Views on Economic Reforms

IN the matter of economic reforms, I kept pointing out in my discussions [with Henry Kissinger] that when the Western countries including Canada came out of the Second World War, we slackened the tight wartime controls on our national economies only very slowly. We kept exchange controls, for example, and we kept rationing. I was in Britain and France in the 1950s, and even then they still maintained some controls. So we capitalist nations realized in our own cases that you could only decontrol a tightly managed economy very slowly. And yet here we were sending all kinds of zealous Thatcherite and Reaganite advisers to tell the Soviet Union that there was no option but converting instantly to a free market system: they must take a cold bath and decontrol overnight. And of course that created economic as well as political chaos.

When I say we may come to regret this, it's because the peace of the world is based on stability. If countries begin to feel threatened by others, they frequently resort to ethnic nationalism in self-defence, or they look for alliances that will upset the particular balance of power that they find threatening.