Notes for reply to Denis Healey
Bilderberg 1971

It is not entirely clear whether Mr. Healey includes
me among the "dinosaurs from the Occupation Age" to whom he refers
in his otherwise quite unambiguous paper; but whether or not that
was his intention, I am distressed at his traducing an innocent beast
that has never gotten the good press it deserved. After all, the
dinosaur did manage to exist, if not exactly flourish, for a whole
geologic era, which is a greater span than *homo sapiens* has so far
achieved; most dinosaurs lived on vegetables and would not have
bitten any Americans, even if some had happened to be around at the
time -- which many here would no doubt regard as the mark of a
discriminating palate; and, if the dinosaur did not know how to
make an analogue computer, he at least had sense enough not to make
a bomb and blow himself up -- which is more than can be claimed
with any assurance with regard to man. So I suggest to Mr. Healey
that he find his invidious metaphors elsewhere.

This morning, however, we are not interested in Denis
Healey's preoccupation with the Age of the Great Lizards so much as with
his conception of present day Europe and how he sees events evolving
in that troublesome old continent. His vision of the future, as I
read it, contemplates a Europe destined to remain fragmented in its
present structure of small and medium-sized states, each pursuing
independent diplomatic ventures with the Warsaw Pact nations -- a
free for all of diplomatic activity that he characterizes as
"individual initiatives by individual countries." He assumes that

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when such activity finally persuades the Soviet Union to lose its
fear of the West, the Kremlin can be induced, as he puts it, "to
come to terms with the colonial revolution in Eastern Europe" -- which,
if I understand him, means that it will progressively release its hold
on its Eastern European empire, presumably dissolving the Warsaw
Pact as the West dissolves NATO, with the ultimate result that
the line dividing Europe will gradually fade away, that the severed
parts of Germany will be reassociated in some form or another, and
that we will all live happily ever after.

To provide the assurances that the Soviet Union needs
before it will relax its grip on its empire, Mr. Healey apparently
counts not only on the manufacture of a whole basketful of bilateral
non-aggression pacts, but also envisages a European Security Conference
which would busy itself, among other things, with developing an
accord for mutual and balanced troop withdrawals.

As Mr. Healey paints this impressionistic picture, what
emerges is unquestionably attractive; yet I do not believe for a
moment that the process he describes would work the way he suggests,
since, in my view, he misassesses Soviet objectives and ignores the
hard realities of power politics. The central postulate of his
position, it would appear, is that the Soviets maintain a frantic
hold on Eastern Europe primarily out of fear of a <u>revanchist</u> Germany
-- or what he refers to as the "German demon" that must be "exorcised"
-- the implication being, of course, that Soviet expansionist
objectives are matters of the past. For Mr. Healey apparently believes
that the discontents and stifled aspirations in the satellite states
are generating such pressures that, if only we could create what he

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calls a "climate of mutual trust" with Moscow, the Kremlin would
voluntarily "loosen its grip" on its empire in apparent imitation
of Britain's benign policy toward its own empire over the past
half century. At the same time, he brushes aside any serious
prospects for progress toward political unity in Western Europe,
asserting that "if political unity is to be achieved on any major
issue of foreign policy it will be round the general approach to
Eastern Europe which is embodied in the Ostpolitik".

Speaking of dinosaurs, what strikes me most about Mr. Healey's
conception is how old-fashioned it is -- or, if Mr. Healey will
forgive me for using the word most offensive to him, how conservative!
It is the attempt to return to a status quo ante-bellum -- but this
time with the major difference that, while Western Europe remains a
conferences of small and medium-sized nation states, the Soviet Union
looms at the other end of Europe as a military and industrial giant
of overwhelming dimensions armed with all the weapons of nuclear death.
To me, that is not a very reassuring vision.

To assume, as Mr. Healey apparently does, that the Soviet
Union will go to hazardous lengths to enforce the Brezhnev Doctrine
-- as it did less than three years ago in Prague -- purely for the
purpose of maintaining a buffer against the Western threat, but that
it would willingly see its empire dismantled once that threat were
neutralized by a series of non-aggression pacts seems to me quite
fanciful. I find no serious evidence that the Soviet Union has discarded
its expansionist ambitions or that it would not take advantage of any
available opportunity to extend its power and influence. Perhaps
it is now driven more by nationalistic than ideological motives --

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that is a matter for argument -- but twentieth century European history has proved that nations can have expansionist ambitions with no ideology at all.

What is the position of the Soviet Union today? Within the past few years it has taken giant strides toward making its weight felt around the world. Both in absolute and relative terms, it is now far more powerful than ever before in history. It has realized the ancient Czarist dream of becoming a Mediterranean power. It has established a firm beachhead in Egypt to which it has, -- even within the past few weeks -- deployed large quantities of trained manpower and the most highly sophisticated weapons. It is strengthening its presence and influence at the mouth of the Red Sea as a staging platform for political subversion in the developing vacuum of the Persian Gulf and in East Africa. For the first time in history it is on its way to becoming a major naval power, with the prospect of fleets in all the oceans of the world -- including the Indian.

Nor is its Eastern European empire in any foreseeable danger of blowing apart. Again and again (East Germany in 1953, Poland and Hungary in 1956, and Czechoslovakia in 1968) individual member states of the empire have made heartbreaking efforts to loosen the bonds that held them. Each time the Soviets have ruthlessly intervened. Can anyone sensitive to the hopeless despair in Prague today seriously believe that Czechoslovakia is again on the verge of breaking out? Instead it seems to me that the Kremlin was never more determined to enforce the Brezhnev Doctrine -- its own special version of the colonialist concept of limited sovereignty -- with all that implies.

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Only last week the perceptive leader of a state bordering
on the Soviet Union told me with great conviction that, no matter
what pressures might build up in the satellite countries, the Soviet
Union would never relax its hold on its empire until there had been
a complete change of direction in Moscow, a change of direction
possibly only with a fundamental alteration in the system and
structure of the Soviet regime. Yet what are the chances of that?
Today the Kremlin houses a government of old men facing a succession
problem that, in a dictatorship, can be resolved only by a crisis.
With great good luck such a crisis might possibly bring in a somewhat
more liberal leadership but, given the brutal politics of the Soviet
system, it is quite as apt to bring to the fore a new Stalin.

I come, therefore, to my central point -- that the might
and purpose of the Soviet Union can be realistically dealt with
*either* by a continuance of the present system of American power on
the continent *or* by effective progress toward the building of an
indigenous structure of power in Western Europe -- or, preferably,
for some time to come -- by both. But it cannot be safely countered
by individual national *diplomacy* on the part of Western European
states which, acting alone, necessarily deal from weakness. So long
as Western Europe remains divided into separate states with a long
history of rivalry such national initiatives are more likely to
fragment the West than to liberate the East from the relentless
 discipline of its tyrannical master.

In pressing for a European Security Conference the Soviet
Union has sought to encourage exactly that process -- to halt progress
toward European unity and to attempt to pry America out of Europe.

In the end, it quite clearly hopes to hasten the dissolution of NATO on the seductive contention that such a free alliance is an appropriate trade-off for that shoddy and facticious show of the Warsaw Pact. Up to this time, I need hardly remind Mr. Healey, the Soviet Union has made quite clear that it does not see the mutual and balanced reduction of forces as an appropriate subject for the agenda of such a conference.

I gather that Mr. Healey is unhappy with me primarily because I have shown less than total enthusiasm for Chancellor Brandt's initiative toward an *Ostpolitik*. What doubts I have do not relate either to the motivation or good intentions of the Chancellor or his government; I know from personal acquaintance that Chancellor Brandt is irrevocably committed to Western ideas and indeed to Western European unity, and I am fully sympathetic with his desire to do whatever can be usefully accomplished to ameliorate the personal hardships flowing from the brutal division of his country.

My concern has been principally with the political and psychological effects of the treaties with Moscow and Warsaw, fearing-- not withoug some confirmation in recent events -- that they might engender a deceptive euphoria -- the public impression that a major breakthrough had been achieved with the East, when, in fact, the substantive content of the treaties is *de minimis*.

Is there not danger that such euphoria could, if continued for any length of time, lead a new generation of Germans, unconditioned by the war and its aftermath, to reject the exertions necessary for a protracted holding of the line against the elemental, though presently frustrated, objective of the Soviet Union to push the

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is that the Federal Republic's initiative is, as I see it, premature.
What has been lacking is a well thought out sense of sequence and
priorities; for, once Western Europe concentrated on building an
~~more solid structure~~ effective structure of power, it could create a base from which truly
effective negotiations with the East might be conducted.

Though today the issue of Britain's entry is being discussed
in tradesmen's terms as though all that mattered were the price
~~of New Zealand butter and statesmen were not able to~~ of New Zealand butter and statesmen need think no further than a
year ahead, the decisions to be taken in Brussels and the other
capitals this summer may prove the most important of this century.

If Britain adheres to the Rome Treaty the way will be open
to bring the diverse peoples of Western Europe together in a great
common enterprise enabling them to speak to the East on a solid
basis of equality. But, if these negotiations are allowed to fail,
then the world may again face strains and tensions, pressures
and counter-pressures, that can hold a real danger for the West.
So long as a brilliant illusionist occupied the Elysee Palace the
realities of relative power were obscured in the enchantment of grandeur,
but the fact can no longer be ignored that Germany even in its
~~triumphant~~ present form has the largest population and the most industrial
might in continental Western Europe -- and, if the counterweight of
British power is not available to secure a stable balance, centrifugal
forces can become dangerously operative. Then, and under those
circumstances, continued Western German initiatives with the East
could seriously strain the fabric of Europe, inducing in France a
defensive introspective mood and contributing to the worrisome
psychological and political problems of Italy, a Mediterranean

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power no longer washed by an exclusively Western Sea.

Let me say finally to Denis Healey that, though I am disappointed, I am not surprised by his paper. From time to time over many years I have indulged the illusion that I had converted him to a clear comprehension of the European promise but always he has backslid. I once thought that the reason some members of the British Labor Party took such an obscurantist view was due to the fact that the last two leaders of the party have been professional economists -- the only group occupationally disabled from understanding what Europe is all about, prevented by their own discipline from mastering any conception that could not be quantified. But that is an inadequate analysis. It does not explain the enlightened views of George Thompson nor does it let Denis off the hook.

BILDERBERG MEETINGS

WOODSTOCK CONFERENCE

23, 24 and 25 April 1971

(arrival 22 April)

LIST OF PARTICIPANTS

H.R.H. The Prince of the Netherlands
Chairman

Ernst H. van der Beugel

Professor International Relations,
Leiden University

Honorary Secretary General for Europe

Joseph E. Johnson

President Emeritus, Carnegie Endowment for
International Peace

Honorary Secretary General for the United States

Observer: H.R.H. Princess Beatrix of the Netherlands

BELGIUM

JANSSEN, Daniel
Deputy General Manager UCB, S.A.
Lecturer Brussels University

LAMBERT, Baron
Chairman, Banque Lambert

SIMONET, H.
Member of Parliament
President, Brussels University

VANISTENDAEL, August A. J.
Secretary General, International Cooperation for Socio-Economic Development (CIDSE)

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[w]

## CANADA

BOURASSA, Robert
Prime Minister of Quebec

GRIFFIN, Anthony G. S.
President, Triarch Corporation Ltd.

