Matthieu Leimgruber and Matthias Schmelzer, eds, The OECD and the International Political Economy since 1948. Palgrave Macmillan, 2017, hbk £80, ebook £63.99.
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This ground-breaking collection is part of a larger research project now based at the University of Zurich, from which valuable work has already emerged (Leimgruber, 2013; Schmelzer 2012, 2014, 2016, 2017). Although there is quite a substantial literature on the OECD, its rich archival resources are largely unstudied, and it is still relatively neglected among international organizations concerned with the global political economy. This volume continues the considerable task of remedying the first of these issues, and makes a strong contribution to the second. Its publication is welcome, not least because it has implications, going well beyond the specific role of the OECD itself, for the evolution of the global political economy over the last sixty years. Yet in one respect it frustrates the reader: the first substantive chapter opens by quoting the first Secretary-General of the OECD, Thorkil Kristensen as posing the question: 'what should the OECD do?' (23), but despite the wealth of detail in the chapters that follow, the manner in which the OECD itself defined its mission does not receive entirely adequate treatment. I shall return to it in conclusion.
The OECD emerged in 1960-61 out of the Organization for European Economic Cooperation (OEEC), at a moment when that body's primary task (the management of the Marshall Plan) was complete, and the European economy was at long last back on a viable footing. The OEEC itself had had to fight for space in its early years with overlapping organizations (Daniel Stinsky, chapter on its relationship with the 'all-European' United Nations Economic Commission for Europe): Stinsky makes the important point that it did not simply attach to a previously existing entity recognized as "Western Europe", but rather embodied a new conception of an economic and geopolitical grouping defined by the Cold War (66). The OECD itself emerged alongside the European Economic Community (1957) and the 'rival' European Free Trade Association (1959) (a clash of projects, by the way, that was seen as potentially problematic at the time and is still an issue today), but took on an 'Atlantic' identity when the United States and Canada joined Turkey and seventeen 'Western European' states, large and small, all previously members of the OEEC. Although it was initially largely staffed by Keynesians of various kinds (orthodox liberals being rather thin on the ground), the OECD consistently sought to rebuild and extend the world market along liberal capitalist lines, and successive Secretaries-General have had strong liberal and lately neoliberal credentials. Only its Steel Committee emerges as a bastion of state corporatism: Wolfram Kaiser (chapter on OEEC/OECD and steel during the Cold War) describes a continuous practice of 'multi-level neo-corporatism' that was 'largely oblivious to the neo-liberal turn in economic thinking and policy-making that set in around the mid-1970s' (163). For three decades, in which its membership was confined to actual or honorary 'Western' economies (Japan was a member from 1964, Australia and New Zealand from 1971 and 1973 respectively: their entry, which was not trouble-free, is discussed in a chapter by Peter Carroll), the OECD's project amounted to building a world market across the 'free world', generally under US leadership although in significant tension with it during the Reagan years. The granting of observer status to Yugoslavia in 1955 (chapter by Andrej Marković and Ivan Obadić on the relationship to 1980) represented its only foray 'across the Cold war divide' (97). Almost immediately upon its foundation, it found itself facing a concerted effort from developing countries to challenge the prevailing global trade and investment regimes (Patricia Hongler, chapter on the OECD and UNCTAD 1964). Hongler depicts an organization struggling to secure a united 'Western' response to a challenge that would mature into a demand for a new International Economic Order in the following decade, and suggests (on the evidence of the attitudes of Swiss and UK delegates, rather than statements or positions of the OECD itself) that it did so from a white male anti-colonial perspective that counterposed Western rationality and objectivity to developing world emotionalism and even hysteria. The organization can be seen to some extent in those decades as the 'Warden of the West', as Leimgruber and Schmelzer describe it, but less so as a 'rich country club', as some have seen it - among its initial membership not only Turkey but also Greece, Spain and Portugal were classified as 'less developed countries', and legitimate recipients of foreign aid.
The collection sets out to apply a critical perspective which looks beyond the OECD’s presentation of itself as a benevolent global knowledge hub, to focus on ‘the foundational role of the OECD’s entanglements in the (post-)colonial period and its key function as a Cold war economic institution’ (5). The authors are careful, however, not to regard it as stuck forever in this mould. Rather, the three claims at the core of their historical perspective are first that it has continuously sought to reinvent itself as a ‘warden of liberal capitalism’ and a defender of the hegemony of the West; that it has been much more than a ‘think tank’, playing an important geopolitical role during the Cold War and in its search for a new post-Cold War role after 1990 as ‘first and foremost an international organisation made up of nation states’, acting ‘very much in the framework of international power relations and inter-state negotiations’; and that it is not a simple unity, but is rather ‘characterized by its survival strategies in competition with other international organizations, by its fundamental (geo)political and identity-defining role, by formal and informal hierarchies, both between countries and between its different directorates’ (6). Overall, Leimgruber and Schmelzer conclude in their historical overview, ‘Even though the OECD was a Cold War institution structurally driven by member country interests and the underlying power structures, the Secretaries-General (and other powerful officials) exerted a considerable influence on its running and priorities’ (24). This is an important point, and underlines the importance of foregrounding the broadest terms in which these individuals saw their mission.
