Are We Anti-Capitalist?

January 15, 1962

Two weeks ago my colleague Raymond Moley pointed to the strange fact that our government was supporting the action of the U.N. in systematically destroying, among other things, the properties of the Union Minière, which would have been the major source of supply for the entire Congo. “Since that company represents capitalism,” he continued, “it is easy to see why the Soviet so eagerly supported the U.N. resolution which precipitated the war.” But how explain our own government’s action? “Could not the President and his many advisers understand the consequences and also the inconsistency of ruthlessly destroying the Congo’s economic viability and then spending billions to restore it through foreign aid?”

This strange attitude was revealed afresh in the attack by Carl T. Rowan, Deputy Assistant Secretary of State for Public Affairs, on Dec. 27:

“Out of Katanga’s rich veins, Union Minière was producing 8 percent of the world’s copper, 60 percent of its cobalt, and many other minerals. Union Minière was a classic example of the profitable side of colonialism. Despite all the Congo’s troubles, this Belgian-controlled firm had net profits of $47 million in 1960. . . . Union Minière pays about 80 percent of the tax revenues of Katanga. . . . Now isn’t it natural that those with financial interests in Union Minière would rather see Katanga as an easily controlled ‘separate nation’ than as part of a larger Congo nation whose government might not be as friendly as Mr. Tshombe and his associates?. . . . Much of Mr. Tshombe’s most vocal support arises not so much from the fact that he is ‘anti-Communist’ as the fact that he is pro-Union Minière.”

WHAT PROFITS DO

This remarkable statement admits that the Union Minière, formed in 1906, has become the economic backbone of Katanga, and is vital even in the world economy. Yet Rowan is sarcastic because the company has until recently earned a profit. If it had not been that profitable, however, it could not have supplied 80 percent of the tax revenues of Katanga, and it could not have employed 21,000 people (equivalent to the whole adult male population of Katanga’s 95,000 inhabitants).

Rowan’s statement seems to imply that if a foreign- owned company is profitable, all the benefits go to the foreign owners. This is a fallacy we are accustomed to find among socialists, Communists, and xenophobes. But it is strange to see it getting implied support from a member of the State Department of the world’s greatest creditor nation, with huge investments all over the globe. For this fallacy is always the excuse offered for the expropriation and nationalization of foreign-owned companies. (Rowan did admit at one point that “the Congo needs much that Union Minière can give.”)

HOW TO RETARD GROWTH

Rowan implies that it is a point against Tshombe that he is not only anti-Communist but pro-capitalist. Rowan seems to expect the same thing that the Union Minière expects that the government of “a larger Congo nation . . . might not be as friendly as Mr. Tshombe”—i.e., that it might levy still heavier taxes (already some $50 million a year), and perhaps expropriate and nationalize the properties. But Rowan talks as if this would be a very desirable thing from the American point of view.

The Rowan statement seems to be just one more indication of a strange anti-capitalist bias that now seems to run through our whole foreign economic policy. This is reflected in the Administration’s proposals for punitive taxation of American investment in Europe; its efforts to force American investments to go, not to the countries where the owners of the funds want to put them, but to the countries where our bureaucrats think they should go; its deliberate encouragement, in Latin America, of more government planning, more drastic corporate and income taxation, more “land reform” (i.e., expropriation and division of big private land holdings).

It need hardly be pointed out that all these policies must retard, not encourage, sound economic growth in underdeveloped countries, and must increase the burden on the American taxpayer for foreign aid.