LEMAN, Paul H.
President, Aluminum Company of Canada Ltd.

MACDONALD, Donald S.
Minister of National Defence

ROTSTEIN, Abraham
Professor at the Department of Political Economy
University of Toronto

## DENMARK

SCHLEIMANN, Jørgen
Editor, Radio Denmark

SØRENSEN, Svend O.
General Manager, Den Danske Landmandsbank

TERKELSEN, Terkel M.
Chief Editor, "Berlingske Tidende"

## FINLAND

ENCKELL, Ralph
Head of the Finnish Delegation to OECD

von JULIN, Jacob
Chairman of the Finnish Cellulose Association

## FRANCE

AUMONIER, Andre
Vice President of "Fondation Europeenne pour l'Economie"

[w]

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(FRANCE)

BAUMGARTNER, Wilfrid S.
President, Rhône-Poulenc S. A.
Honorary Governor Banque de France

CARTIER, Raymond
Director, "Paris-Match"

MARTINET, Gilles
Editor, "le Nouvel Observateur"

ROTHSCHILD, Baron Edmond de
Director of Companies

GERMANY

BAHR, Egon
State Secretary in the Federal Chancellery

CARSTENS, Karl
Director, German Institute for Foreign Affairs

KAISER, Karl
Professor at the "Institut fur Theorie und Soziologie
der Politik", Saarbrücken University

MERKLE, Hans L.
Chairman, Board of Management Robert Bosch GmbH

SCHRODER, Gerhard
Chairman of the Committee on Foreign Policy of the
Bundestag and former Minister for Foreign Affairs

WISCHNEWSKI, Hans-Jürgen
Federal Secretary of the SPD

WOLFF von AMERONGEN, Otto
President of Otto Wolff A. G.

INTERNATIONAL

DUCHENE, L-François
Director, Institute for Strategic Studies, London

[u]

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(INTERNATIONAL)

GAZZO, Emanuele
Editor-in-Chief "Agence Europe", Brussels

HEALEY, Denis
Member of Parliament
Author working paper

KOHNSTAMM, Max
Vice President, Action Committee for the United States of Europe

TUTHILL, John W.
Director-General "The Atlantic Institute", Paris

ITALY

BORDOGNA, Giuseppe
Treasurer of CONFINDUSTRIA, Federation of Italian Industries

CITTADINI-CESI, Marchese Gian G.
Minister Plenipotentiary and President, A.E.P.E.

GLISENTI, Giuseppe
Chairman of INTERSIND, Confederation of Italian State-owned Industries

MIGONE, Gian G.
Professor at the Faculty of Political Science, University of Torino

OTTONE, Piero
Editor-in-Chief "Il Secolo XIX"

PIAZZESI, Gianfranco
Journalist and Correspondent for "La Stampa"

SCASSELLATI, Ubaldo
Secretary General of "Giovanni Agnelli Foundation"

NETHERLANDS

IDENBURG, Peter J. A.
Lecturer International Relations, Amsterdam University

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KRAIJENHOFF, Jonkheer Gualtherus
Vice-President, Board of Management AKZO N.V.
President, Netherlands Red Cross

LUNS, Joseph M.A.H.
Minister for Foreign Affairs

NETHERLANDS, H.R.H. Prince Claus of the

SPOOR, André S.
Editor-in-Chief "NRC Handelsblad"

NORWAY

HØEGH, Leif
Shipowner

TIDEMAND, O. Grieg
Shipowner and former Cabinet Minister

SWEDEN

BENGTSSON, Ingemund
Minister of Agriculture

WALLENBERG, Marcus
Chairman, Stockholms Enskilda Bank

SWITZERLAND

CASSERINI, Karl
Chief Economist, International Metalworkers' Federation

JANN, Adolf W.
Chairman and Managing Director, F. Hoffmann-La Roche & Co.
Ltd.

UMBRICHT, Victor H.
Member of the Board, CIBA-GEIGY Ltd.

TURKEY

BEYAZIT, Selahattin
Director of Companies

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(TURKEY)

BIRGI, M. Nuri

Ambassador to N.A.T.O.

UNITED KINGDOM

BENNETT, Sir Frederic

Member of Parliament

CATHERWOOD, Sir Frederick

Director General, National Development Office

COCKROFT, John

Economic Leader Writer, "The Daily Telegraph"

GRIERSON, Ronald H.

Chairman, Orion Bank Limited

KLEINWORT, Sir Cyril

Chairman, Kleinwort, Benson Ltd.

MAUDLING, Reginald

Secretary of State for Home Affairs

ROLL, Sir Eric

Director, S. G. Warburg & Co. Ltd.

THOMSON, George

Member of Parliament

UNITED STATES

ALLISON, Graham T.

Associate Professor of Politics, Kennedy School of
Government, Harvard University

ANDERSON, Robert O.

Chairman of the Board, Atlantic Richfield Co., Roswell, New Mexico and Chairman, Aspen Institute for Humanistic Studies

BALL, George W.

Managing Director, Lehman Brothers Incorporated

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(UNITED STATES)

BENDETSEN, Karl R.
Chairman and Chief Executive Officer, U.S. Plywood-Champion
Papers Inc., New York

COLLADO, Emilio G.
Executive Vice President, Standard Oil Company (New Jersey)

CORSON, John J.
Chairman of the Board, Fry Consultants, Washington

DEAN, Arthur H.
Senior Partner, Sullivan and Cromwell

DUNLOP, John T.
Dean of the Faculty of Arts and Sciences, Harvard
University

DUSTER, Donald L.
President, Chicago Commons Association

ELLIOTT, Osborn
Editor-in-Chief and President, "Newsweek"

FRASER, Donald M.
Member of Congress

FRELINGHUYSEN, Peter H. B.
Member of Congress

HAUGE, Gabriel
Chairman of the Board, Manufacturers Hanover Trust Company
Author of working paper

HEINZ II, Henry J.
Chairman of the Board, H. J. Heinz Company

HUGHES, Thomas L.
President, Carnegie Endowment for International Peace

KISSINGER, Henry A.
Assistant to the President for National Security Affairs

MACDONALD, Gordon J.
Member, Council on Environmental Quality, Washington

MACGREGOR, Ian K.
Chairman and Chief Executive Officer, American Metal
Climax, New York

MOYERS, Bill
Journalist, former Publisher and Vice President, "Newsday"

[i]

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(UNITED STATES)

PEASE, Robert
Executive Director, Allegheny Conference on Community
Development, Pittsburgh, Pa.

PERKINS, James A.
Chairman, International Council for Educational Development

REUSS, Henry S.
Member of Congress

RIEGLE, Donald W.
Member of Congress

ROCKEFELLER, David
Chairman of the Board, The Chase Manhattan Bank, N.A.

ROCKEFELLER IV, John D.
Secretary of State of West Virginia

SLATER, Joseph E.
President, Aspen Institute for Humanistic Studies
President, Salk Institute

STEIN, Howard
President, Dreyfus Corporation, New York

STEVENSON III, Adlai
United States Senator

STONE, Shepard
President, International Association for Cultural Freedom

VANCE, Cyrus
Partner, Simpson, Thacher & Bartlett
former Under-Secretary of Defense

VOGT, Lt. General John W. USAF
Director of the Joint Staff, Organization of the Joint
Chiefs

* The United States has been fighting in Vietnam for <u>10 years</u>.

* We have spent <u>120,000,000,000</u> (billion) dollars for this War.

* America has lost <u>50,000</u> people to this War.

* There have been well over <u>1,000,000</u> Vietnamese deaths.

* The Gallup poll has indicated that <u>73%</u> of the American people want all U.S. Forces home by the end of this year.

WHY DOES THIS WAR CONTINUE?

We ask visiting people concerned with world affairs to influence the leaders of their nations in encouraging the leaders of our nation to enact a more speedy disengagement of our troops from Vietnam.

The purpose of this vigil is to exhibit our belief that peace is the only measure in world affairs that can ensure the freedom and survival of humanity on our planet.

AD AGENDA ITEM II

Confidential

BILDERBERG MEETINGS

23 - 25 April 1971

# THE NIXON DOCTRINE AND THE FUTURE OF EUROPE

by

DENIS HEALEY

## The Reasons for the Nixon Doctrine

In presenting "A New Strategy for Peace" in his first report on United States Foreign Policy for the 1970s President Nixon based his new posture primarily on the radical transformation in world politics since President Truman first committed the U.S.A. to an active role overseas. He pointed out that the Cold War was no longer the decisive factor in international relations. Western Europe and Japan had fully recovered from the political, economic and psychological ravages of the Second World War. The Third World had proved unexpectedly immune to Communist penetration and the Marxist dream of international Communist unity had disintegrated. America and Russia had recognised a vital mutual interest in halting the dangerous momentum of the nuclear arms race. The 1970s were to be an era of negotiation.

His second report, "Building for Peace" in 1971 reaffirms this analysis of the outside world but is more candid about the internal factors which have made inevitable some revision in America's foreign and defence policies. "To continue our predominant contribution might not have been beyond our physical resources", he explains, "- though our own domestic problems summoned them. But it would certainly have exceeded our psychological resources." So "we will look to others for a greater share in the definition of policy as well as in bearing the costs of programs. This psychological reorientation is more fundamental than the material redistribution; when countries feel responsible for the formulation of plans they are more apt to furnish the assets needed to make them work." On the other hand "we only compound insecurity if we modify our protective or development responsibilities without giving our friends the time and the means to adjust, materially and psychologically, to a new form of

[k]

American participation in the world."

None of America's allies can complain about the redistribut-
ion of material and psychological burdens which the President,
proposes in such balanced terms. None can contest the validity of
the arguments he adduces. Indeed the domestic pressures for
change are much more powerful than he admits. At a time when
America's internal problems, particularly in the cities, risk
becoming insoluble for lack of resources and the absence of
policies devoted to them, the pressure of military expenditure
on the economy had become intolerable. It is not wholly an
accident that in the last decade economic growth in the developed
non-Communist world was in inverse proportion to the percentage
of G.N.P. devoted to defence; the United States' G.N.P. rose
only 59% as against 68% for the Common Market countries and
208% for Japan.

Meanwhile public support for American military action over-
seas has shown a startling decline. In May 1969 a Time-Louis Harris
Poll showed only 26% of Americans willing to see United States
troops used to resist overt Communist aggression in Berlin.
In December 1970 only 14% thought America should send troops if
Israel seemed in danger of being defeated by Arab armies. In May
1970 56% thought America had made a mistake by sending troops to
fight in Vietnam. Although the steep decline in American military
casualties had reduced the temperature of the opposition to the
Vietnam war there is little evidence that it has reduced its size.
The postwar commercial and political entanglements of the United
States with the outside world may forbid a return to the
isolationism of the Thirties, but the role of world policeman is
no longer acceptable and the domestic retreat to the suburbs has
its counterpart in a revulsion against foreign responsibilities.
Yet, whatever the immediate risks to their own security, America's
allies can only welcome this shift in American priorities if it
leads to a greater concentration of effort on social and environ-
mental problems which have been dangerously neglected since the
New Deal. The stability of American society itself must be the
precondition of any useful American role in the world.