Despite the ambitions of its Secretaries-General, the OECD was not always able to persuade its members to adopt liberal practices, free trade in agriculture being a significant example. Nor was it always successful either in forcing itself on to the top table (whether in relation to the G7 in its day, or to tasks entrusted from time to time to the IMF and the World Bank), or in shaping policy. Where individual countries opposed liberal international policies, it could make little headway: the paradigmatic case here is international migration, where its consistent advocacy of labour mobility across borders met equally consistent resistance, as receiving countries blocked any suggestion of supranational regulation and cherry-picked relentlessly. In consequence, it was reduced to the role of collecting data and hosting debate (Emmanuel Comte and Simone Paoli, chapter on the 'narrowing down' of the OEEC/OECD role on the issue from 1947 to 1986). In other areas, too, its contributions were limited. It was influential on environmental issues in the early 1970s (having earlier been instrumental in the founding of the 'Club of Rome'), but its advocacy of market solutions ran into difficulty at the point where general principle had to be converted into precise policies (Iris Borowy, chapter on the 'polluter pays' principle); on gender it lagged behind other institutions, and when it caught up, it tended to follow rather than lead. Its Expert Group on Women in Development (created in 1981) was continually hampered by the conservatism of the mostly male delegates on the Development Advisory Committee (Rianne Mahon, chapter on the DAC and gender policy). Mahon usefully follows the story up to the end of the century (and would have little to say otherwise): Rosalind Eyben and others fought to insert gender issues into the general review and surveillance exercises run by the OECD and to use the opportunities created to ask 'difficult questions' (342), and in the mid-1990s they sought to revise the organization's guidelines on gender equality and women's empowerment to reflect a broader and more critical agenda, only to have a higher all-male committee limit its recommendations to education for girls, sidelining issues around 'social reproduction' (346). Committed feminists within the organization opted, it seems, to work to push the boundaries and to educate member countries and their colleagues within what was a quintessentially pro-market organization. So for example, they pointed out that measures to cut social protection were counter-productive if they put in peril the capacity of women to contribute to project sustainability and environmental protection, and 'act as shock absorbers in the face of the disruptions caused by structural adjustment', and they presented women as 'ready to make adjustment work - if there were appropriate measures to support their activities' (343). At the same time, from 1994 or so onwards the expert group, renamed the Working Party on Gender Equality in 1998, played an important role in feeding work pioneered by Diane Elson and others on the incorporation of gender analysis into the design and implementation of economic reforms, highlighting women's unpaid labour and promoting gender budgeting (348; see also OECD 2002, below).
The OECD has been most influential in areas that cohere around the theme of building a world market in which the policies adopted by individual countries are conducive to exposure to greater competition nationally and greater competitiveness across the world market as a whole, and this is emphatically the theme around which its identity is built today. In its early years it played a key role in the coordination of international monetary and financial policy (Kazuhiko Yago, chapter on Working Party 3 of the Economic Policy Committee, on Policies for the Promotion of International Payment Equilibrium). It was a pioneer in establishing principles and practice in the area of foreign aid, an activity that continues today in peer reviews of development cooperation, most recently of South Korea (OECD 2018). It was early to develop and introduce techniques of monitoring, surveillance and peer review to promote mutual learning, policy coordination and competitiveness (William Glenn Gray, chapter on Country Reviews in the 1970s), in work that also continues today through periodic country economic surveys of all member countries and an increasing number of non-members. And it led in putting the issue of education for scientific expertise and human capital development onto the international agenda (Regula Bürgi, chapter on 'engineering the free world'), and has continued to advocate reforms that gear the education system towards producing the knowledge, skills, behaviour and attitudes that a dynamic and competitive economy requires, working with countries to help them to 'get skills right' by tailoring them to changing labour market needs (OECD 2017a). Significantly, its latest Skills Outlook focuses on skills and global value chains, and urges developing countries not only to invest in appropriate skills, but to align education and skills policies with policies on infrastructure, labour market reform, trade and competition to maximise their productivity and their integration into the world economy (OECD 2017b).
From the vantage point of this contemporary orientation, which is unequivocally global in scope, we can return to this collection to assess its roots. Here Samuel Beroud's chapter on the promotion of supply-side economics and 'positive adjustment' makes a good entry point. It shows that interpretations of the OECD's role in the 1970s in particular that polarise 'Keynesian' and 'neoliberal' approaches and posit a sharp break between them are unhelpful. If anything, the strategy he depicts reflected a liberal standpoint in that it advocated openness to competitive pressures from the world economy, along with a Schumpeterian perspective that saw 'creative destruction' as a necessary and continuous aspect of economic development. The OECD recommended 'positive adjustment policies' (PAP) to ensure that economies adapted over time: ‘In a nutshell,' Beroud summarises, 'PAP advised OECD member countries to refrain from interventionist industrial policies and protectionist measures, to tackle “rigidities” in the labour market, and to encourage the re-training of workers. Such structural changes were seen as a prerequisite to facilitate the transfer of capital and manpower (sic) from declining industries towards new economic activities’ (233). Here, the key point is that adjustment was to be brought about by measures that would 'facilitate the adaptation of economic structures through market forces' (241); but they could be combined, when the international situation warranted it, with a 'Keynesian' policy of (selective) reflation or demand stimulus at the global level. Beroud finds that 'positive adjustment' was advocated by Secretary-General Emile van Lennep as early as 1970, but was resisted by OECD members (234). A report entitled Inflation: The Present Problem (drafted by a Cambridge-trained economist with impeccable Keynesian credentials, Stephen Marris) advocated a combination of measures to eliminate excess demand, trade liberalization to increase cheap imports from developing countries, and 'policies of internal adjustment of the structure of industry and employment in advanced countries', suggesting that the latter, along with temporary support for 'losers', would 'help governments to resist political pressure for too early relaxation of restrictive policies' (236, emphasis mine). Edward Heath, then UK Prime Minister, was one who took exception to lectures from the Chateau de la Muette: when van Lennep identified the UK as failing to contain inflation, he was summoned to London for a scolding (237).
