Shipping - as a free enterprise - in a changing world

Lecture, given by Mr. Robert Pederapie former chief-editor of the 'Internationale Transport Zejtachrift1, at the

Annual

General Meeting of the Royal Netherlands Shipowners' Association, held on June 10, 1976.

KONINKLIJKE EDERIALNDSE REDERSVERENIGING Stationsweg

131

-

's-Gravenhage 2006

The title of my address is: "Free shipping in a changing world." "Free" stands naturally for "free enterprise". But what should be understood by a changing world? The world is undergoing constant change. Lord Inchcape, president of the General Council of British Shipping,

declared recently: "I suppose every generation is convinced that its times are uniquely critical and difficult. We, I think, can fairly argue that we are living through one of those periods of upheaval in world economic and political affairs which produce structural changes. just as profound as have two world wars."

This process is not yet completed. The free enterprise system is exposed to increasing attacks in the West. The consequences of the industrial revolution in the lIner shipping business have not yet penetrated fully into the consciousness of all those involved. The Pax Americana àame to an end in

1974.

The developing countries, which are striving for a change in

the world economic system are making their numerical superiority count in the institution of the UNO. The Soviet Union has

attained the status of a world power and is aiming at political, economic and Ideological expanaion.

I must add that I originally wanted to give my address the title "Capitalist shipping in a changing world." The concept

"capitalist", however, is not only vague, it also constitutes an Irritant word and for many people represents the embodiment

of all evil. If we take as a criterion the disposable power Of the production factor capital, then at the moment we are offered only the choice between a private capitalism and a State capitalism which fully deserves the description

of

monopoly capitalism.

The concept "capitalist" is often used as an opposite to the no less vague concept "social". Now the primary social tasks of the economy consist in providing for the material needs

of human beings. Is the State capitalist system, therefore, better equipped for this than the private capitalist system? Karl Marx in no way misunderstood the dynamics of the private capitalist system. He saw that its end would only come If a fully developed, production apparatus supplied surpluses and

needed no further expansion. Looked at globally however, this situatiOn takes a long time before itcan be achieved. Shortage is rife in the world and not surplus.

The prodigious increase In the production power of the capitalist countries has in itself resulted in the.develop-ment of a new social elethe.develop-ment. The principle by which the modern manager is guided is not the maximising of profit but the optimising of earnings. This optimising is, however, primarily obtained by increasing turnover. The incantation

runs: A large. turnover with small profit. That is the basis of ,the present prosperity in the Western capitalist world. The profit of the capital investor in this connection

attains proportions which vary relative to individual circumstances. I was once able to ascertain from a large shipping company's

annual balance sheet, that, of every dollar which they had entered in their books as freight charges, one cent flowed into the pockets of the shareholders. An even larger portion of the profit naturally served investment aims.

In the modern economy there can be neither a maximising of profit nor a maximsing of. wages. There should rather be a viable relationship between wages, taxes, dividends and

investments. In ôonnection with this, market forces naturally play a part - labour market forces and capital market forces. Yet a qualification is appropriate. A labour market hardly

exists any longer in factual terms. Labour is no longer considered as a commodity for sale as in the time of Karl Marx. Wages are arranged between go-called soejal partners.

In this connection, attention must be paid to what enter-prises and the national economy can bear. The trade unions have thus outgTown the state of innocence. There are encouraging omens suggesting that they have understood the signs of the times. I am thinking of very recent develop-ments iii the Federal Republic of Germany and In Great Britain.

I would like to add that the claims of the developing countries, which would like to reduce the prosperity gap

.3.

between North and South, should be taken into account in the social problem field, too. In this connection, I believe that the policy o.f the national trade unions of Western Europe and of the International Transport Workers' Federation In the field of shipping is still based somewhat one-sidedly on the protection of the jobs and wage levels of the seamen of the Western world. There is a group egoism here, which is certainly understandable - just as

under-standáble as the egoism of every shipping company which tries to safeguard its existence by a change of flag. One must certainly guard against an over-hasty moral judgement. But one must,

however, recognise that labour is also involved in the North South conflict between poor and. riOh nations.