The Consequences

The Nixon Doctrine has already had a dramatic effect on

American military spending and deployment overseas. The defence budget had declined from 9% of the G.N.P. to under 7%. 400,000 men have been brought home, nearly all from Vietnam and other Asian countries. It is the President's intention to cut the armed forces from the 3.5 million of 1968 to 2.5 million by 1973, and if possible to dispense with the draft altogether. So long as America retains the capacity for assured destruction of an aggressor after absorbing a surprise attack, she no longer demands a superiority in strategic nuclear weapons; in SALT she is seeking agreement with the Soviet Union to maintain the balance of mutual deterrence at a lower level of forces on both sides, and if possible to control the development of new strategic systems.

It has been clear ever since the seminal speech in Guam that Asia would bear the brunt of this planned reduction in American capabilities. The main criticism here is that there has been no comparable reduction in the treaty commitments which the President has pledged America to keep; thus it is unclear whether in a crisis America would choose to interpret those commitments differently from what has till now been expected, or whether in the absence of adequate conventional forces she would be prepared drastically to lower the nuclear threshold. Moreover it is the President's current intention to keep fifty thousand men in Vietnam for an indefinite period after 1972 to protect the formidable American air power which is to remain there; this is pregnant with the risks of a new entanglement which would be incompatible with the main thrust of the Nixon Doctrine and might compel major withdrawals from Europe.

## The Implications for N.A.T.O.

On the other hand President Nixon has promised to make no cuts in America's combat strength in Europe during his present term of office, and the national review of N.A.T.O. strategy he commissioned seems to have confirmed the desirability of maintaining the so-called strategy of flexible response as agreed by N.A.T.O. in 1967 and developed through the Nuclear Planning Group in later years. This strategy rejects alike the "tripwire" concept of immediate and automatic nuclear response which had become unacceptable to the United States, and the alternative of a wholly

conventional response even to an all-out Soviet attack, which
has never been acceptable to the Europeans. Instead, N.A.T.O.
aims to hold anything but a major deliberate invasion without,
recourse to nuclear weapons, and in the case of a major attack
to introduce nuclear weapons into the battlefield in such a way
as to enable and encourage the enemy to stop the fighting if he
does not want to risk an all-out strategic exchange.

It is not certain that the present strategy of flexible
response would remain acceptable to both America and Europe if
there were a unilateral reduction in N.A.T.O.'s overall convention-
al capability. America's agreement to maintain existing force
levels for the time being followed on Europe's agreement to make
a slightly greater conventional contribution to N.A.T.O. and to
spend a billion dollars on new infrastructure - the first concrete
example of a European defence identity in practice. But America's
longer term intentions are unknown, and there is significant
Congressional pressure for cuts in her N.A.T.O. forces. None of
the European countries is finding it easy either to maintain
existing levels of defence expenditure or to provide adequately
trained soldiers in sufficient numbers.

If a fall in N.A.T.O. force levels made the present strategy
appear invalid, a dangerous and divisive argument might open be-
tween America and Europe; Europe would try to commit America to a
more automatic nuclear response, and if rebuffed would probably be
torn between the desire for an independant strategic nuclear de-
terrent of its own, despite the risk of provoking the Russians and
the difficulty of accommodating the Germans, and the desire for a
reconciliation with Russia at any cost. Such a prospect if of course
a powerful incentive for maintaining existing force levels - but
it should also focus attention on the prospects of negotiating
mutual and balanced force reductions with the Warsaw powers, as
the foundation for a new European security system based on co-
operation rather than confrontation between the blocs.

It is at this point that the Nixon Doctrine undergoes its most
severe test so far as Europe is concerned. If its fundamental
analysis of the new world situation is not just rhetoric devised
to cover a retreat from responsibility imposed by domestic
pressures, if the era of negotiation is to be taken seriously, and
the European partners are to play their promised share in the

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formulation of allied policy, then America must be prepared to
see Europe take the initiative in some areas of discussion with
the Communist states, just as America has already taken the
initiative in others, notably SALT and the Arab-Israel conflict.

So far President Nixon's style has been immensely welcome
to Europeans who had been irritated by the tendency of the
previous Administration to present them with unilateral decisions
on major issues of allied policy and then to reverse those
decisions with the same indifference to their views - witness the
tragicomedy of the M.L.F. and the somersaults on N.A.T.O. strategy
and on ABMs. None would contest the wisdom of his general approach
towards multilateral negotiations with the Soviet Union as pre-
sented in the European chapter of "Building for Peace".

The confrontation with the Warsaw powers is now passing from
static trench warfare to a war of movement; the problem is to
exploit the need for independent initiatives by individual countries
on both sides without losing control of the campaign as a whole.
Yet this analogy is imperfect; for the aim of the battle is not
victory but reconciliation, and the construction of a new security
system which will permit Russia to come to terms with the colonial
revolution in Eastern Europe without fears for her defence. It is
not easy for individuals weaned on a vision of the Cold War as a
zero-sum game, in which one side could gain only if the other
lost, to readjust their thinking to the new world situation as
President Nixon describes it; for an alliance like N.A.T.O. the
readjustment is more difficult still.

The Ostpolitik

At present the problem is best illustrated by the differing
attitudes to Chancellor Brandt's Ostpolitik; given an agreement
on Berlin the preparation of a European Security Conference will
raise similar issues even more acutely. Opposition to the Ost-
politik is confined so far to individuals and groups who do not
hold Government power in their own countries - notably a large
part of the CDU/CSU in Germany (though not Dr. Schroeder, at
present its most popular leader) and certain retired officials in
the United States.

Some distinguished American dinosaurs from the Occupation
Age clearly find it difficult to come to terms with a world so

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different from that in which they were able to determine the policies not only of the U.S.A. but of Germany too. More significant is the attitude of Mr. George Ball, who in his recent article in "Affari Esteri" probably speaks for many on both sides of the Atlantic whose doubts about the Ostpolitik stem primarily from fears that it may prevent closer unity in Western Europe. In his view the Ostpolitik is engendering complacency and wishful thinking about the prospects of restoring the unity of Germany and Europe as a whole; this is distracting the West Germans from the urgent need to enlarge the European Economic Community by including Britain and the other applicants, and to strengthen it by giving its central organs supranational powers.

Of course it would be idle to deny that such dangers do exist. But no one with a real concern for Europe's future can afford to ignore as totally as Mr. Ball the real popular demand for reconciliation between Eastern and Western Europe and the explosive pressures inside the Communist states for greater individual freedom and national independence.

The postwar division of Europe is seen increasingly, on both sides of the Iron Curtain, as an unnatural mutilation and impoverishment. No one now believes that Russia can be rolled back by military force, as many pretended they did twenty years ago. If the necessary climate of mutual trust is to be created for a voluntary loosening of Russia's grip, it must start with the exorcising of the German demon in Eastern Europe and continue with a mutual exploration of the security problem. Mr. Ball can offer no alternative to those Germans - a growing number - who cannot renounce the ideal, however distant, of reunification. He obviously still believes, as so many did in the Fifties, that the West Germans would be prepared to lose their national identity in a West European federation. The evidence is against him.

Whether it was President de Gaulle who killed this possibility, or whether it was always too ambitious a dream, it is clear that the European Economic Community will not assume significant supranational powers in the near future whether Britain is allowed to join or not. The idea that economic co-operation will in itself force political unity is now seen to be mistaken. If political unity is to be achieved on any major issue of foreign policy it will be round the general approach to Eastern Europe which is embodied in the Ostpolitik. Unless the concept of West European unity is open to the East it will be unacceptable to most West

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Europeans.

It is equally true, as Chancellor Brandt has so often insisted, that the Ostpolitik is less likely to attain its long-term objectives unless the Community is enlarged so as to achieve a better internal balance and greater overall strength. In fact his Ostpolitik and his Westpolitik are two sides of the same coin. As he often points out his first important diplomatic initiative was directed not Eastward but Westward - to develop Common Market unity on Britain.

In Germany itself however, the onslaught against the Ostpolitik from Opposition politicians is based primarily on national rather than European grounds. Herr Birrenbach, for example, argued in the Bundestag foreign affairs debate: "The interests of quite a few other countries are not identical with those of the Germans. If the nation itself does not pursue its own interests with the necessary vigour, we cannot expect foreign governments to protect them on our behalf."

Yet the view that the Ostpolitik is selling West German interests down the river does not stand up to examination. Chancellor Brandt's strongest opponent among the Communists is Herr Ulbricht; in general he arouses misgivings even more among the "hawks" of the Warsaw Pact than among the "hawks" of N.A.T.O., and in the immediate aftermath of the Polish riots Soviet diplomatists tried to undermine him by leaks in Washington and Bonn.

Western criticism of the Ostpolitik comes from men who are out of power, and who in the case of Germany may have party political motives for their attacks. The nearest thing to criticism which the Ostpolitik has encountered from Governments in the West is the reference in "Building for Peace" to the dangers of what is described with uncharacteristic opacity as "a differentiated detente". Yet oddly enough the same document takes exactly the opposite view on the same issue when it says: "In the era of Communist solidarity we pursued an undifferentiated negotiating approach towards Communist countries. In the new era we see a multipolar Communism marked by a variety of attitudes toward the rest of the world. Failure to respond to this diversity would have ignored new opportunities for improving relations. Negotiation with different Communist countries on specific issues carries more promise."

These are wise words. But if a differentiated negotiating approach is successful, it can only lead to a differentiated detente. Of course the Western countries must conduct their policies in harmony and with mutual consultation - as they do. But a failure to make progress in one area cannot be treated as a reason for not making what progress is possible in others. Deadlock in the Paris talks on Vietnam is not regarded by the United States as an argument against America trying to get agreement in SALT or in the Middle East talks. It should not be allowed to obstruct her allies' efforts either.

If the Nixon Doctrine means what it says, it must not only permit but even encourage America's allies to make progress in negotiations with Communist powers where progress is possible without damage to the Western community as a whole. The Russians have often in the past used negotiations with the West not in order to reach agreement but solely to divide and confuse their adversaries. They may often seek to do so again. But I believe that the West is now sufficiently mature to resist this type of deception, while the new tensions between Russia and her allies expose the Communist camp to greater risks in multilateral negotiation. The outstanding success of the December 1970 meeting of the N.A.T.O. Council compared with the confusion at recent meetings of the Warsaw Pact illustrates this point. But the N.A.T.O. Council could not have displayed such unity and strength except in the context of its prior agreement to press towards a European Security Conference on sensible terms.

The critical test of the prospects for the new wave of Western policy represented by the Nixon Doctrine, the Ostpolitik and the movement for a European Security Conference will be, as so often in the past, Berlin. If a satisfactory improvement in the Berlin situation is reached through the Four Power talks and the simultaneous contacts between Bonn and Pankow, confidence in seeking further progress will be immensely strengthened. We are of course entering unfamiliar territory. The United States will remain uneasy about losing that central control of Western policy which was the first commandment of its postwar theology.

Some of the allies will find it painful to have to think for themselves. As the old landmarks crumble away many on both sides of

CONFIDENTIAL

23 - 25 April 1971

Bilderberg/Woodstock

Agenda Item No. 1

REWRITING THE SOCIAL CONTRACT
by GABRIEL HAUGE

It must have been like this in Babel: so many voices, so many tongues, so many
causes. Public interest waxes and wanes as Viet Nam, poverty, plight of urban blacks,
crime in the streets, drug use, college unrest, consumerism, women's liberation,
pollution and the environment, each in turn commands attention. There seems to be
no lasting focus, but the issues remain real and they are not settled.