In fact Marris (and the OECD) advocated a dual strategy, in which the measures described above were complemented by the allocation of different roles to different states in the global economy, in accordance with their circumstances: 'Keynesian' demand stimulation by some countries would facilitate 'neo-liberal' adjustment by others, in an approach known as 'locomotive theory'. It argued, under the general rubric of 'concerted action', that 'strong' countries should stimulate domestic demand to boost the world economy and help 'weak' countries out of recession, while 'weak' countries should use the eased circumstances produced by increased global demand to implement measures of 'positive adjustment' (240). Among other things, the initiative also reflected increasing concern over creeping protectionism (among other things, the US tried to negotiate protection for its steel industry in 1976). Then as now, the 'strong' countries were recalcitrant, being generally averse to any risk of domestic inflation, and wanting to see 'positive adjustment' from the 'weak' countries first. Modest reflation ended with the highly inflationary second oil shock of 1979, and the focus switched solely to structural adjustment: the OECD set up a Special Group to explore measures in the fields, inter alia, of 'manpower, social, industrial, scientific, environmental, agricultural, regional, trade and international investment policies' (245), and Hans Tietemeyer, a German ordoliberal exponent of the 'social market economy', was elected as its chair. Its report, in 1982, identified the market as 'the best mechanism to marshal responses to social, economic and technological change', and called on states to combat market failures by enhancing the functioning of the competitive system. In terms of global political economy, three points stand out here, in ascending order of importance. First, this approach rejected the strategy of tax cuts for the wealthy, as introduced then by Thatcher and Reagan, and now by Trump. Second, it called on the advanced economies to pursue structural adjustment to accommodate themselves to global competition (just as the World Bank was calling on developing countries to do so). Third, it was focused, often against the inclinations of its members, on increasing the level of competitiveness across the global economy as a whole.
Beroud captures accurately, I think, some key aspects of the stance of the OECD in the 1970s and into the 1980s. But in doing so, he prompts the question of the earlier roots of this orientation - at which point we can return, in the light of Kristensen's question above, to the issue of how the OECD defined its role. In their overview of the development of the OECD, Leimgruber and Schmelzer note Kristensen's view that it should work as a 'catalytic think tank', his insistence that it should enjoy some autonomy from its constituent member states, and his propensity to absent himself for considerable periods to conduct research of his own (36-7; see also the biographical note by Schmelzer, 2015); and referencing Beroud's chapter, they suggest that the 'transformation from "Keynesian" planning to a "neoliberal" market-oriented policy framework within the OECD was ... a complicated one and largely dominated by changing member states' interests rather than ideological shifts' (40). Then, turning briefly to the post-1984 period (Van Lennep left in that year), they summarise that during the 1980s and 1990s the OECD 'played a key role as a promotor of liberal economic reforms in member countries, particularly in the areas of labour policies, public management, deregulation, and privatization' (41); and they suggest that its opening of its membership to former Eastern European countries and Mexico and South Korea was a defensive move to 'counter its eclipse as a relevant think tank whose analysis could make universal claims' (42). They conclude by defining the OECD as a 'warden of liberal capitalism', albeit one that was 'the economic grouping representing the economic interests of the capitalist West through to 1989 and 'possibly beyond' (43).
This is a considered and balanced judgement, made in the light of the existing secondary literature and a massive effort of collective archival research; and full acknowledgement is made throughout of counterveiling tendencies, the diversity of OECD activities, by no means all controlled from the centre, and the tension between the efforts of Secretaries-General and core staff to set priorities, and those of member states to dictate the agenda themselves. But there are two points of crucial importance to the question of what the OECD thought it should be doing, both clearly articulated from the beginning, and only one is taken into account here. Early in 1963 the OECD Observer published two extended statements, relating to its method of working and policy orientation respectively.* The first spelled out the system of 'confrontation of economic policies', an elaborate working method carried over from the OEEC in which the member countries used the OECD as a forum to explain and justify their policies, and comment on those of their peers. This would allow each country to 'formulate and apply its policy in full knowledge of the international conditions in which it will be put into effect, and of the plans of other governments and the motives behind them' (OECD 1963: 3). This confirms the importance, emphasized throughout this collection, of policy coordination, mutual surveillance, and peer review. It also reveals a means of reconciling the substantive policy preferences of the OECD on the one hand, and the interests and preferences of states on the other. The method of confrontation, it is suggested, would generate constructive solutions to acknowledged problems through a learning process that was consistent with full national sovereignty, yet could shift state interests towards OECD preferences by countering sectional pressures. The reasoning deserves to be quoted verbatim:
'confrontation yields its most appreciable result in those precise cases where there are differences between national viewpoints. In such cases the unanimity rule might have been expected to make confrontation meaningless except for the purpose of recording disagreement. But this is seldom the case. A country which finds itself alone against practically all others is subject to strong moral pressure; and the experience in recent years shows that, even if they have to be repeated several times, right ideas generally prevail over wrong ones. A glance through the conclusions and recommendations of a series of annual reports devoted to a particular country (accepted before publication by the representatives of the country under review but often only after long and tenacious discussion) will reveal many cases where national policy has been seriously criticised and subsequently amended. It is not difficult to understand why this should be. A country's economic policy is not the pure expression of unalloyed reason. It reflects the prevailing balance of its social and political forces, and is normally under constant sectional pressures, but discussion in an international forum such as the O.E.C.D. helps to put these forces and pressures into better perspective, and to sort out the good from the bad. Publication by the O.E.C.D. of an international view of what are sometimes thought to be purely domestic questions can materially help the formation of more bilateral opinions in the country concerned' (ibid: 7).
This has been an enduring feature of OECD practice, even if the faith in reason and deliberation it reflects has not always been rewarded. But it is very revealing of the OECD's image of itself at its inception: it shows that its method of working was intended to bring about a process of what contemporary constructivist analysis calls socialization: individual countries would reassess their interests and modify their policies as a result of the highly structured and iterative interaction described. In the process, the danger of capture by vested interests could be mitigated.
