Kissinger’s approach to the “global negotiations” was characteristically pragmatic, and it was relatively successful. It involved a two-pronged initiative of concessions and bilateral arrangements to pacify and divide the South, as well as an alliance with the Europeans to block the proposal’s more radical elements. European governments were more open to the NIEO than many American policymakers were. Unlike the United States — a late-rising power that preferred to dominate its periphery indirectly — Europe had engaged in hundreds of years of direct colonial control. Postcolonial European powers maintained their influence through foreign aid and special trade deals, and the economies of former colonizers remained deeply entangled with those of the formerly colonized. Elites in Europe were also friendlier to state intervention in national economies and more open to Third Worldist ideas. These factors in Europe’s distinctive attitude toward the Third World demands are one of the book’s intriguing subplots.

Another well-drawn character is Daniel Patrick Moynihan, the centrist Democrat best known for his controversial 1965 report on the black family. Appointed by Kissinger as UN ambassador in 1975, Moynihan turned out to be a distinctly undiplomatic diplomat who created a series of headaches for the State Department. He was a proponent of neoconservatism — an early incarnation of the same ideology that would inspire the George W. Bush administration’s interventions in Iraq and Afghanistan decades later. In stark contrast to Kissinger’s pragmatism, Moynihan and other neoconservatives were idealists who saw themselves as defenders of Western civilization in general and US-style liberal democracy in particular. Moynihan decried the “tyranny of the [Third World] majority” at the UN, which he saw as a collection of “police states,” continuously attacking the United States on the floor of the UN with the “blind acquiescence” of American policy elites. Moynihan was having none of it, and he repeatedly said so in public. Having alienated the nations with which Kissinger was assiduously attempting to negotiate, Moynihan was forced to resign after only seven months on the job.

Kissinger also clashed with the free-market advocates Franczak describes as “neoliberals.” These included William Simon and Alan Greenspan — Gerald Ford’s Treasury secretary and Council of Economic Advisers member, respectively — as well as Earl Butz, secretary of agriculture under both Nixon and Ford. These officials (and undoubtedly many others like them) felt that it was wrongheaded to indulge Third World demands when much of their misery was self-imposed; instead of compromising with NIEO demands, poor countries should be exhorted to help themselves by removing harmful state interventions in their economies. For Kissinger, however, this “economic theology” was impractical and counterproductive. “I want to avoid the Protestant missionary approach. I don’t want to preach,” Kissinger told Butz. “What I want to do is convince the political leadership of these countries that we mean it when we call for cooperation.” Unlike the neoliberals, Kissinger was perfectly willing to offer concessions on commodities and foreign aid, as long as they were within politically acceptable limits.

It is fascinating to juxtapose the Nixon-Ford-Kissinger policy with that of the Ronald Reagan administration only a decade later. Kissinger exemplified an era in which international economic policy was dominated by the State Department, using economic incentives to pursue strategic goals. In contrast, Reagan’s international economic policy was moved into the realm of the US Treasury, dedicated to the promotion of US economic interests. The remaining portion of Reagan’s foreign policy was dominated by the militaristic fight against the communist menace around the globe, with input from neoconservative cabinet members such as Elliott Abrams and Jeane Kirkpatrick. Whereas Kissinger warned against “preaching,” Reagan and his Treasury had no such compunction. What unites “societies which have achieved the most spectacular broad-based economic progress . . . is their willingness to believe in the magic of the marketplace,” the president explained in his address to the annual meetings of the World Bank and IMF in 1981. “Unless a nation puts its own financial and economic house in order, no amount of aid will produce progress.”

If the NIEO began to falter after Reagan’s inauguration, the Third World debt crisis hastened its demise. The IMF, which managed the crisis, soon joined forces with the World Bank and bilateral aid agencies to require an ambitious array of policy reforms, such as trade liberalization and the privatization of state-owned industries, soon immortalized as “the Washington Consensus.” We know from other studies that debt crisis also enabled a leadership change in developing countries’ governments to individuals better able to negotiate with international financial elites — often with economics degrees from the United States and favorably predisposed toward neoliberal reforms. In this way, the NIEO’s proposals for global redistribution were swept away by the tide of neoliberal globalization.