The very diffusion of public attention suggests that these issues are symptoms of
a deeper disturbance. The roots of social instability in the United States are many
and complex but two will concern us here: a new awareness of the side effects of
unprecedented economic growth of the last generation; and the awakening to a new
emphasis on the quality of life which in turn results from the affluence that has been
achieved for most, although not yet by any means for all.

Our society is both beneficiary and victim of a unique growth in quantity. Per
capita income increased eight-fold during the past century, while population grew five-
fold and in cities over one million by seventy-fold. It is no accident that urbanization
and population growth accompanied the gain in productivity. Since 1950 real gross
national product in the United States has doubled, the median education of the adult
population has risen one-third, and the proportion of the labor force in professional
and technical jobs has nearly doubled. Meanwhile, the stock of automobiles, for
example, has more than doubled. Congestion and pollution have increased at least
as fast, while life expectancy has remained virtually unchanged. And so the question
is increasingly debated as to how much the sum of human happiness has risen

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There are those - not dissident youth alone - who fear that economic growth is
creating problems faster than it is solving them. The very imperatives in the idea
of progress: efficiency, rationality and ceaseless change, are seen by these critics
as a grave threat to human values: the autonomy of the individual, the integrity
of his personality and the unity of society.

Awareness of the quality of life and emphasis on protecting the environment
from ourselves as producers and consumers constitute unfinished business carried
over from the material surge ahead in recent decades. So too does the elimination
of residual poverty and lack of opportunity, the rural lag and urban blight which
remain blots on our advance. Consumerism, another aspect of this unfinished
business, is really only the gospel of productive efficiency as viewed from the
perspective of buyer and user instead of producer and seller. These, of course,
are not new priorities, but their current emphasis represents renewed interest in
the search for balance in material progress.

There is another, more forward-looking side to social instability. Our long
struggle against want is well on the way to being won. In a sense, we are at the
end of one age and the beginning of another, in which many people flounder, not
only because their choices are so much wider, but also because material prosperity
and its broad dissemination are regarded as no more than instrumental values.
These values, which have oriented our economy and society for so long, are now
so near achievement that they no longer can serve as guides in any simple way.
From the present search for new priorities and instrumental values derives a good
deal of the social instability of the day. As the title of Patricia Griffith's new novel
puts it, "The Future Is Not What It Used To Be".

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Expectations, not facts, have always been the leading indicators of history.

It is interesting that high levels of output and continued growth nowadays are usually taken as given, and even the elimination of congestion and pollution as accomplished, because these are not values or goals of life, but only conditions for their fulfillment.

We know that racial discrimination is wrong, and we are working on the moral equivalent of a heart transplant. We know what a city should not be, and are proceeding to eliminate its glaring flaws. But we have yet to learn, or to agree, as to what a city should be or should accomplish. We know what a corporation should not do: discriminate, pollute, exploit. But what should it do, besides producing a product or service the public wants, and doing it well?

## Business Today

President Calvin Coolidge's dictum of the 1920's that the business of America is business sounds strange today. Henry Luce brought that view up to date in 1963 with his revision that the business of business is America. Business leaders have, of course, known this for generations, and have carried social responsibility into practice. They were once damned as paternalistic for their trouble, but attitudes have changed. Milton Friedman still argues that the only duty of business is to make profits for stockholders; but even he views private profit as a public duty, for much of our past achievement was the consequence of business doing well what it knows how to do best: providing the goods and services that people want. Friedman's doctrine finds fewer supporters today. What some businessmen have always done by personal choice is now increasingly accepted as a civic duty.

While the corporation has been transformed, so has the concept of the public interest

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A participatory democracy has always existed on paper, but the conditions for its realization are only now being met. Among them, as Thomas Jefferson well knew, is a citizenry educated and informed as never before. More people have the leisure and opportunity to participate to an extent undreamed of in the nineteenth century: we now have something approaching a town meeting on a national scale. Recent triumphs of technology and the broadening of public policy goals have led many to believe that there are more things in our control than were dreamed of by the Utopians. Belief in the power of organized society to set and reach goals has, in turn, escalated expectations. It has propelled many formerly passive citizens to raise their voices and sometimes their fists. They see business as a major influence on the course of events, and therefore want to take a hand in its direction. The clear separation of roles as worker, as citizen, as consumer, that once characterized Americans, has become blurred. The skilled employee, the manager himself, is today a citizen at work.

The family firm has been largely replaced by the legally immortal (though often financially quite mortal) corporation whose products and markets are constantly changing, as are its technologies, plant locations, employees and stockholders. Nothing about it is very private any more. The owner-founder has mostly been replaced by relays of management teams. These are men of a new breed, professionally trained for their functions, career-minded, often taking as much pride in their own skills as in their firm or product. Lacking a founder's identification with one firm, they are mobile and increasingly view their functions as partaking of trusteeship. They are responsive to several publics, sharing a broad perspective as to the place of their corporation, and of business at large, in society. They generally come out of a background different from that of an older generation of businessmen, and have a somewhat different outlook. Most leaders of the 500 largest

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industrial corporations in the United States share middle class origins, nearly all have college training, almost half have postgraduate training as well. Although many were schooled in business administration, their education is diversified. In recent years they have included managers fully prepared to operate a shipyard with one hand and a perfume factory with the other, without getting the attar of roses mixed up with the piston grease. Multiple objective management is the pride of the modern corporation and the fact that some objectives are social rather than financial does not seem to overawe the well-schooled business administration graduate.

The large modern corporation, run by professional managers, supervised by a board of directors chosen by stockholders, and constrained by creditors, governments, employees and customers is as complex as many governments and typically more dynamic. It is a leading originator and agent of change, including its own. The 500 largest industrial firms in the United States, for example, accounted for almost two-thirds of domestic sales in 1969. They contributed an even larger share of total research performed and of the technological progress that on one hand complicates the environment, human health and social welfare and on the other hand provides the resources to counter these threats, with affluence and security to spare.

## Evolving Role of Business

Because of their overall performance, corporations are increasingly being asked to extend their activities beyond the core function of efficient production and marketing of goods and services. There are even some demands that they become political supermarkets, establishing and enforcing a full line of foreign and domestic policies. Like some children of permissive parents, they face the prospect of a corporate identity crisis.

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The emergence of the corporation as the change-agent of society reflects a questioning judgment on government. Back in the 1930's when the self-regulatory functioning of the economy broke down, government stepped in, assuming responsibilities for general relief, for farm income, for employment, for regulation of the conditions of work. Now, after a generation of nearly uninterrupted economic growth, business has reestablished its credentials. In fact, what has caught public attention in recent times is the apparent inefficiency and incapacity of many government programs. Public education budgets rise sharply, but so does criticism of results. The costs of welfare grow even under conditions of high employment, side by side with widespread questioning of the effectiveness of these expenditures. Mail service declines while its deficit mounts. Poverty and malnutrition persist despite holy wars unleashed by government against them. Federal programs for medical care result in sharp escalation of medical costs with little evidence of achieving their goals. Many local governments appear unable to cope with developments in their own communities. Although a segment of opinion in the United States still believes that the public establishment is omnicompetent and that business does not care, a much larger and growing group has begun to doubt the ability and power of government to carry out the great remaining domestic missions and is turning hopefully to business as the only feasible alternative. It is appealing to many as an idea with yeast in it.

Business, of course, is already discharging enormous social responsibilities in performing it accustomed tasks. It mainly provides the jobs that opportunity is all about, the incomes that relieve us of the drudgery and limited standard of living of our ancestors, the economic progress that gives us hope, the resources for tackling the problems of the day. Without the income and wealth creating power of business in our society, we could not afford the

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tomorrow that our people aspire to. But here is the dilemma: the more we expand the agenda of business into areas of little or no return or actual loss, the more we tend to undermine incentives to efficient performance on one hand, or to checkmate management with takeover efforts and stockholder suits on the other. The law of action and reaction is common to physics, politics and economics.

## Redefining the Social Responsibilities of Business

In redefining its social responsibilities today, business faces two main challenges: to broaden its system of accounting to include the full social and economic costs of production and growth, so as to better harmonize the incentives of business and the welfare of society; and to utilize its special competence to deal with priority problems of the day.

**Social costs of production** - You will recall that the sixth labor of Hercules was to clean the Augean stables where the stalls of 3,000 oxen had been untended for thirty years. While it is reported that he did the job in a single day by diverting the waters of two rivers through the stables, the account makes no reference to the consequences downstream.

Some social costs not incorporated in economic decisions, such as the cost of untreated waste discharged into the air, water or upon the land, are borne by the community and society, not by the producer responsible or by consumers of his product. Other social costs, i.e., litter, can be laid at the door of consumers, as costs of consumption not paid by the user, but by those who share his environment. Some social costs however are joint costs which no system of accounting can sort out but which also must be reflected in economic choices. For example, the worst congestion and pollution in our great cities is a combination of industrial location, concentration of urban population, commuting by car, labor migration from farming,

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federal subsidies for suburbanization, population growth, and failure of zoning, land use and transportation planning by urban governments. They are the social costs of our freedoms and our institutions. They are nobody's and everybody's fault.

Environmental issues have commanded little attention until recently because few people were aware of some problems until they hit the headlines, such as oil spills; or because their full consequences went unrealized, like the automobile; or for lack of an appropriate institution or authority, as still applies in international waters. Opinion now is in the process of veering from one extreme, with social costs of economic activity largely ignored and falling on society as a whole, to awareness and often exaggeration of these still unmeasured costs and a disposition to charge them to the producer. In some manifestations opinion is shifting sharply from apathy to overkill.

It is widely agreed now that business is accountable for the social costs of its production, that it should consume its own smoke, to paraphrase Dame Rose Macaulay's words in another context. But it does not follow that business can include among such costs those which it does not create, or cannot control, such as the unwillingness of the average automobile rider to fasten his safety belt. Reality, of course, is seldom as simple as our precepts. The voracious national appetite for electric power to operate household appliances, quite as much as for industrial plants, spews sulfur dioxide and other pollutants into the air we breathe. And the American love affair with the automobile, rather than any machinations of Detroit, is really what congests our cities and drives fresh air fiends to close their windows.

Americans, who consume 40 percent of world resources produced, junk

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seven million cars, 48 billion cans and 20 million tons of paper annually, but the limitations of the environment now challenge our personal freedom in this regard. The disposable handkerchief, the single-use toothbrush, disposable clothing are, of course, convenient. But who in the end is accountable for a "buy, use and throw away" economy? Ultimately this question must be answered by a political decision which business can help implement but can hardly make.

**Costs of growth** - There are special costs of economic growth, such as declining industries, distressed communities, displaced people and obsolete skills. The innovative firm that often contributes to these problems does not pay for most of these costs, and it is not suggested that it should, lest economic progress with its widespread benefits be unduly discouraged. Only recently has society begun to accept responsibility for distressed communities and retraining of workers, and the allocation of this responsibility between government and business is still open.