But a second major theme is missing from this collection. A second article in the same 1963 issue of the OECD Observer, under the name of Kristensen himself, addressed the view he took of relations with 'other continents', and entered into the substance of policy preferences. It is a document of considerable importance. After some striking remarks on the tensions between 'federalist' and 'functionalist' approaches to European unification (Kristensen, 1963: 15-16), it suggested, in the light of the considerable deficit in the overall balance of payments of the United States, that the European countries should embrace liberal rather than protectionist agricultural policies. First, this would address the inflationary tendencies whose consequence was that 'Europe [had] lost some of its competitive power': 'it is a common experience that one of the best ways of countering inflationary tendencies is to allow freer entry of goods from abroad so as to strengthen competition and prevent shortages that may push prices up'. Second, it would allow European countries experiencing a 'persistent shortage of industrial manpower' to transfer workers from agriculture to industry, with benefits for both growth and productivity. Such a strategy, Kristensen admitted, would be 'socially and politically difficult'. But it would still be better to 'pave the way for the progressive abolition of protection in order to encourage the movement towards greater efficiency'. He was not optimistic, expecting rather that reciprocal protectionist measures would have the result of making economic and political cooperation all the harder, and lead to 'less efficient production in the protected sectors, and in consequence some slowing-down of general expansion'. 'What is perhaps even more serious,' he went on, 'is that reciprocal protectionism in the two Western continents would probably have the result of also making them protectionist in their relations with the under-developed countries' (ibid: 17). Nor was this all. Turning to the 'less developed continents', he stressed the need for development aid, perhaps until 'the end of the century', but insisted that in the long run, 'the main problem of the developing countries will probably be their external trade': 'the problems of markets for the products of the less developed countries will be much more important in future than the problems of trade between developed countries'. And after referencing the 'complicated question of stabilising prices or export earnings in respect of tropical products and primary materials' (on which, in fact, both before and after UNCTAD 1964 Kristensen's views were very close to those of Raul Prebisch), he concluded as follows (again verbatim):
'The other major aspect is that in the long run we must expect a spectacular increase in the imports of manufactured products originating in the poorer countries. Almost their only wealth is their plentiful low-wage manpower. They must have modern techniques, but like the Japanese they could adopt them gradually. We might perhaps envisage a large scale re-deployment
of industrial activity between the continents over the next few decades, which would mean a re-orientation of European industry. It is not too soon to start preparing for this. Whether we like it or not, Europe will be forced in the imminent future to change, not only her day-to-day policy but also her economic and political structure under the pressure of inexorable forces which entail ever-growing interdependence between all the continents. Europe cannot live in isolation. There is no protection against the fundamental forces of history' (ibid).
This is not quite the liberal version of the Communist Manifesto, but it shows an impressive grasp of tendencies of the world market all the same. Its insistence on the need for the developed or advanced countries to assist in the development of others, and in due course to welcome competition from their industrial exports and to adapt their societies to meet it is the essence of the OECD's sense of its mission. It would be reiterated time and time again - by Kristensen again after UNCTAD 1964 (Kristensen, 1966: 6), by van Lennep in response to the rise of the Newly Industrialised Countries (NICs) and global production chains in the following decade (OECD, 1979), and by a host of publications from the Development Centre in the mid-1990s (OECD 1995, 1996, 1997). Engagement with former Eastern Europe, Mexico, South Korea, and later with India, China and others was simply a continuation of this core original mission, not an opportunistic deviation from it. From the start, the mission of the OECD was to develop the global economy along capitalist lines, as far as possible in accordance with liberal principles. And above all, as recognized from the start, this would involve finding ways to carry out 'difficult' social and economic reforms. So while I welcome this collection and the broader project behind it, my sense of the trajectory of the OECD since its inception differs in this major respect.
However, in uncovering the persistent tension between the efforts of member countries to defend their privileges and collective hegemony against 'the rest' on the one hand, and the long-term aspirations of successive Secretaries-General to create an all-embracing global economy based on intensified competitiveness on the other, the authors here have broken fresh ground. It is a theme that deserves to be put centre-stage in further archival research, as does the related question of the manner in which the organization sought to coach and counsel member countries on techniques through which their populations could moulded and reconciled to the disciplines of such a system.
* In the PDF versions of the Observer available online at the OECD ilibrary, the articles listed as appearing in No. 1 (November 1962) and No. 3 (March 1963) have been transposed in error. So the articles cited here are found attached to No. 1.
References and further reading
Kristensen, Thorkil (1963) Economic Relations Between Europe and Other Continents, OECD Observer, No. 3, March, 14-18.
Kristensen, Thorkil (1966) Problems Facing the Western World: Money, Trade and Food, OECD Observer, No. 22, June, 3-7.
Leimgruber, Matthieu (2013) The embattled standard-bearer of social insurance and its challenger: the ILO, the OECD, and the "crisis of the welfare state", 1975-1985, in Globalizing social rights: the ILO and beyond, Sandrine Kott and Joelle Droux (eds), Basingstoke: Palgrave, pp. 293-309.
OECD (1963) 20 Nations Exchange Their Policy Ideas for Mutual Economic Benefit, OECD Observer, No. 3, March, 3-7.
OECD (1979) The Impact of the Newly Industrialised Countries on Industry and Trade in Manufactures. Paris: OECD.
OECD (1995) Linkages: OECD and major Developing Economies. Paris, OECD.
OECD (1996) Shaping the 21st Century: The Contribution of Development Co-operation. Paris, OECD.
OECD, 1997) The World in 2020: Towards a New Global Age. Paris: OECD.
OECD (2002) Gender and Economic Reform, Development Assistance Committee, Working Party on Gender Equality, DCD/DAC/GEN(2000)2/FINAL. Paris: OECD.
OECD (2017a) OECD Work on Education & Skills. Paris: OECD.
OECD (2017b) OECD Skills Outlook 2017: Skills and Global Value Chains. Paris:OECD.
OECD (2018) Development Cooperation Review: Korea. Paris: OECD.
Schmelzer, Matthias (2012), The Crisis before the Crisis: The ‘problems of Modern Society’ and the OECD, 1968–74, European Review of History, 19, 6, pp. 999-1020.
Schmelzer, Matthias (2014) A club of the rich to help the poor? The OECD as an unduly neglected actor in the field of "development", in M. Frey, S. Kunkel, & C. Unger (eds), International Organizations and Development, 1945 to 1990, Palgrave-MacMillan, pp. 171-195.
