Efficiency in the World Economy

Abstract

Discussion of a managed world economy immediately invites the question: is management necessary or desirable? Would economic welfare everywhere. not be better promoted by relying on market forces to maximise the welfare of all the world’s inhabitants? The flow of trade and investment alone, if allowed to operate freely, should lead to the optimum allocation of world resources. This process would not only maximise rates of growth generally; it should also, if unimpeded, bring about an automatic transfer of wealth from those areas at present richest (and so most capable of buying and investing) to those capable of producing most economically and successfully. And, since production would usually be most competitive in areas where wage levels are lowest, it should thus bring about a rapid transfer of wealth and welfare from rich countries to poor.