It is also clear that society has yet to face the full implications of metropolitan growth. Its social costs are the combined consequence of a dynamic technology and a free society. It is, of course, perfectly possible to operate a city of eight million without congestion or auto-induced air pollution - look at Moscow. But to accomplish this, most people are denied cars, and the government determines the location of housing, employment centers and service facilities. It would be easier to prevent slums or to eliminate them if the institutions of society controlled migration and residence. It might be easier to cope with the problem of labor redundancy if individuals were denied freedom of education and occupational choice. Freedom comes at a cost, not a profit, and it is the responsibility of society to keep the price as low as possible. Business is the instrument that will build and rebuild, and possibly share

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in the running of cities, but citizens through government must make the decisions,
including the vital compromise between freedom and order.

**Social accounting** - Science, said Hobbes, is the knowledge of consequences.
But first, we must have the facts. The debate in my country about the supersonic
transport well illustrates the point. So too does controversy running among
economists over the Administration's target forecast of a $1,065 billion GNP for
1971. Whatever the total turns out to be, it will include surplus farm products,
the medical costs of illness, the pay of policemen required to cope with crime;
it will exclude most quality changes. The accounting practices of government,
no less than those of business, clearly do not take account of many of the social
costs of production and growth.

We have no measure of net social product. There is some discussion in
the United States of the need for a Social Report by the President, similar to
his annual Economic Report to the Congress, to be prepared by a new Council
of Social Advisers or by a reconstituted Council of Economic and Social Advisers.
The government of the United Kingdom has begun publication of a new periodical
entitled "Social Trends". A current research project in the U. S. identifies over
200 social indicators, compared to which a profit and loss statement is simplicity
itself. Yet in assuming new responsibilities, business, no less than government,
must specify its goals. It must establish yardsticks for measuring goal achievement,
however crudely. It needs to institute accounting procedures to provide information
on performance relative to its expanded goals. In its own interest it must let all
affected parties know just what it is doing and how well. It needs a bigger
scoreboard.

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In the narrower area of corporate philanthropy, most companies prepare an annual contributions budget. Many have established contributions committees with their own secretariats to survey potential donations and evaluate results. A growing number have established company foundations, professionalizing the function which Herbert Spencer cynically defined as "being kind by proxy", and separating philanthropy from dependence on the fluctuating fortunes of business activity. Corporations in the United States are now contributing an average of almost one percent of their pre-tax earnings to charitable, educational and related purposes, a sum approaching a billion dollars a year, which may fall short of hopes, but which is many times the amount and twice the percentage prevailing before 1952. The aggregate and the percentage of earnings can be expected to grow under the law which permits contributions up to five percent of earnings as deductible for tax purposes. Beyond these sums, devotion of corporate executive time to community service doubtless will also continue to grow, and this title of time is a real and valuable contribution.

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**Institution-building** - Since form and function interact, new institutions are frequently needed for new responsibilities. Business must find ways of reconciling the preservation of productive efficiency with a business-like furtherance of new concepts of the public interest. New forms of business-government partnership will develop, each building on the other's strengths, but the burden of innovation and reform cannot fall wholly on business. Governments too are subject to the new social audit.

The first priority in institutional reform might well be that of local govern-
ments in metropolitan areas. Cities cannot be made livable fragment by fragment by
fragment. All of the major problems of cities require the combined efforts of all
levels of government sharing a city among them. This may take various forms.
One is government consolidation of the kind we see in Toronto. Another is the
Council of Governments approach in the United States, which has yet to attain real
leverage. A third is the special-function agency, such as the Port of New York
Authority and transport authorities in several cities. None of this precludes, of
course, a key role for business in urban rebuilding and investment, or even in
the operation of the vital organs of cities, but a business-government partnership
is not very productive where government does not govern.

There are many other variations of institutional reform which have been
devised in the United States in reaction to new responsibilities. In regional devel-
opment they include: the federal-state Appalachian Regional Commission estab-
lished by Congress to direct development efforts in our largest depressed region;
various interstate compacts; state and local hybrids of government and business,

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such as the New York State Development Commission; and completely private insti-
tutions, such as the Greater Hartford (Connecticut) Corporation established by
thirty leading companies.

The federal government has created several "for-profit" corporations in which it retains a voice through appointment of some members of the board of directors. They carry out business activities fraught with public interest whose conduct requires government-like powers. Best known is the Communications Satellite Corporation. More in line with new domestic priorities is the National Corporation for Housing Partnerships, established last year to stimulate construction of housing for low-income families by a combination of equity investments, joint ventures and its own housing projects. The National Railroad Passenger Corporation, also newly created, has been given wide powers to develop a plan (Railpax) of intercity rail passenger transportation, relieving airport and road congestion, with the contribution of government funds and guaranteed loans.

In this process the dividing line between the private and the public sectors
becomes more obscure. Governments, for their part, have been making wider
use of business methods and criteria in the discharge of many functions. A
tendency toward more realistic pricing of services to identifiable beneficiaries,
such as users of local utilities or students at state universities, is a case in point.
The efforts on behalf of cost-effectiveness analysis in public budgeting is another.
The Lakewood (California) Plan, whereby smaller local governments buy services
from larger ones instead of each providing its own, and thus achieving joint
economies of scale, is a third. The creation of public corporations, from the
Tennessee Valley Authority to the new U.S. Postal Service, offers another example of

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business-type operations, self-financing from the sale of services and access to the capital market and ultimately responsive to the dictates of the consuming public rather than to legislative bodies and government departments.

Much, of course, can be accomplished with minimal institutional innovation. The taxing power of government can be linked with the productive energies of business by contracts for services which business has not been in the habit of selling, nor government of buying. For example, the Office of Economic Opportunity in Washington has contracted with six firms to raise the reading and mathematical skills of 28,000 disadvantaged students, with payment based on performance. An electronics company has been given the task of evaluating and reorganizing the Camden, New Jersey public school system, hiring subcontractors on a performance basis. These are early efforts and no firm judgments are yet possible, but the initiatives are provocative.

Business has often organized on a wider scale for special social goals. The National Alliance of Businessmen, for example, has assumed the obligation of a continuing program to employ and train hard-core unemployed, mostly blacks. The American Bankers Association Key Cities program has set itself the objective of raising $1 billion for financing minority-owned business by 1975. The life insurance industry is carrying out a $2 billion program of mortgage lending in central city areas.

Business groups in most cities provide the leadership for community improvement in all its aspects, and have been doing so for many years. That is how downtown Pittsburgh was rebuilt and how air pollution in this steel center was

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greatly reduced long before urban decay and air pollution became national issues.
The National Council for Air and Stream Improvement was organized by the paper
industry as far back as 1943. Keep America Beautiful, a national organization
 combatting litter, was formed by manufacturers and users of packaging materials
 years ago. These efforts, to be sure, are piecemeal, makeshift, and haven't
 begun to keep pace with the growth of the problem but they do provide the back-
ground against which more concerted efforts are taking shape.

**Beyond legality** - There remains a difficult aspect to all this: business management is confronted with the need to make value judgments concerning its activities beyond the criterion of legality. Should a company sell to South Africa? Lend to a pornographer who is operating within the law? Buy from a supplier who pollutes the atmosphere? Deal with a union which discriminates against blacks?

The direct answer clearly is that corporations are legal entities free to
exercise their judgment within the law. Usually legality, morality and the
economic advantage of the firm coincide. In some cases there may be no eco-
nomic advantage, no matter how broadly construed, and there may be a penalty.
Here a management will make its judgment on grounds that are important to it
and its constituencies. For instance, two U.S. mutual funds will not invest in
liquor or tobacco shares; another spurns the stock of companies engaged in munitions
production. There are funds that invest as a matter of policy in racially integrated
housing or in firms devoted to urban and population problems. A leading food
company recently refused to locate a plant in an Illinois city until it adopted an
open housing ordinance.

These and similar judgments a business may make, and the tools of public

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persuasion are always at hand to seek an increase in the number doing so. But a
view that cannot muster enough support to become the official policy of a representa-
tive government should not be imposed on a company or any other organization.

Coercion should be a public monopoly, sparingly used. In our pluralistic society,
nothing is unanimous and that is why we make do with majority rule. Judgments
or programs that are uncongenial to the majority may and often do find a haven in
some organization, whether a charitable fund, a city, county or a corporation.

That is as it should be. As part of this tradition, a business should be free to make
its own way within the limits of the law and its own power.

## Amending the Social Contract

There are many approaches to enforcing the new Social Contract: incentives and subsidies for desirable behavior; penalties or taxes for undesirable performance; regulations setting standards and forbidding certain actions; encouragement of technology that can help find ways out of dilemmas. There is no one best approach, since conditions vary: the feasibility of technological solutions, the enforceability of standards, the effectiveness of inducements.

There is a pair of rules, however, that should guide the choice
of methods. First, whatever approach government selects should fit the
framework of incentives for productive efficiency. We have yet to find an
adequate substitute for the incentives of risk and return and competitive
pressure for inducing efficiency in production and allocation. These
same incentives can be directed toward alleviating our social problems.

The role of government is to modify the choice among alternatives by
suitable carrots, sticks, and fences, but to leave business free to ar-

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range its own affairs to the best of its considerable abilities, subject to
a revised set of standards. Business needs a considerable measure of
freedom, if it is to function at its best. After all, business is people,
too. As Nobel Prize winner Paul Samuelson reminds us, Henry Ford
cannot operate today like his grandfather did, but neither, says economist Samuelson, can he operate like St. Francis of Assisi.

The *second* rule is that, whatever government does, it should
not penalize compliers and allow a competitive advantage to violators.
Only because of this problem is government intervention really needed
at all. Most firms would be willing to abide by the new Social Contract
if they were assured that their competitors would do likewise. But if
low-sulfur fuel is more costly, or if anti-pollution devices are expensive,
Gresham's Law of pollution comes into play: dirty plants and
dirty cities drive out clean ones by underpricing them. In setting new
standards or changing an old one, enough time must be allowed to
avoid unequal treatment of existing capacity and new investment, of
plant and equipment of different ages. Where a burden cannot be distributed
equitably, or where equity might call for an excessively long period
of grace, it is best to resort to incentives rather than to general regulation.
This principle would also apply to the extra cost of hiring and
training disadvantaged workers.

*Standards* - The mobility of the population, of business itself, the extensive areas from which goods are obtained and over which they are marketed, all suggest the need for national standards, supplemented by local action. No one

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community has the power adequately to protect its people. It may lack the legal powers
to keep out unsafe products; it lacks the effective capability of keeping out polluted air.
It will be penalized for enforcing standards within its limited area of jurisdiction
which are much higher, and therefore more costly, than standards prevailing in
competing jurisdictions.

"Clean the air. Clean the sky. Wash the wind.", wrote T.S. Eliot and his
words have been mobilized by the Administration. A series of air and water
quality acts have been building up the power of the federal government to set and
enforce standards. The Environmental Protection Agency has been prescribing
acceptable maxima for pollution emission. Recent legislation has set a 1975
target date for reduction of pollutants from automobile engine emissions by 90
percent. While Detroit has made a good case against the practicability of this date,
supporters of the time schedule assert that, just as the prospect of hanging is
said to remarkably concentrate the mind, this requirement may do wonders for
antipollution research. Legislation proposed by the Administration would extend
water quality standards from interstate waterways to all navigable streams,
would expand the power of EPA to review the safety of pesticides, would allow it
to set noise standards, would require its permit for ocean dumping, and its
prior approval for the introduction of any new chemical. State and local govern-
ments also have a full legislative hopper on environmental regulation. One
community in Maryland now has a law on the books banning all disposable con-
tainers within the city limits.