Schmelzer, Matthias (2015) ‘Kristensen, Thorkil’ in IO BIO, Biographical Dictionary of Secretaries-General of International Organizations, edited by Bob Reinalda, Kent J. Kille and Jaci Eisenberg, www.ru.nl/fm/iobio, Accessed 16 March 2018.
Schmelzer, Matthias (2016) The Hegemony of Growth. The OECD and the making of the economic growth paradigm. Cambridge, Cambridge University Press.
Schmelzer, Matthias (2017) 'Born in the corridors of the OECD’: the forgotten origins of the Club of Rome, transnational networks, and the 1970s in global history, Journal of Global History, 12, 1, 26-48.
The OECD emerged in 1960-61 out of the Organization for European Economic Cooperation (OEEC), at a moment when that body's primary task (the management of the Marshall Plan) was complete, and the European economy was at long last back on a viable footing. The OEEC itself had had to fight for space in its early years with overlapping organizations (Daniel Stinsky, chapter on its relationship with the 'all-European' United Nations Economic Commission for Europe): Stinsky makes the important point that it did not simply attach to a previously existing entity recognized as "Western Europe", but rather embodied a new conception of an economic and geopolitical grouping defined by the Cold War (66). The OECD itself emerged alongside the European Economic Community (1957) and the 'rival' European Free Trade Association (1959) (a clash of projects, by the way, that was seen as potentially problematic at the time and is still an issue today), but took on an 'Atlantic' identity when the United States and Canada joined Turkey and seventeen 'Western European' states, large and small, all previously members of the OEEC. Although it was initially largely staffed by Keynesians of various kinds (orthodox liberals being rather thin on the ground), the OECD consistently sought to rebuild and extend the world market along liberal capitalist lines, and successive Secretaries-General have had strong liberal and lately neoliberal credentials. Only its Steel Committee emerges as a bastion of state corporatism: Wolfram Kaiser (chapter on OEEC/OECD and steel during the Cold War) describes a continuous practice of 'multi-level neo-corporatism' that was 'largely oblivious to the neo-liberal turn in economic thinking and policy-making that set in around the mid-1970s' (163). For three decades, in which its membership was confined to actual or honorary 'Western' economies (Japan was a member from 1964, Australia and New Zealand from 1971 and 1973 respectively: their entry, which was not trouble-free, is discussed in a chapter by Peter Carroll), the OECD's project amounted to building a world market across the 'free world', generally under US leadership although in significant tension with it during the Reagan years. The granting of observer status to Yugoslavia in 1955 (chapter by Andrej Marković and Ivan Obadić on the relationship to 1980) represented its only foray 'across the Cold war divide' (97). Almost immediately upon its foundation, it found itself facing a concerted effort from developing countries to challenge the prevailing global trade and investment regimes (Patricia Hongler, chapter on the OECD and UNCTAD 1964). Hongler depicts an organization struggling to secure a united 'Western' response to a challenge that would mature into a demand for a new International Economic Order in the following decade, and suggests (on the evidence of the attitudes of Swiss and UK delegates, rather than statements or positions of the OECD itself) that it did so from a white male anti-colonial perspective that counterposed Western rationality and objectivity to developing world emotionalism and even hysteria. The organization can be seen to some extent in those decades as the 'Warden of the West', as Leimgruber and Schmelzer describe it, but less so as a 'rich country club', as some have seen it - among its initial membership not only Turkey but also Greece, Spain and Portugal were classified as 'less developed countries', and legitimate recipients of foreign aid.
The collection sets out to apply a critical perspective which looks beyond the OECD’s presentation of itself as a benevolent global knowledge hub, to focus on ‘the foundational role of the OECD’s entanglements in the (post-)colonial period and its key function as a Cold war economic institution’ (5). The authors are careful, however, not to regard it as stuck forever in this mould. Rather, the three claims at the core of their historical perspective are first that it has continuously sought to reinvent itself as a ‘warden of liberal capitalism’ and a defender of the hegemony of the West; that it has been much more than a ‘think tank’, playing an important geopolitical role during the Cold War and in its search for a new post-Cold War role after 1990 as ‘first and foremost an international organisation made up of nation states’, acting ‘very much in the framework of international power relations and inter-state negotiations’; and that it is not a simple unity, but is rather ‘characterized by its survival strategies in competition with other international organizations, by its fundamental (geo)political and identity-defining role, by formal and informal hierarchies, both between countries and between its different directorates’ (6). Overall, Leimgruber and Schmelzer conclude in their historical overview, ‘Even though the OECD was a Cold War institution structurally driven by member country interests and the underlying power structures, the Secretaries-General (and other powerful officials) exerted a considerable influence on its running and priorities’ (24). This is an important point, and underlines the importance of foregrounding the broadest terms in which these individuals saw their mission.
Despite the ambitions of its Secretaries-General, the OECD was not always able to persuade its members to adopt liberal practices, free trade in agriculture being a significant example. Nor was it always successful either in forcing itself on to the top table (whether in relation to the G7 in its day, or to tasks entrusted from time to time to the IMF and the World Bank), or in shaping policy. Where individual countries opposed liberal international policies, it could make little headway: the paradigmatic case here is international migration, where its consistent advocacy of labour mobility across borders met equally consistent resistance, as receiving countries blocked any suggestion of supranational regulation and cherry-picked relentlessly. In consequence, it was reduced to the role of collecting data and hosting debate (Emmanuel Comte and Simone Paoli, chapter on the 'narrowing down' of the OEEC/OECD role on the issue from 1947 to 1986). In other areas, too, its contributions were limited. It was influential on environmental issues in the early 1970s (having earlier been instrumental in the founding of the 'Club of Rome'), but its advocacy of market solutions ran into difficulty at the point where general principle had to be converted into precise policies (Iris Borowy, chapter on the 'polluter pays' principle); on gender it lagged behind other institutions, and when it caught up, it tended to follow rather than lead. Its Expert Group on Women in Development (created in 1981) was continually hampered by the conservatism of the mostly male delegates on the Development Advisory Committee (Rianne Mahon, chapter on the DAC and gender policy). Mahon usefully follows the story up to the end of the century (and would have little to say otherwise): Rosalind Eyben and others fought to insert gender issues into the general review and surveillance exercises run by the OECD and to use the opportunities created to ask 'difficult questions' (342), and in the mid-1990s they sought to revise the organization's guidelines on gender equality and women's empowerment to reflect a broader and more critical agenda, only to have a higher all-male committee limit its recommendations to education for girls, sidelining issues around 'social reproduction' (346). Committed feminists within the organization opted, it seems, to work to push the boundaries and to educate member countries and their colleagues within what was a quintessentially pro-market organization. So for example, they pointed out that measures to cut social protection were counter-productive if they put in peril the capacity of women to contribute to project sustainability and environmental protection, and 'act as shock absorbers in the face of the disruptions caused by structural adjustment', and they presented women as 'ready to make adjustment work - if there were appropriate measures to support their activities' (343). At the same time, from 1994 or so onwards the expert group, renamed the Working Party on Gender Equality in 1998, played an important role in feeding work pioneered by Diane Elson and others on the incorporation of gender analysis into the design and implementation of economic reforms, highlighting women's unpaid labour and promoting gender budgeting (348; see also OECD 2002, below).