I would like to add in this connection, if the International Transport Workers' Federation occupies itself with the wage

levels On board ships under so-called flags of convenience, then it will perhaps one day also have to deal with the wage levels o'n board Soviet ships.

However, it is clear that the level of wages does not depend on the goodwill or ill-will of the employer alone. That is

also valid for that employer which an American author once ha8 described as Soviet Union Inc.. For, to be sure, the

Soviet Union is.not only a state, it is also a big industrial combine. The leaders of this combine would certainly like to provide the Soviet workers with as high a standard of living as that which Western workers enjoy. Yet objective factors are decisive for them also. After subtracting expenditure for investment, for public works, for provision of equipment, for armenients and for supplies of weapons abroad, there is not enough left over for private domestic consumption.

The Soviet economy is admittedly regarded as being still in a state of expansion. The pace of this expansion depends on the efficiency of the system. In a book which appeared in the German Democratic Republic on the "Economics of Ocean Transport" mention is made ofthe alleged "adventages of collective ownership of the means of production." In this regard, the followinr views are stated: "The economic laws

of capitalism, which are characterised. by striving for profit, spontaneity and ruinoas competition, act in a complicating and inhibiting fashion. For this reason, the orgánisation of asocial Division of Labourunder socialism is superior to that of the capitalists." Of course there is not yet much signof this. In fact9 the heavily centralised apoaratus of the State capitalist countries acts as a drag chain. In the Soviet Union it is realised that de-centralisation- is necessary. But the monopoly bureaucracy, which controls the production factor capital, fears concentrations of power on the periphery.. At any rate, in my view, planning and co-operation should.. be given more weight in the framework of the free enterprise system. The laws of the market economy should nOt serve as excuses which justify omissions In this area, And the critical utterances from the East German side should also not be simply cast to the winds, This is true, above all, for the criticism of the dissipation of forces and the waste which are required by excessive competition. One must be ready to learn from one's opponent. If Karl Marx has been overtaken, so has Adam Smith, too9 whose theses just as those of Marx are i-n line with Darwinism. The thoughts of Adam Smith, which create the market laws, in the sense of natural laws in the economy, as a type of

"biological equilibrium" , such as rules in the jungle, are certainly based on correct observations. But the Darwinist concept of the struggle for survival of the fittest may have been acceptable in the time of early capitalism, when small entrepreneurs operated at their own risk. In the age of the big combine it is no longer acceptable. If, for example, General Notors were to collapse,. then that would draw many thousands of people - workers, small shareholders and suppliers - into the vortex and convulse the American financial system. For the USA, this would be purely and simply a national catastrophe.

Consequently, it is my view on the subject, that the concept of the market economy should be given a new meaning. The èmphasisshould not be on competition and on blind submission

to the laws of the market. The knowledge of these laws should lead to mastery over then. Planning with foresight serves this end, planning which is supported by the tool of modern market research methods It makes it possible to avoid large-scale waste. We cannot afford such waste, from the point of view of the national economy.

We should also not Indulge in it, because it gives the

private capitalist system the reputation of a cowboy economy. Co-operation forms another important element which must find a place in the market economy.

A representative example of the consequences of faulty prognosticated planning,. based on market research, and of co-operation is provided by events in tanker transport. In 1973 and 1974, in connection with the ever faster growing

Increase in petroleum

consumption,

approximately 30 thousa,nd million dollars were invested in tankers and, moreover, the

shipbuilding industry was induced to make substantial

investments.

Certainly, the drastic price rises by the oil-producing countries and the economic recession which

this brought about, which caused petroleum consumption to fall, could not have been foreseen. But the experts are today unanimous in saying that shipbuilding orders were excessive from the start. Since a considerable number of large banks were involved in the

financing

in question, It would have been an easy matter for these institutions to collect statistical material and arrange an exchange of

information in order to avoid excesses.