The recent surge of interest that has produced these environmental standards
should not blind us to the longer history of progress in other areas, such as

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labor standards: wages, hours, and working conditions, unemployment compensation and social insurance. The Administration is in the midst of seeking from Congress major revisions in our programs of public assistance and in the system of medical insurance covering most workers. The difficulties of enforcing standards of nondiscrimination in hiring have not precluded progress in fact and in legislation, such as the Equal Employment Opportunity Commission established to eliminate discrimination against women and members of minority groups.

**Underwriter of last resort** - Most businessmen are risk-takers; it is an occupational attraction and hazard. Every time they support research or enter a new market they take the limited risk of losing their investment. What management cannot do, however, is assume open-end commitments, such as to employ the entire disadvantaged group or to renew central cities. The continued economic viability of businesses depends on their costs and their revenues in a competitive market. Only governments have revenue sources sufficiently independent of immediate consumer satisfaction or cost-effectiveness for such undertakings. Government must bear the open-ended risks which are not a necessary condition of doing business but a social obligation of all. It must be underwriter of last resort, where greater business risks offer no compensating expectations of return. This is the case with the bulk of insurance for central city slum areas, housing and medical care for the poor, financing for marginal minority business. The banking and insurance industries have pooled their responsibilities and resources for these ends to a degree, but there is a limit to the extent they can employ other people's money which they hold when the problem is not simply a wider sharing of risk, but in fact much higher risks and costs.

- 20 -

**International dimension** - The jurisdiction of the new Social Contract obviously must reach around the world. Swordfish and tuna caught on the high seas can be contaminated by industrial wastes. Health hazards can cross international boundaries through trade: farm products containing dangerous pesticides, TV sets emitting unshielded X-rays.

Some nations obviously can impose social costs on others, as well as their own citizens. On certain health problems we already have a measure of broad cooperation, through the World Health Organization. On industrial pollution, the U.S. State Department has established an Office of Environmental Affairs, which is examining critical international aspects of problems in such fields as automobiles, pulp and paper and power plants. The OECD has established a Committee on Environment. The UN Economic Commission for Europe has scheduled a conference to coordinate national environmental policies. The NATO Committee on the Challenges of Modern Society has activated a 3-year study of methods of controlling pollution of inland waterways, part of an eight-section schedule. In 1972 the UN will hold a World Conference on Pollution in Sweden at which the U.S. may propose the creation of a World Environmental Institute. In the private sector, the theme of this week's biennial congress of the International Chamber of Commerce in Vienna is, "Technology and Society: A Challenge to Private Enterprise."

It is clear that trade could be seriously affected. The nation whose food products are contaminated, or whose manufactures are unsafe, may find its exports barred. On the other hand, the nation that takes the most effective measures to conserve its environment and protect its citizens may find its products priced out of international markets, or even threatened by imports. Investment could

- 21 -

be redirected to countries with lower standards and lower costs.

There obviously is room here for give and take. Common standards is the ideal, which would leave relative positions unchanged, except that nations whose standards are already high would gain. Until that day, domestic standards must be protected, at least by applying them also to imports. But exporters concerned about their social costs are still disadvantaged. This is a difficult issue, whenever their higher standards are reflected not in the intrinsic value of the product but solely in meeting the costs of various domestic social objectives. In all its many aspects, it is probably not too sweeping to say that achievement of environmental quality calls for international cooperation as far reaching as that required for the atom.

## Evolving Social Goals and Priorities

Between nations there is no consent of the governed, only common interests of sovereign states. Within the nation, we have been living under a Social Contract which is undergoing revision because of a change of circumstances and a related change of heart. Along with other parts of society, the role of business is changing because the goals of society are being re-examined. The process of continuing discussion and debate through which we move toward a consensus or compromise on goals and priorities is one in which all elements of society, including business, must participate. Although business will aid in rebuilding cities in conformity with new technology and population needs, for example, it is not for it to make the vital choices between diffuse suburbs and skyscrapers, between subways or expressways, or to devise the land use plans and zoning

- 22 -

[u]

codes which shape the environment which, in turn, bends man. Business provides the tools and the alternatives and therefore should have a voice. It is the whole citizenry, however, that must choose and govern.

Looking back at the panorama of material achievement and at the exponential growth of knowledge, it is certain that tomorrow will be unlike yesterday, or even today. As most people become affluent by past standards, each generation will be free to define its own concept of the good life. Goals and priorities, once hemmed in by universal scarcity, now shaped by industrialism, urbanization, and the population explosion, will in time become freer of these constraints. We cannot predict the future, but we can do our best to hand on a strong, productive economy and a mechanism of social choice in good working order, so that succeeding generations may fulfill "...man's responsibility to bring the world, that ought to be, into being."

Gabriel Hauge

1 April 1971

1. SOCIAL INSTABILITY: UNREST AND VIOLENCE

Marked social instability is the main trait of the period we live in. In fact, how else could we consider either the widespread tendency toward "unrest" from which no Western country seems to be spared, or the more recent diffusion of violence as a political action.

As regards unrest, already in 1969, at our Marienlyst meeting, we considered a number of cases where this situation of unrest sprung from or was directed toward political and social claims. But unrest is not bound to these forms, which are more or less defined and whose modes of expression are known.

In its extreme form, unrest often has nihilistic targets. Its goal is destruction, either because destruction is considered as an end in itself, or in the incredibly optimistic hypothesis that the collapse of the social system will allow the forces of unrest the exclusive ability to invent another, more preferable system in the field.

In another widespread form, unrest often appears to find an end in itself. It seizes whichever pretext is at hand for a target, and when this target is attained, it starts again under the coverage of another pretext. This type of unrest is not actually a "movement to attain something", but rather an erratic display of dissatisfaction.

This is also true of another, more subtle form of unrest which does not give rise to riots and uproars, but slows down the operation of the system and paves the way for the explosions to come. This is the "malaise" felt by so many individuals and groups, whose emotions toward society and civilisation itself range from plain skepticism to distrust, from fear to repressed hate. This "malaise" confines

1

2. =

individuals into a sort of repressed, idle detachment, from which
they may explode destructively at the first opportunity.

Since 1969, additional manifestations of unrest have appeared over
and above those considered. Among them, of particular concern
is the appearance of symptoms of social instability within the world
of the enterprise itself. In Europe, the traditional demands and
actions of workers, led by the labour unions, have recently been
superseded by the debate on the very institutions, procedures and
criteria which have always been considered as qualifiers of the con-
temporary business system. Within the enterprise we rediscover
the two symptoms described above: the acute symptom, limited in
each instance as to the number of individuals affected, of uncontrolled
unrest for the sake of unrest; and the latent symptom, spread a-
mongst a large number of individuals, which hinders productive acti-
vity and is expressed through absenteeism or the support of agitators.

As to the _use of violence_, this has become increasingly widespread
and intense, especially in the last two years. We were accustomed
to consider violence within a certain logic of power, affirmed either
by those who intend to conquer power or by those striving to main-
tain it at any cost in the face of opponents.

What surprises us today is how violence is utilized within basi-
cally pacifist frameworks, whose objective is not to take over,
but to confront legal power, as a means of revealing the insuffi-
ciency, feebleness and illegitimacy of authority. From now on,
I shall refer to violence in this context.

3. =

According to Sorel and Pareto, the attraction exerted by violence is directly proportional to the extent of bureaucratisation and centralisation in public life. In almost every part of the world, young people have turned violence into a form of policy, into a manifestation of political action against what they consider an inefficient, abusive, arbitrary system, to be denounced as something which is no longer at the service of the sovereignty of the citizens.

## 2. SOCIAL INSTABILITY AND THE ROLE OF THE COMMUNIST PARTIES

These symptoms cannot be interpreted but as the signs of deep social unrest, whose roots must be analyzed if it is to be treated.

But before attempting any analysis, let me add that in some European countries - among which mine - unrest exhibits particular traits which are not found elsewhere. They result from the existence in these countries of powerful communist parties, whose avowed strategic objective is a radical change of the present economic and social system.

Thus, we might consider that instability in France and Italy, for example, is due for the most part to the existence of these parties, and that it would be useless to analyse the situation any further.

Yet, I do not intend to limit my discussion to an analysis of social instability in Italy and France, and furthermore it seems to me that even in these two countries the success of the communist parties with the electorate is more the result of an as yet non-analysed dissatisfaction, canalized by these parties, than of a conscious adhesion to the objectives of communism. Besides, in these countries a number of violent, extraparliamentary political groups antagonize the communist party, which they consider an oligarchic, bureaucratic

4. =

movement.

In this view, an analysis of the causes of such dissatisfaction appears all the more necessary.

### 3. THE UNEXPLAINED SOCIAL MALAISE

What is "social instability"? At first glance and according to a traditional definition, we might explain it as a perturbation of relations between society at large and certain groups of individuals. Beyond a certain threshold of tolerance, which may vary from one society to another, this perturbation causes conflicts which may constitute a serious menace to the orderly operation of the social system, entails a waste of much-needed resources, and challenges the welfare of society by jeopardizing its economic expansion.

But are we satisfied with this definition of instability, to interpret such widespread and serious social phenomena as those of the past few years?

Personally, I am not. This definition, which may have been valid for the "deviant" attitudes of individuals and small heretic groups of the past, cannot be applied piecemeal to the recent manifestations of protest, confrontation and guerrilla, which are often shared by the largest portion of important social groups (the students, the workers, the tradespeople, the farmers, etc.) in an extended geographic area.

Furthermore, this definition is not applicable to the recent intensification of the political use of violence to denounce the limitations of legal power.

[x]

5. =

Perhaps the very concept of "instability" is no longer useful in interpreting these events, because of the practical impossibility to define what we intend nowadays by "social instability".

Only the traditional rural societies and some of the underdeveloped societies are defined as "stable" by the cultural instruments of our age. The principles generally referred to in Europe to indicate a yearning to organize for the future an expanding society unhindered by dramatic interior conflicts, are those of integration, of pluralistic democracy, of balanced and harmonised development.

But if we lack the terms for dependable and unequivocal definitions, let us at least try to reconstruct, synthetically, the genesis of this unrest that worries us today. Let us examine this genesis from the viewpoint of business. To borrow a term from our opponents, let us try to be autocritical for once.

## 4. SOCIAL CHANGE AND HISTORICAL BEHAVIOUR OF BUSINESS

For too long we have remained unaware of the intimate relations existing between our type of economy and social order. Accordingly, we deemed it possible to accelerate the rythm, the dynamism of the economic process, while maintaining the social and institutional structures of a static society.

In Europe, this has meant spreading and intensifying industrialisation, until the level of mass production was reached in a society whose way of life was still too akin to that of a rural society.

In hindsight, it is evident that the objective of economic progress without social disturbance could not be attained. Rural society's

6. =

way of life has been completely disrupted by the massive transfer
of manpower from agriculture to industry, the exodus from the
countryside and the formation of sprawling urban agglomerations,
the race toward the alluring job opportunities offered by the indus-
trialized areas.

Unfortunately, the countries where industrial growth was later in
coming did not utilize the experience of their percursors to avoid
the causes and consequences of this disruption.