The OECD has been most influential in areas that cohere around the theme of building a world market in which the policies adopted by individual countries are conducive to exposure to greater competition nationally and greater competitiveness across the world market as a whole, and this is emphatically the theme around which its identity is built today. In its early years it played a key role in the coordination of international monetary and financial policy (Kazuhiko Yago, chapter on Working Party 3 of the Economic Policy Committee, on Policies for the Promotion of International Payment Equilibrium). It was a pioneer in establishing principles and practice in the area of foreign aid, an activity that continues today in peer reviews of development cooperation, most recently of South Korea (OECD 2018). It was early to develop and introduce techniques of monitoring, surveillance and peer review to promote mutual learning, policy coordination and competitiveness (William Glenn Gray, chapter on Country Reviews in the 1970s), in work that also continues today through periodic country economic surveys of all member countries and an increasing number of non-members. And it led in putting the issue of education for scientific expertise and human capital development onto the international agenda (Regula Bürgi, chapter on 'engineering the free world'), and has continued to advocate reforms that gear the education system towards producing the knowledge, skills, behaviour and attitudes that a dynamic and competitive economy requires, working with countries to help them to 'get skills right' by tailoring them to changing labour market needs (OECD 2017a). Significantly, its latest Skills Outlook focuses on skills and global value chains, and urges developing countries not only to invest in appropriate skills, but to align education and skills policies with policies on infrastructure, labour market reform, trade and competition to maximise their productivity and their integration into the world economy (OECD 2017b).
From the vantage point of this contemporary orientation, which is unequivocally global in scope, we can return to this collection to assess its roots. Here Samuel Beroud's chapter on the promotion of supply-side economics and 'positive adjustment' makes a good entry point. It shows that interpretations of the OECD's role in the 1970s in particular that polarise 'Keynesian' and 'neoliberal' approaches and posit a sharp break between them are unhelpful. If anything, the strategy he depicts reflected a liberal standpoint in that it advocated openness to competitive pressures from the world economy, along with a Schumpeterian perspective that saw 'creative destruction' as a necessary and continuous aspect of economic development. The OECD recommended 'positive adjustment policies' (PAP) to ensure that economies adapted over time: ‘In a nutshell,' Beroud summarises, 'PAP advised OECD member countries to refrain from interventionist industrial policies and protectionist measures, to tackle “rigidities” in the labour market, and to encourage the re-training of workers. Such structural changes were seen as a prerequisite to facilitate the transfer of capital and manpower (sic) from declining industries towards new economic activities’ (233). Here, the key point is that adjustment was to be brought about by measures that would 'facilitate the adaptation of economic structures through market forces' (241); but they could be combined, when the international situation warranted it, with a 'Keynesian' policy of (selective) reflation or demand stimulus at the global level. Beroud finds that 'positive adjustment' was advocated by Secretary-General Emile van Lennep as early as 1970, but was resisted by OECD members (234). A report entitled Inflation: The Present Problem (drafted by a Cambridge-trained economist with impeccable Keynesian credentials, Stephen Marris) advocated a combination of measures to eliminate excess demand, trade liberalization to increase cheap imports from developing countries, and 'policies of internal adjustment of the structure of industry and employment in advanced countries', suggesting that the latter, along with temporary support for 'losers', would 'help governments to resist political pressure for too early relaxation of restrictive policies' (236, emphasis mine). Edward Heath, then UK Prime Minister, was one who took exception to lectures from the Chateau de la Muette: when van Lennep identified the UK as failing to contain inflation, he was summoned to London for a scolding (237).
In fact Marris (and the OECD) advocated a dual strategy, in which the measures described above were complemented by the allocation of different roles to different states in the global economy, in accordance with their circumstances: 'Keynesian' demand stimulation by some countries would facilitate 'neo-liberal' adjustment by others, in an approach known as 'locomotive theory'. It argued, under the general rubric of 'concerted action', that 'strong' countries should stimulate domestic demand to boost the world economy and help 'weak' countries out of recession, while 'weak' countries should use the eased circumstances produced by increased global demand to implement measures of 'positive adjustment' (240). Among other things, the initiative also reflected increasing concern over creeping protectionism (among other things, the US tried to negotiate protection for its steel industry in 1976). Then as now, the 'strong' countries were recalcitrant, being generally averse to any risk of domestic inflation, and wanting to see 'positive adjustment' from the 'weak' countries first. Modest reflation ended with the highly inflationary second oil shock of 1979, and the focus switched solely to structural adjustment: the OECD set up a Special Group to explore measures in the fields, inter alia, of 'manpower, social, industrial, scientific, environmental, agricultural, regional, trade and international investment policies' (245), and Hans Tietemeyer, a German ordoliberal exponent of the 'social market economy', was elected as its chair. Its report, in 1982, identified the market as 'the best mechanism to marshal responses to social, economic and technological change', and called on states to combat market failures by enhancing the functioning of the competitive system. In terms of global political economy, three points stand out here, in ascending order of importance. First, this approach rejected the strategy of tax cuts for the wealthy, as introduced then by Thatcher and Reagan, and now by Trump. Second, it called on the advanced economies to pursue structural adjustment to accommodate themselves to global competition (just as the World Bank was calling on developing countries to do so). Third, it was focused, often against the inclinations of its members, on increasing the level of competitiveness across the global economy as a whole.