Here an enormous waste took place - naturally, not only in money, but also in labour and material. Now, last year, a book which attracted much attention appeared in the

Federal Republic of Germany under the title "Bin Planet wird gepindert" ("A Planet is being Plundered"). In this book, the plundering which is being organised of scarce natural resources, was criticised. Its author, Herbert Gruhl, Is a politician in a party which is based on the ma±ket economy. But he is, however, of the opinion that

the State must intervene. In this connection, I would only like to add that the tinerioan economics magazine "Fortune' has already criticised the top managers who refuse all

State intervention wholesale because of a far too conservative frame of mind, and thus lose contact with reality.

Personally, however, I would give preference to :the self. regulation of the economy. A good example of self regulation

through co-operation is offered by the much maligned

conferences of the, shipping lines. They make it possible in actual. fact to prevent a waste of tonnage by tailoring the supply to the demand and the effects are felt in many different trades. With the development of new types of ship, such as the container ship, the Roll-on-roll-off and car ferry ships etc., the shipping business has become an extraordinary capital intensive branch of industry calling for expertise in planning, market research and co-operation. The big shipping companies have also taken up this challenge. The West European companies, for example, which were preparing to containérise the South African trade have a fine knówledge,of the tonnage to be employed by each conference member. They thus indicated that a meaningful planning of investments is not .a prerogative of the state capitalist economy, and they show that rational utilisation of operational equipment constitutes no such prerogative either.

increases in productivity enforce concentration. The lines which work with big container ships and which previously operated individually, have for this reason formed themselves 'together into so-called Consortia, often on an international

level. The ships of each member of a consortium are at the disposal of the other members. This type of collective operation constitutes a revolutionary innovation, which to my k±iowledge is without parallel in other areas of the

economy. I find it lamentable that this truly revolutionary innovation took place, to a large extent, in camera. The

big lines involved, are unfortunately maintaining an embarrassed silence. Obviously they are afraid that they could be

7.

the capitalist system

with

a new concept, which, in the frame-work of a self-regulation allows cost lowering rationalisation and prevent waste. In my opinion, the state should not combat such waste by direct intervention, as Herbert Gruhi says, but it should favour self regulation in its role ai legislator.

The existing cartel laws, however, do not do this. In particular the American anti-trust legislation is aimed unequivocally

against self regulation of the shipping line business in the sense described. It allows no closed conferences and no pooling and forbids American lines to form Consortia. The Americans, undoubtedly, rightly attach a high value to democratic supervision of economic and political power. A

supervision which prevents the possible growth of concentrations of power is one thing; however, the prevention of economically necessary concentrations of industry is another.

Detroit is the example of an ecohomic concentration in the sense of an oligarchy in the motor car industry. The pricing policy of this industry is not determined in the first instance through competition, but through the enlightened self-interest of the participating concerns.

The same is true of shipping and always has been true. The principle of "what the traffic can bear" which is decisive for the structure of the conference tariffs, does not assist in maximising of profit, but in optimising of earnings and increase in turnover. The relatively high overhead costs should thus be distributed over the different commodities

in proportions that push, none of the cargoes over a prohibitive threshold.

A difference exists between Shipping and the Motor Car Industry, in so far as the relatively few large motor car factories

need no conferences and pools to prevent ruinous competition. The shippinglines however, have t'o reckon with a multitude of active or potential outsiders. For this reason, they

need a certain measure of cartel protection; to use the wicked, word "cartel" which

jE

also an irritant word.

