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World Economy and Trade
The world economy exists because no country today is self-sufficient and all must participate in international trade. As a result, poor and rich countries, capitalist and socialist alike, exist in a global economic web. If there is a bad coffee crop in Brazil, the price of breakfast goes up in Vienna and Warsaw. If there is a harvest failure in Russia, the farmers of Kansas alter their sowing plans. If the price of crude oil is raised in West Asia the pinch is felt in Boston and Bujumbura.
And this applies not only to raw materials, but to other sectors of the world economy. The inflation which much of the world has suffered originated in the economies of developed countries. About 90 percent of the world’s scientists live in developed countries and technology is one of their main exports. Banks and insurance companies, airlines and shipping companies all tie the world together.
The result of this interdependence--and it is a growing one--is that no country can set its domestic economic policy without regard to global trends. And as these trends too are often beyond the control of any country or group of countries, what we have today is a world economy that is out of control.
By no measure of efficiency is the world economy functioning well. Even the richest countries have suffered from growing unemployment, stagnant rates of economic growth and high inflation. In many other ways too, countries around the world are in trouble. Existing systems of production and exchange do not seem to work in the interests of people or their natural environment. Billions of dollars are spent yearly on armaments while essential social services are ignored for lack of funds. In many countries there is mass hunger while in others there is a tremendous waste of food. Within countries and among them they are huge gaps between the living standards of the rich and those of the poor. Levels of income, technology, production and trade are all widely different, with some having too little and others so much that their waste destroys the natural environment.
It is not working well because the institutions, rules and systems which manage the world economy are increasingly inadequate. In many cases they were created during the colonial period; others were created right after the Second World War when the United States was the preeminent economic and military power. In the post-war period the dollar became, as it were, the world’s reserve currency, against which others were valued. Massive American aid and trade helped revive the shattered economies of Europe and Japan. But this revival itself undermined the systems based on the dominance of the United States in the world economy. So did the emergence of a vocal and independent group of countries in Africa, Asia and Latin America, which pushed ever more urgently to regain control of their own natural resources.

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