Beroud captures accurately, I think, some key aspects of the stance of the OECD in the 1970s and into the 1980s. But in doing so, he prompts the question of the earlier roots of this orientation - at which point we can return, in the light of Kristensen's question above, to the issue of how the OECD defined its role. In their overview of the development of the OECD, Leimgruber and Schmelzer note Kristensen's view that it should work as a 'catalytic think tank', his insistence that it should enjoy some autonomy from its constituent member states, and his propensity to absent himself for considerable periods to conduct research of his own (36-7; see also the biographical note by Schmelzer, 2015); and referencing Beroud's chapter, they suggest that the 'transformation from "Keynesian" planning to a "neoliberal" market-oriented policy framework within the OECD was ... a complicated one and largely dominated by changing member states' interests rather than ideological shifts' (40). Then, turning briefly to the post-1984 period (Van Lennep left in that year), they summarise that during the 1980s and 1990s the OECD 'played a key role as a promotor of liberal economic reforms in member countries, particularly in the areas of labour policies, public management, deregulation, and privatization' (41); and they suggest that its opening of its membership to former Eastern European countries and Mexico and South Korea was a defensive move to 'counter its eclipse as a relevant think tank whose analysis could make universal claims' (42). They conclude by defining the OECD as a 'warden of liberal capitalism', albeit one that was 'the economic grouping representing the economic interests of the capitalist West through to 1989 and 'possibly beyond' (43).
This is a considered and balanced judgement, made in the light of the existing secondary literature and a massive effort of collective archival research; and full acknowledgement is made throughout of counterveiling tendencies, the diversity of OECD activities, by no means all controlled from the centre, and the tension between the efforts of Secretaries-General and core staff to set priorities, and those of member states to dictate the agenda themselves. But there are two points of crucial importance to the question of what the OECD thought it should be doing, both clearly articulated from the beginning, and only one is taken into account here. Early in 1963 the OECD Observer published two extended statements, relating to its method of working and policy orientation respectively.* The first spelled out the system of 'confrontation of economic policies', an elaborate working method carried over from the OEEC in which the member countries used the OECD as a forum to explain and justify their policies, and comment on those of their peers. This would allow each country to 'formulate and apply its policy in full knowledge of the international conditions in which it will be put into effect, and of the plans of other governments and the motives behind them' (OECD 1963: 3). This confirms the importance, emphasized throughout this collection, of policy coordination, mutual surveillance, and peer review. It also reveals a means of reconciling the substantive policy preferences of the OECD on the one hand, and the interests and preferences of states on the other. The method of confrontation, it is suggested, would generate constructive solutions to acknowledged problems through a learning process that was consistent with full national sovereignty, yet could shift state interests towards OECD preferences by countering sectional pressures. The reasoning deserves to be quoted verbatim:
'confrontation yields its most appreciable result in those precise cases where there are differences between national viewpoints. In such cases the unanimity rule might have been expected to make confrontation meaningless except for the purpose of recording disagreement. But this is seldom the case. A country which finds itself alone against practically all others is subject to strong moral pressure; and the experience in recent years shows that, even if they have to be repeated several times, right ideas generally prevail over wrong ones. A glance through the conclusions and recommendations of a series of annual reports devoted to a particular country (accepted before publication by the representatives of the country under review but often only after long and tenacious discussion) will reveal many cases where national policy has been seriously criticised and subsequently amended. It is not difficult to understand why this should be. A country's economic policy is not the pure expression of unalloyed reason. It reflects the prevailing balance of its social and political forces, and is normally under constant sectional pressures, but discussion in an international forum such as the O.E.C.D. helps to put these forces and pressures into better perspective, and to sort out the good from the bad. Publication by the O.E.C.D. of an international view of what are sometimes thought to be purely domestic questions can materially help the formation of more bilateral opinions in the country concerned' (ibid: 7).
This has been an enduring feature of OECD practice, even if the faith in reason and deliberation it reflects has not always been rewarded. But it is very revealing of the OECD's image of itself at its inception: it shows that its method of working was intended to bring about a process of what contemporary constructivist analysis calls socialization: individual countries would reassess their interests and modify their policies as a result of the highly structured and iterative interaction described. In the process, the danger of capture by vested interests could be mitigated.
