Demas never makes clear the ultimate causes of this pattern of economic performance. Yet at one point he did give the clue when he suggested that the international corporation might sometimes be the most meaningful unit of analysis for the purpose of discussing economic development.
So far as the Caribbean is concerned, there is certainly a strong case for this contention. For perhaps the most important characteristic of the regional economies is that they are dominated by a series of international corporations. Moreover, these corporations form parts of wider international systems of resource allocation. This is true of the mining corporations, the sugar companies, the hotel chains, the banking, hire purchase and insurance houses, the advertising companies, the newspapers and the television and radio stations. But Demas does not carry his analysis of these facts to the point where he draws the significant inferences from this consideration.
He might have noted that, in so far as there is harmonization among these concerns, it is for the most part achieved within the context of the metropolitan economies where they are based, and not in the peripheral economies of the countries where the companies actually operate. Moreover, the policies of the corporations are determined by their parent companies operating somewhere in the northern hemisphere and not by the local need to integrate industries and to increase interdependence between different sectors of the economy. The economy is, therefore, hardly more than a locus of production made up of a number of fragments held tenuously together largely by Government controls, themselves often borrowed from elsewhere. In other words, it is to be appreciated that it seems to be inherent in the structure of the international corporations which operate in the region that the Caribbean economies remain fragmented and unintegrated. It is not merely a question of the flow of goods, though that is important; it is principally that the corporations are the channels through which metropolitan technology and forms of organisation are introduced into the economy with little reference to the overall domestic factor market. The companies are also the main agencies.
Thus, the main clue to what needs to be done to develop Caribbean economies is to be found in a study of the particular details of the relations between the territorial economies and the corporations. Once we begin to differentiate these particularities and their relation, many of the “absurd aspects of the open economy” begin to make sense. For example, the misallocation of foreign exchange and investible funds by the hire purchase companies, while the national plan is calling for a development effort.
Demas is in fact keenly aware of the important position of the corporations. Thus he points out that…
“An appropriate development strategy would also have to include machinery designed to ensure that the decisions of the large international corporations are harmonized with the national interest…” (p. 137).
He further calls for the “Generation of Local Centres of Decision-Making” (|p. 137) to which end he advocates an increase in the proportion of investment from national sources of saving, greater encouragement to local entrepreneurs, and the exercise of more discretion in the management of the financial and commercial systems.
The crux of the matter, is, however, that for Demas “All these objectives can be achieved without necessarily lessening the inflow of foreign capital or affecting the position of existing firms or institutions.” (p.137).
But can they? If, as seems to be the case, “full blown” democracy means the encouragement of foreign capital and the maintenance of existing firms and institutions in their present position, then there will be a virtual commitment to high consumption, involving as well, the acceptance of financial, communications and advertising systems which absolutely restrict domestic resource mobilization, and, indeed, probably militate against the development of any national will to self-propelled development.
The conclusion which emerges is that the primary planning task in both time and importance is to create a framework within which the Caribbean economy would be able to make effective decisions about development. In terms of action, this means a transformation of the character of the corporations and a drastic revision of the terms of their participation. In this connection, measures for nationalization or even expropriation cannot be arbitrarily ruled out as they are by Demas (p. 137).
That such measures may have far-reaching consequences, and force the society to incur heavy short-term costs is of course, a matter to be seriously considered. The likelihood of metropolitan retaliation has also to be taken carefully into account. But then, for that, we must bring to the fore not merely the economic but also the military, and, above all, the political properties of the situation. And though the conclusion we may reach from such considerations are wide open, it has to be admitted that it is here that Demas may have his most important point about small scale.
Where, then, can Demas be placed in the general scheme of contemporary Caribbean economic thought? Since the change in the political outlook round about 1940, the dominant theme in our thinking has been that economic development requires a greater promotional initiative by the State. As Lewis wrote in 1949, the sugar planters had done nothing for a hundred years and the assumption that private enterprise would show a dynamic initiative of its own had become untenable. The practical effect in the field of economics has been a massive output in support of the needs of public policy.
The pioneering studies were undertaken by the Anglo-American (later Caribbean) Commission. Subsequently, the impetus was sustained first by the Economic Policv Committees in conjunction with the Colonial Development and Welfare Services, and then by the Economic Planning Boards (Units) and University Research Institutes established after the war. Whether by resident economists such as O’Loughlin and Thorne or by visiting consultants such as Lewis and Barton, the work has, however, largely been concerned with the recording of observations and the formulation and evaluation of programmes.
Explicit theorizing about how the economies function has been more limited. The bulk of the theoretical statements to date have been confined to parts of the economic mechanism and have seldom been related to more than one or a few territories at a time. Such general theory as there has been, has come, recently and under the influence of structuralist thinking in Latin America, from the mainland territories of North-East Brazil and Venezuela. Thus, we can point to little beyond Furtado’s “Economic Growth of Brazil”, a definitive study of a long period of stagnation following in the wake of plantation economy; and Dudley Seers’ “Model of a Petroleum Economy”, essentially a short-run theory of persistent unemployment under modified plantation conditions.