On the other hand, the behaviour of business has been more "aggressive" and structured than we normally think: for example, we ourselves have propounded material prosperity as a social value to be yearned for, whereas its value is at best merely instrumental. This way, we have influenced the choice of society in this direction, thus opening the way to a painful reappraisal of the whole system of fundamental values, upon which social order has rested for several centuries.

If business has chosen to play an active role in the economic transformation of society, it must realize that at the same time it has inevitably played the role of agent of social change. But we have played this second role in a "passive" way, not only because we have not considered it our task to solve the social problems deriving from an acceleration of the economy, but also due to our unawareness of these very problems. We have not even tried to help in the diffusion of culture in order to better understand these problems, nor have we lobbyed for suitable institutions to face them positively and on time.

7. =

After all, neither the men of culture, nor the people in charge of
social institutions have tried to understand what was happening,
what would inevitably take place, and what they should have done
to play their role in a dynamic and constructive way.

Business - which is intimately connected with mass industry and
the industrialized tertiary services - presupposes today a continu-
ously expanding market, open to innovation in all of its productive
factors. However, it faces a social environment guided by institu-
tions devised to manage rural societies and a culture oriented to-
ward interpretation of the past and the utopia of an eschatological
future, rather than the determination of a possible medium-range
future. Finally, it has to cope with value systems providing at
best a catechetical guidance suited to repetitive behaviours, rather
than a few, fundamental moral criteria favouring the acquisition of
new experiences.

All in all, in many European countries business finds itself in con-
flict with the culture and institutions of society.

And if business finds it difficult to develop in a situation where it can,
to a large degree, take the initiative of the protagonist, should we
be surprised at the difficulties of others? What about the difficulties
of those whose work is tied solely to the continuation of an antiquated
culture and outworn institutions? What about the quandary of all the
people who, without being protagonists either of change or resistance
to change, suffer their consequences, pulled asunder by the two con-
trasting forces of economic dynamism and cultural and institutional
stagnation?

8. =

5. **BEHAVIOUR OF INSTITUTIONS AND CULTURAL ATTITUDES**

In synthesis, two considerations emerge at this point:

a) In the western world, and particularly in Europe, this period marks the definitive passage from an economically static society, having a basically rural character and a culture oriented toward the past, to a dynamic society based on mass production and the industrialization of tertiary services, with a culture that cannot help but look toward the future.

b) We still aren't sufficiently aware of the cultural and political implications of this change. Consequently, the transformation is being pushed through by the haphazard interplay of pulsating forces, rather than through a continuous process guided by a clearly aware cultural and political leadership.

Thus, we are beginning to realize that the current phenomena of social change are not governed and oriented, on the political and the cultural plane alike.

So, we can reasonably maintain that, if business has not done much to bring about a renovation of culture and institutions, the cultural and political leadership has not shown the necessary vigour and initiative. It may in fact be sustained that certain of the more obviously negative phenomena accompanying the process of economic growth are not the unavoidable consequence of this process, but of the random, disorderly way in which the process has developed.

For example, growth of production and income are linked to industrial growth, and this, in turn, requires a population adapted to an urbanised territory. If urban agglomeration takes place in a state of congestion, of pollution, of anomie, this cannot be ascribed to

9. =

urbanisation and industrialisation per se, but to the way to which
these processes are achieved.

It would perhaps be desirable to be reassured on this issue by the
intellectuals and the people in charge of social institutions. But it
would be even more desirable to try and find some solution to the
mutual deficiencies at the top level of responsibility, instead of
crying over split milk.

The lack of a culture on a level with the problems at hand, of in-
stitutions equal to the task of governing a developing industrial so-
ciety, is, in my opinion, our most serious deficiency. We miss the
scholar who can restore importance to values in themselves, pro-
pose the new priorities in their hierarchy, contribute to devising
new ways through which social groups and institutions (family, com-
munity, nations) may continue to fulfill their cohesive function.
And we miss the men of politics who can propose general objectives
acceptable to individuals and groups alike.

6. PSYCHOSOCIOLOGICAL INTERPRETATION

Individuals and groups, when abandoned to themselves, may endure or react. In any case, tensions emerge which, being without political or cultural orientation, cause ever more serious conflicts.

Contemporary sociologists and psychologists have dedicated much
time and effort to this analysis, reaching certain conclusions.

First of all, it seems that the accelerated change from an essential-
ly rural society into an industrial society is at the roots of social in-
stability.

[c]

10. =

Change in itself is a factor of instability, because it entails a series
of social movements suffered by the individual against his wishes.
To change one's own habits and way of thinking; to see that know-
ledge often acquired with great effort has become obsolete or in-
sufficient: all this burdens the individual with a task to which he
is not always amenable, which may result in his rejection of a so-
ciety that inflicts such changes upon him without explanation and
often with little or no preparation.

For those past their prime, who are no longer sure of having the
intellectual flexibility and the energy required to face this disarrange-
ment of their life, the change may become a dramatic experience.

This is all the more true in view of the fact that the current mutation,
the incessant evolution of our frame of reference, takes place at an
ever faster pace. For certain individuals, it is above all the pace
of change that brings about anxiety.

This "shock of the future", to borrow the title of a bestseller, this
acceleration in the rythm of history under the impulse of science
and technology, does not only affect those whose reflexes are blunt-
ed: it also causes anguish in the younger generations. In fact, now-
adays, the young people cannot rely as much as the preceding gen-
erations on the help of their elders, as they face a future which often
is more upsetting for the adults than for themselves.

Let's consider a typical example: the father, in the ancient rural
tradition, based part of his moral authority on his educational func-
tion, as it was from him that his son derived the essentials of his
craft. Today, the picture is very different. The father often gives

11. =

the impression of being out of touch with reality, supplanted by
progress, so that one of his own seats of authority is seriously im-
paired. Perhaps this is where we may find the roots of the crisis
of authority, of the wind of confrontation, of the systematic redis-
cussion of all traditions, all customs that hitherto have played
an essential role in the adaptation of the individual to his social en-
vironment.

Thus, the swiftness of change acts as a centrifugal force, isolating
the individuals from the groups that used to be the repository of
tradition - the family, etc., and hurling them toward new
groups, lacking tradition and often definite objectives, whose cohe-
sion is based only on fear and refusal.

Another factor of instability is that society does not seem able to
master the precipitating evolution of science and technology, and
appears to be swept along by it without any control whatsoever.

A classic example of this is nuclear energy, an inexhaustible, pro-
mising treasure, and at the same time direct and immediate threat
to the future of mankind.

Luckily, under the powerful stimulus of the mass media, the citizens
of the more industrialized countries are becoming increasingly aware
that the improvement of the standard of living brought about by so
many technological innovations of everyday use, is more than upset
by their deadly effects on the ecological balance of the environment
which has made life possible on their planet.

According to the social scientists, the individual translates the pre-

12. =

sent crisis of authority, coupled with the acceleration of history
and the ambivalence of progress, into the feeling of being hurtled
along the road on some contraption lacking control and direction.
There is no doubt that images of this sort, simplified as they may
be, are present in the collective unconscious, and underlie the most
disorderly manifestations of the revolt of the individual.

Furthermore, at the same time that it gives the impression of not
knowing where it is going, society increases its anonymous, collec-
tivistic pressure upon the individual, relegating him more and more
to his little niche and taking away his traditional supports.

As Jung wrote in his last work, " as a social unit, the individual of
today is governed, fed, dressed, educated, lodged in standard dwel-
lings..., but he finds himself increasingly deprived of the direction
and responsibility of his own life". The State or the organisation
has taken the place of God, and has not permitted the establishment
with the individual of that covenant that existed between man and his
Creator, that tie which allowed him to endure the physical and moral
power of the secular world.

Political action seems then to have become a condition of existence,
the element allowing the individual to communicate with his fellow-
men and to act historically within the framework of society. As to
power and its negation - violence -, they seem to have become the
only indispensable means of political expression (1). It can be very

(1) "On the political plane, it is not enough to say that power and violence cannot be identified with each other. Power and violence are opposites: when one exists, the other is absent. Violence appears whenever power is in danger, but if we let violence proceed to its extreme consequences, power disappears. Thus, it is incorrect to think that the opposite of violence is non-violence; on the other hand, to speak of "non-violent" power is pleonastic. Violence can destroy power, but it is absolutely incapable of creating it......" (Hannah Arendt, "On Violence").

13. =

easily demonstrated how the human faculty of acting on the political plane, in the modern age, has been exalted verbally, but reduced in practice.

The more progress in a country, the more the power of the adminis-
trators becomes removed and anonymous: our societies find their
limit of vulnerability in the dimension and anonymity of their central-
ism. We also witness the birth of a new type of nationalism in the
minorities: in a number of European countries, the ethnic groups
whose assimilation was at the basis of the constitution of the nation-
al states display symptoms of rebellion against the central government.

On his side, the individual tries to recover through violence the facul-
ty of action of which he feels deprived. Ghetto strife and campus
rebellion seem to spring from the fact that in these ways the indivi-
duals feel they are acting together, frustrated as they are by the
decreasing possibility of expressing themselves as a group in normal
ways.

In analyzing these motivations, scientists sometimes appear uncer-
tain as to whether these rebellions mark the appearance of some-
thing new, or whether they should be considered as the last gasps of
a human prerogative that mankind is in the midst of definitively losing.

7. THE GOALS OF BUSINESS AND THE FUTURE

One can draw some conclusions from the analysis that has been made
by sociologists and psychologists.

1. The impulse of industrial progress has brought about unprecedented economic progress; this accelerated social change is certainly the origin of present unrest.

14. =

It is imperative to change this situation. Some people propose the overall solution of reducing the rhythm of technical and scientific applications in industry, or reducing the rhythm of investments.

I believe that this kind of solution is premature. The present generation, at least, expects other decisions from businessmen. In particular, I think that two things are expected.

Firstly, before they are obliged to do so by law, businessmen should agree to try to resolve the problems that are closely connected to the productive activity which directly contributes to social unrest. I am referring to air and water pollution, to the augmenting wastes, to the elimination of durable consumption goods once they are no longer utilized (for example, cars). I have in mind the destruction of the natural environment by mining, industrial centers and transportation networks. I am also considering the relation existing between the location of jobs and the places where the population lives. In the past there have been several instances where errors have been committed more through bad taste and insufficient cultural sensitivity than for economic reasons.

Finally, I am thinking of the increased consumption of raw materials, which are beginning to run short, and of a concentration of research to discover substitute products.

In my opinion the first task in this field is that of distinguishing the important from the accessory. For example, if, as some say, technological industrial progress is definitely menacing the oxygen reserves on this planet, because of the rarefaction of marine plankton,

15. =

the intensive exploitation of forests, and the rapid increase in oxygen
consumption by industry and its products, the problem is of a much
higher order than that posed by localized pollution.

The possibility of an "oxygen gap", or the progressive disappearance
of marine life, necessitates that we examine whether or not these
hypotheses have a serious basis, and then immediate decisions must
be taken.

Nations, administrations and international organizations have taken
some leadership in regard to the question of pollution. Every now
and then industry is called upon to participate in these efforts, but
on the whole these decisions are taken by others, as if industry's
good faith were suspect. One can certainly not accept the opinion
of those who sustain that industry is incapable of thinking beyond the
problems of its short-term income. I think that industry should not
only directly cooperate in the solution of a problem to which it could
make a constructive contribution; it should also take some initiative.
It should act directly at all levels, but particularly internationally,
because it is here that the solutions to the most important questions
may be found. A proliferation of different norms without real value
from the point of view of the future of humanity would have disastrous
consequences on international commerce, and would undoubtedly
end in a regression of the standard of living.