Of all the periods described in this book, the Jimmy Carter era — which takes up the greater part of three chapters — is most difficult to summarize. Carter’s North-South strategy was not driven by the same kind of unified vision that dominated policy before (during Nixon-Ford-Kissinger) and after (Reagan-Bush) his tenure. On the contrary, Franczak describes a policy that could legitimately be called incoherent — due not only to lack of foreign policy experience at the top but also to conflicting visions within the administration and between the administration and Congress.

The Carter administration made human rights and basic human needs into major elements of foreign policy, which distinguished it from the Kissinger era. Yet this agenda, however admirable, did little to address the South’s demands for global redistribution. The priority of Global South leaders was to address inequality among countries, not within them. Moreover, the NIEO was premised on negotiations between formally equal, sovereign nations; for a Third World leader to be browbeaten about their treatment of political prisoners smacked of imperialistic interference in domestic affairs. Moynihan had been correct to observe that a majority of Southern states were less than democratic. What he had neglected to mention, of course, was that many of these governments had been actively supported, or even installed, by the United States. In any case, there was a tension between upholding sovereignty and upholding human rights that the Carter team could not resolve.

In other respects, Carter’s foreign policy was not so different from Kissinger’s during the final years of the Ford administration. Yet in its dealings with the Global South, the Carter administration lacked Kissinger’s shrewd diplomatic skills: “The irony,” Franczak observes, “is that Kissinger may have been less sincere about his concern for the South’s plight, yet he was much more willing to meet the South on its own terms in the dialogue.” The Carter administration appears to have been too candid for its own good; instead of Kissinger’s soothing rhetoric and partially empty promises, the administration explained exactly what the United States was and was not willing to do, offending the South and reinflaming radical Third Worldist rhetoric.

In the tug-of-war between portraying events in their complexity and summary analysis and interpretation, Global Inequality leans toward the former, a fact that arguably makes the book both harder to encapsulate in a review and more realistic and convincing. Readers from more synthetic disciplines (such as sociology and political science) will scour its pages in vain for a theoretically partisan, explanatory argument. For example, the author does not attempt to explain America’s various foreign policy factions as a function of underlying material or geopolitical forces. Yet it seems hardly coincidental that Kissinger’s accommodationism toward the NIEO occurred when the United States still had to share power with the Soviet Union — and when it was critical to prevent protest in developing nations from devolving into socialist revolution. It was not only the debt crisis but also the decline and fall of the Soviet Union that enabled neoliberal policies and the unapologetic pursuit of US economic interests.

Rather than synthesizing evidence to adjudicate among theories, the book illustrates multiple themes and subthemes with layers of thick description. Some of these resonate with contemporary events. In the twenty-first century, developing countries are once again engaging in coordinated action, this time using the G20 and the World Trade Organization rather than the UN General Assembly, and arguably with considerably greater success. Some of the language used in these new declarations, such as the demand for “special and differential treatment,” is keenly reminiscent of the NIEO of nearly five decades ago.

Yet the book also reminds us of stark differences between past and present. The NIEO was delivered at a time when (to paraphrase John Maynard Keynes) the ideas of economists and political scientists, both when they were right and when they were wrong, had a powerful impact on American foreign policy. Before they served as secretaries of state and national security advisers, Kissinger, Zbigniew Brzezinski, and George Shultz were all university professors. It is especially striking to contrast the elite debates of that bygone era with Donald Trump’s reference to Haiti and African nations as “shithole countries” and his nonsensical promise to build a wall along the US-Mexico border.

What has also changed profoundly is the importance of the Global South in the hierarchy of American policy concerns. The NIEO coincided with an era when policymakers across the political spectrum mostly agreed that the United States had a vital interest in developing nations — whether as geopolitical allies or as enemies, as potential importers of US-style democratic institutions or as lucrative investment opportunities. These concerns carried into the Bill Clinton, George W. Bush, and Barack Obama years. More recently, however, the weakening of US hegemony has been matched by an inward focus and a dwindling interest in the developing world. Whether the Global South is better or worse off for Washington’s neglect remains to be seen.

About the Author

Sarah Babb is a professor of sociology in the Morrissey College of Arts & Sciences at Boston College.