But a second major theme is missing from this collection. A second article in the same 1963 issue of the OECD Observer, under the name of Kristensen himself, addressed the view he took of relations with 'other continents', and entered into the substance of policy preferences. It is a document of considerable importance. After some striking remarks on the tensions between 'federalist' and 'functionalist' approaches to European unification (Kristensen, 1963: 15-16), it suggested, in the light of the considerable deficit in the overall balance of payments of the United States, that the European countries should embrace liberal rather than protectionist agricultural policies. First, this would address the inflationary tendencies whose consequence was that 'Europe [had] lost some of its competitive power': 'it is a common experience that one of the best ways of countering inflationary tendencies is to allow freer entry of goods from abroad so as to strengthen competition and prevent shortages that may push prices up'. Second, it would allow European countries experiencing a 'persistent shortage of industrial manpower' to transfer workers from agriculture to industry, with benefits for both growth and productivity. Such a strategy, Kristensen admitted, would be 'socially and politically difficult'. But it would still be better to 'pave the way for the progressive abolition of protection in order to encourage the movement towards greater efficiency'. He was not optimistic, expecting rather that reciprocal protectionist measures would have the result of making economic and political cooperation all the harder, and lead to 'less efficient production in the protected sectors, and in consequence some slowing-down of general expansion'. 'What is perhaps even more serious,' he went on, 'is that reciprocal protectionism in the two Western continents would probably have the result of also making them protectionist in their relations with the under-developed countries' (ibid: 17). Nor was this all. Turning to the 'less developed continents', he stressed the need for development aid, perhaps until 'the end of the century', but insisted that in the long run, 'the main problem of the developing countries will probably be their external trade': 'the problems of markets for the products of the less developed countries will be much more important in future than the problems of trade between developed countries'. And after referencing the 'complicated question of stabilising prices or export earnings in respect of tropical products and primary materials' (on which, in fact, both before and after UNCTAD 1964 Kristensen's views were very close to those of Raul Prebisch), he concluded as follows (again verbatim):
'The other major aspect is that in the long run we must expect a spectacular increase in the imports of manufactured products originating in the poorer countries. Almost their only wealth is their plentiful low-wage manpower. They must have modern techniques, but like the Japanese they could adopt them gradually. We might perhaps envisage a large scale re-deployment
of industrial activity between the continents over the next few decades, which would mean a re-orientation of European industry. It is not too soon to start preparing for this. Whether we like it or not, Europe will be forced in the imminent future to change, not only her day-to-day policy but also her economic and political structure under the pressure of inexorable forces which entail ever-growing interdependence between all the continents. Europe cannot live in isolation. There is no protection against the fundamental forces of history' (ibid).
This is not quite the liberal version of the Communist Manifesto, but it shows an impressive grasp of tendencies of the world market all the same. Its insistence on the need for the developed or advanced countries to assist in the development of others, and in due course to welcome competition from their industrial exports and to adapt their societies to meet it is the essence of the OECD's sense of its mission. It would be reiterated time and time again - by Kristensen again after UNCTAD 1964 (Kristensen, 1966: 6), by van Lennep in response to the rise of the Newly Industrialised Countries (NICs) and global production chains in the following decade (OECD, 1979), and by a host of publications from the Development Centre in the mid-1990s (OECD 1995, 1996, 1997). Engagement with former Eastern Europe, Mexico, South Korea, and later with India, China and others was simply a continuation of this core original mission, not an opportunistic deviation from it. From the start, the mission of the OECD was to develop the global economy along capitalist lines, as far as possible in accordance with liberal principles. And above all, as recognized from the start, this would involve finding ways to carry out 'difficult' social and economic reforms. So while I welcome this collection and the broader project behind it, my sense of the trajectory of the OECD since its inception differs in this major respect.
However, in uncovering the persistent tension between the efforts of member countries to defend their privileges and collective hegemony against 'the rest' on the one hand, and the long-term aspirations of successive Secretaries-General to create an all-embracing global economy based on intensified competitiveness on the other, the authors here have broken fresh ground. It is a theme that deserves to be put centre-stage in further archival research, as does the related question of the manner in which the organization sought to coach and counsel member countries on techniques through which their populations could moulded and reconciled to the disciplines of such a system.
* In the PDF versions of the Observer available online at the OECD ilibrary, the articles listed as appearing in No. 1 (November 1962) and No. 3 (March 1963) have been transposed in error. So the articles cited here are found attached to No. 1.
References and further reading
Kristensen, Thorkil (1963) Economic Relations Between Europe and Other Continents, OECD Observer, No. 3, March, 14-18.
Kristensen, Thorkil (1966) Problems Facing the Western World: Money, Trade and Food, OECD Observer, No. 22, June, 3-7.
Leimgruber, Matthieu (2013) The embattled standard-bearer of social insurance and its challenger: the ILO, the OECD, and the "crisis of the welfare state", 1975-1985, in Globalizing social rights: the ILO and beyond, Sandrine Kott and Joelle Droux (eds), Basingstoke: Palgrave, pp. 293-309.
OECD (1963) 20 Nations Exchange Their Policy Ideas for Mutual Economic Benefit, OECD Observer, No. 3, March, 3-7.
OECD (1979) The Impact of the Newly Industrialised Countries on Industry and Trade in Manufactures. Paris: OECD.
OECD (1995) Linkages: OECD and major Developing Economies. Paris, OECD.
OECD (1996) Shaping the 21st Century: The Contribution of Development Co-operation. Paris, OECD.
OECD, 1997) The World in 2020: Towards a New Global Age. Paris: OECD.
OECD (2002) Gender and Economic Reform, Development Assistance Committee, Working Party on Gender Equality, DCD/DAC/GEN(2000)2/FINAL. Paris: OECD.
OECD (2017a) OECD Work on Education & Skills. Paris: OECD.
OECD (2017b) OECD Skills Outlook 2017: Skills and Global Value Chains. Paris:OECD.
OECD (2018) Development Cooperation Review: Korea. Paris: OECD.
Schmelzer, Matthias (2012), The Crisis before the Crisis: The ‘problems of Modern Society’ and the OECD, 1968–74, European Review of History, 19, 6, pp. 999-1020.
Schmelzer, Matthias (2014) A club of the rich to help the poor? The OECD as an unduly neglected actor in the field of "development", in M. Frey, S. Kunkel, & C. Unger (eds), International Organizations and Development, 1945 to 1990, Palgrave-MacMillan, pp. 171-195.
Schmelzer, Matthias (2015) ‘Kristensen, Thorkil’ in IO BIO, Biographical Dictionary of Secretaries-General of International Organizations, edited by Bob Reinalda, Kent J. Kille and Jaci Eisenberg, www.ru.nl/fm/iobio, Accessed 16 March 2018.
Schmelzer, Matthias (2016) The Hegemony of Growth. The OECD and the making of the economic growth paradigm. Cambridge, Cambridge University Press.
Schmelzer, Matthias (2017) 'Born in the corridors of the OECD’: the forgotten origins of the Club of Rome, transnational networks, and the 1970s in global history, Journal of Global History, 12, 1, 26-48.