Secondly, we are waiting for men to become aware of and give mean-
ing to their tasks, going beyond the traditional concept of considering
work as simply a means of earning one's living. Our fundamental
task is to elaborate this concept with all available means. We must
insist upon the social aspect of work, and the value of work as a

16. =

personal contribution to the solution of problems that are of interest to society. All these elements must have our attention, even when designing machines and selecting the location of plants. I am of the opinion that computers must be employed not only to utilize machines for man's most menial tasks (automation of repetitious tasks), but above all to allow all those who wish to contribute to the improvement of working conditions an a priori verification of the possible effects of their proposals.

In its internal organization, the enterprise is a sort of microcosm; its solutions to increasingly vast problems can contribute to the betterment of its employees, but they can also have value as an example. First of all, increasing the responsibility of every individual at every stage as much as possible, can initiate a reaction to the frustration that individuals feel in regard to their destiny. This implies some attempts at decentralization. Modern electronic means of communication and control permit considerable decentralization of decision-making, while maintaining satisfactory overall coordination. It therefore seems to me that the enterprise must move forward in this way, improving the level of education of its workers until this decentralization is more effective.

Within this perspective of valorization of human resources, it would be necessary to evaluate more systematically the social consequences of working schedules on family and group life, to review the problem of working women, and the age limits in relation to the period of training and reeducation, as well as the social role of the young and the elderly.

Solutions to this last problem are already available, and today

w

17. =

everyone talks about permanent education, reeducation, and distribution of educational training over a longer period, with intervals of active integration in the productive process. All these ideas, which could certainly ameliorate this situation and soften "the shock of the future", are only being applied very slowly, as they raise difficult problems. In any case, this is a field in which industry must prepare to work very hard.

In the area of specialized training, it seems to me that the enterprise should take more direct responsibility. This seems inevitable, for instance, in periodical updating of personnel.

The above is indispensable if we are to meet the expectations which to a great extent are motivated and inherent to businessmen. This puts into question the role of the enterpreneur, of the businessman that has been given responsibility in administrating human and natural resources, and who must account to society for his actions.

2. A second reason for social unrest goes back to the anguish that men feel toward technical and industrial progress, and its ambivalence; it might bring about improved living conditions, or it could cause catastrophes. What can be done about this? Above all we must not forget that this anguish is the price of man's liberation from the fatal submission to natural forces, which, instead, is the case in rural society. It will be possible to go beyond this idea when man will have really understood that technology is one of his creations and that it can be socially oriented. In a word, when man will have the means to control it, even if he continues to give entrepreneurs the mandate to attain, on the operational level, the aim that he had fixed for himself. In addition, this anguish can be overcome when

18. =

man has abandoned the myth of progress at no cost, and does not
limit himself to the creation of newer, artificial goods, a myth that
has made technical progress something that is reproduced indepen-
dently of man. Even if business must refuse all that could slow
down technological dynamism, the problem of orienting this progress
remains. Consequently, society must make some responsibile and
adequate choices. I insist on the adjectives "adequate" and "respon-
sible" and accordingly I am convinced that in the coming years it
will be necessary to make considerable investments in the manage-
ment of society and culture.

In practice, responsible political choices can only be made when
suitable political instruments are available. The need of adapting
a great number of European political institutions to the new data,
dimensions and rythms of industrial society has already been under-
lined. I believe we agree on the fact that business must cooperate
in this modernization: the goal is to devise the ways whereby busi-
ness can cooperate openly, without this cooperation being considered
the unwarranted interference of a pressure group.

But even though political institutions are important, we should not
underestimate the role of the natural groups and of the associations
through which society is organized. I believe that we should give
much attention to this dimension of social reality. Groups are im-
portant insofar as they represent the social space of the individual,
and a firm point of reference in the large, but ephemeral range of
social relations.

These groups play a role in making interpersonal relations more
continuous and effectual. They may serve as means to mediate

19. =

between tradition and innovation, and to favour the personal recognition and awareness of the new values.

As to the problem of making the appropriate choices, this depends on culture. In spite of the enormous quantitative expansion of knowledge, western culture does not seem to be equal to the task of facing the problems posed by industrial society.

The debate on the "two cultures", in which the intellectuals have been engaged in the past few years, shows how much the conflict between "rural society" and "industrial society" has affected the rift between "humanistic" and "scientific" culture.

The fact is that industrial society cannot be deemed consolidate, without the establishment of a new cultural unity based on universally accepted values and on pluralistic experiences.

The enterprise must be able to give its contribution in the definition of these choices, because it represents the most efficient means available to society to achieve certain objectives. Business should be sounded out on whether an objective is technically attainable, on the cost of the operation, and on the means to be employed. Besides, business should be able to suggest how to modify the objectives, in case the means should be insufficient, to avoid the waste of much-needed resources.

Business, politics and culture appear more and more interconnected, and the development of one of them increasingly affects the others.

Another source of unrest at the individual level, which is manifested

20. =

in the form of either agitation or violence, lies in the individual's
increasing dependence on society, and his feeling of having no con-
trol over his destiny.

I believe that an important step in overcoming violence in contem-
porary society, especially on the part of the young, could be that of
having business contribute to giving psychological assurance to man
through recognition of his dignity in his place of work, without which
he becomes a tool of consumption. This would permit man to exert
his rights as a citizen of a free and democratic society in the most
complete fashion.

Perhaps European democracies are still administrated in too oligar-
chic a fashion, regardless of whether the ruling party is of the right
or left. Today they are seriously menaced by a paradoxical form of
impotence of power. Technological concentration has permitted man
to reach the moon, but we cannot meet our simpler daily needs in
an adequate fashion, as if we were under a sort of spell which per-
mits us to do the impossible on the condition of losing our capacity
to realize the possible.

We could make a valuable contribution to this dilemma if we began
to think with a creative spirit as to how we could serve a market
that is at the same time new and unknown, like that of social demand.
In regard to this, we have an enormous need of ideas, fantasies, and
political and social dialogue.

8. THE ROLE OF BUSINESS

At this point how can we synthetically define the social responsibility
that the enterprise should assume, and the function that it should
claim to guarantee an original role to the development of society?

21. =

The elements for answering this question have already been mention-
ed.

In regard to social responsibility, the enterprise, and particularly
the large enterprise, can no longer consider its only job to be that of
the production of goods demanded by the market at the minimum pos-
sible cost. Though this still stands as its primary task, today the
enterprise has other obligations to its collaborators and society at
large.

But what is this additional role of the enterprise? In my opinion, it
is that of receiving from society - which has chosen the overall tar-
gets - the mandate to allocate the financial, human and natural re-
sources of society so that these targets can be attained with the maxi-
mum possible efficiency.

Can the business world survive when both society and the internal
environment of the firm are unstable?

The problem that we must solve is not so much that of reaching a
social system that excludes every form of sanction or conflict; rather,
a minimum of smoothness must be granted, that allows dynamics
while keeping the essential coherence of the social system, in such a
way that conflicts find their solutions in a reasonable period of time
and in constructive directions.

Social unrest has serious causes that must be solved as soon as pos-
sible. Business, politics and culture must be aware of this and co-
operate in order to solve the problem. If social unrest increases,
it will not only hinder cultural development, bringing about violence

M

22. =

and destroying power, but it will prevent industry from continuing
to develop its productive activities. Now, if industry does not keep
growing at the rhythm that we have known in the last decade, the
catastrophe that demographers predict as a consequence of popula-
tion pressure after the year 2000 will be dramatically anticipated.

Above we have said what business should do in the medium term.
All this opens up a series of operational problems and requires new
inventions which will have to be worked out over the next few years.
It seems to me that a concrete proposal is that of drawing well de-
fined plans and then subdividing the tasks among ourselves.

In the short term, business must be ready to perform its social role
in a flexible and open fashion. It is easy to change organization charts,
but it is rather more difficult to renew modes of production. However,
industry's first duty is to protect the extraordinary instrument which
it has been able to give to society, and to continue using it. In this
sense, it is also important to put a stop to the relative vulnerability
that the large enterprise has recently shown with respect to unrest.

Another short-term duty is to define the role of the market, which is
an irreplaceable instrument because of the elasticity and rapidity
of its reactions. However, its relationship to the increasing needs
of man should be analyzed more deeply. An industrial policy which
uses both the institutions of competition and of planning might be of
use for this purpose.

The last point which I would like to insist upon is that of the contri-
bution that the enterprise can give to the achievement of a universal
society. This contribution cannot be overlooked in the short term

23. =

because this society, encouraged by modern means of communication,
already exists to some extent in the mind of the people, but it does
not exist in fact. This gap between objective and psychological reali-
ty is another factor of uncertainty and social instability.

Business has bypassed political reality. On the one hand, the growth
of really multinational enterprises unites citizens belonging to several
nationalities in a common effort; due to their very existence they
may be a useful seed for the future. On the other, if the existence
of multinational enterprises evolves in an insufficient institutional
and political framework, this gives business great responsibility in
the political and social realm.

But how are the world of business and its managers to equip them-
selves, on the psychological and cultural plane, to operate along the
strategic lines leading to a dynamic, harmonised society?

We are aware that as tensions increase, psychological resistance
becomes of paramount importance. But the necessary preconditions
for this reside not only in the certainty of playing a valid social role:
it is also necessary that we have suitable cultural instruments equal
to the task. Our psychological resistance also stands on the certain-
ty of having at our side a group of collaborators that both share a
basic agreement on overall strategies and ideas, and are complemen-
tary in their functions.

This is far as theory goes. But in practice, all we have is many
gimmicks, and various techniques for group work and for rational,
efficient management. However, all of these are more useful in
solving everyday problems than in facing the problems posed by the

[d]

24. =

future. The problem of the future requires a greater commitment: so far we have only been concerned with it on a personal level, if at all, whereas this is an essentially social problem.

Therefore, this is a key subject which requires lengthy discussion on another occasion: if we are objectively bound to strive for the achievement of a dynamic, harmonious society, we must first equip ourselves with the necessary cultural instruments.

What we know as a certainty is that today we must invest our resources in social research and in the philosophy of life itself, just as we have heavily invested in technology and the applied sciences in the last twenty years.

If social philosophy is destined to have such importance for us in the future, we must promote and devise any instrument that could bring about the formation and diffusion of a culture that is able to face the world in a unitary, structured fashion. This culture is to be a "service", an element to balance the exterior and interior aspects of man, allowing him to face the problems of his relationship with others and nature.

We have seen how the development of science no longer appears to coincide with the progress of mankind. As to what we call "knowledge", the never ceasing race toward specialization, toward knowing more and more on less and less, is leading man further and further away from his purpose.

The essence of man lays in the two moments "I want" and "I can", not simply in "I can". Only culture is in the position of bridging this

BILDERBERG MEETINGS

WOODSTOCK CONFERENCE

23, 24 and 25 April 1971

(arrival 22 April)

PROVISIONAL LIST OF PARTICIPANTS

BELGIUM

VANISTENDAEL, August A.J.
Secretary General, International Cooperation for Socio-Economic
Development (CIDSE)

CANADA