Book Review: An International Economy by Gunnar Myrdal


Filed Under : Welfare State

New York: Harper & Brothers. 381 pp. $6.50.

When Gunnar Myrdal was professor of political economy at Stockholm University, he expounded the doctrines of Keynes. When he was Swedish minister of commerce, he did not hesitate to impose government control over exports, imports, and foreign exchange in order to assure “full employment.” Now that he is Executive Secretary of the United Nations Economic Commission for Europe it is his official function to be concerned with the destruction of international economic cooperation which is the inevitable outcome of welfare state interference with world trade. His book, An International Economy, is a futile attempt to solve the dilemma of contradictions between Mr. Myrdal’s past and present ambitions.

He states the problem clearly. The Welfare State, which in Myrdal’s terminology is the “integrated” state, “induces international disintegration.” (p. 48) It leads to world-wide conflicts of interests because welfare policies of protection, favors, and privileges must discriminate against foreign goods, capital, and labor, thus destroying the world market and using it as a dumping ground for “excess supplies” o f c o t t o n, cheese, peanuts, etc., from government warehouses. In short, the Welfare State becomes the economic source of international conflict.

The obvious solution to this dilemma is a return to the free market, and to individual cooperation on the world market. But this solution, which is identical with a return to individual liberty and capitalism, is unhesitatingly rejected by Professor Myrdal. He criticizes it “as not only reactionary but also as ineffective, since it goes against an immutable historical trend.” (p. 52) This immutable trend, according to Myrdal, is leading mankind in the direction of the Welfare State and other forms of collectivism.

But he rejects the return to capitalism also on grounds that it leads to economic advancement on the part of the richer countries and to stagnation and poverty on the part of the poorer nations. The question “that should be pondered carefully,” according to the author, is whether the Marxist analysis that the rich become richer and the poor poorer is not correct as far as the international scene is concerned.

Professor Myrdal’s positive solution to the problem of world market disintegration is the international extension of the welfare state idea. National policies must be coordinated so that “disturbing influences on national welfare are eliminated.” Wealth must be redistributed not only on a national basis, but also from the wealthy nations to those in the underdeveloped areas of the world. Just as Welfare States tax the rich, who naturally lose the power of disposal and employment of their tax payments, so should the world community tax the wealthy nations and employ the funds, coming mainly from the U.S.A., as the world government sees fit. Once we have become “loyal world citizens” we are said to be ready for this “fairer sharing,” which is called the world’s only route to salvation.

It is a private matter if a socialist professor from Sweden chooses to believe all this confusion. And if the pseudoliberal press lends endorsement, that also is its affair. The American public, however, must be on guard against the acceptance of such ideas as a basis for governmental action.


Hans F. Sennholz


August 1956

comments powered by Disqus


* indicates required


December 2014

Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
Download Free PDF




Essential Works from FEE

Economics in One Lesson (full text)


The full text of Hazlitt's famed primer on economic principles: read this first!


Frederic Bastiat's timeless defense of liberty for all. Once read and understood, nothing ever looks the same.


There can be little doubt that man owes some of his greatest suc­cesses in the past to the fact that he has not been able to control so­cial life.


Leonard Read took the lessons of entrepreneurship with him when he started his ideological venture.


No one knows how to make a pencil: Leonard Read's classic (Audio, HTML, and PDF)