The cartel-type organisations in shipping, i.e. the conferences, however, are not only confronted with a more or less tangible

oompetItion from outsiders, they also encounter a countervailing power today, in the form of 3ippers Councils. These Councils are consumer cartels. The shippers have thus, exactly like

the inthstrially organised workers,.grown out of the age of innocence. They no longer stand as the plundered against the plunderers - in so far as they ever did in any case. The power of the new consumer cartels is already clear, most of all in Australia. The wool shippers were and are in a position re-garding the traffic with Europe, to torpedo rate decisions of the conference which do not suit them. In the North American east coast traffic, the Australian Neat Board last year

succeeded in preventing an increase in the conference rates for frozen meat which was caused by cost Inflation. This

resulted in a concentration of the shipments on the big container lines, whilst the lines working with conventional ships were excluded. Thus a concentration was brought to bear which in other circumstances would. be branded as "monopolistic".

But it was also demonstrated that the suiting of the tonnage to the demand makes possible a reduction in costs, which in Its turn creates the precondition for a reduction in rates or a keeping down of rates.

In the traffic with Australia, the British carriers must give neutral accountants sight of their books In order to ensure that the rates which the Australian shippers are paying do not exceed the bounds of a reasonable return. On the basis of the "Note of Understanding" agreed between the Shippers

Councils and the CENSA, the ôonferencea must also make increases in rates and the introduction of surcharges dependent upon

costs. On the other side however, the shippers are not bound to give information about their calculations. That would certainly allow the principle of "what the traffic can bear" to be brought into fuliplay for the benefit of all partici-pants and the effects of cost inflation to be softened for the export industries hardest hit. It would also, I think, accOrd with the principle of solidarity., on which the

in-stitution of the Shippers Councils is based, or at least ought to be based. The time for this however, has undoubtedly not yet arrived.

9.

NOr has the time yet come for a co-operation which the shipping industry could put forward as a type of joint venture of shipowners and shippers. But, I sin of the opinion that thinking must be directed in a direction which corresponds to the concept propagated in the USA, of the "social responsibility" of private industry. This concept as has already been said, should not be limited to labour conditions. Certainly the increase in the economy's productivity must finally have a beneficial

effect on these conditions and this is in fact so. However, it is also a duty to improve productivity for the benefit of the society as a whole. These primary f'uzictions.of the economy, in my view, can best be fulfilled in the framework of the free enterprise system. Free enterprise means

theeconomy has to constitute a private area, in which, experts are active and not politicians and bureaucrats.

Shipping in my opinion, should appeal to this concept rather than to that of the market economy, and to doctrinaire concepts of Oompetitlon. "In the Liner trades there has always been an administered'market," said last year's president of the General Council of British' Shipping, Mr. Bolton.

In the tanker busineøs and in the tramp shipping business, things are arrangeddifferently. On this matter, I would only like to éay that the idea of co-operation is similarly growing. There are international consortia in the tramp business today also.. The obligations on the shippers are looser, however. The chartering of large tankers and bulk vessels on the grounds of long-term contracts has, of coürse allowed a similar re-lationship to develop to that existing between the motor car manufacturers and their suppliers, whereby the enlightened self-interest of the former, who are desirous of a continual and reliable material flow, forbids their market power to be used to such an extent that their suppliers are driven into ruinOus competition.

The London firm of Drewry, affirmed in 'a comment on the

UNCTAD conference code, that such. concepts as market economy, comparative costs and free trade, find no positive echoes in the third world. The developing countries believe that it

is only a question of an ideological justification of the interests of the capitalist industrial nations. In this, they are not entirely wrong. For example, the principle of free trade was first propagated

in the 19th Century, by the English Liberals because England was, at that time, the leading industrial nation, It was intended to

open the door for the sales of British products abroad. In Germany, the nationalist economist Priedrich List propagated against this the idea of so-called educational tariffs for infant industries. The developing countries are obeying similar requirements today. They want not free trade but industrial progress. They do not shrink from protectionist measures in this connection. That is apparant in shipping. But industrial progress today can no longer be achieved by protectionist measures. The developing countries need capital and know-how. The West can offer them that.

The solution lies in the word"co-operatiorz".

But these countries are at present attempting to follow a do-It-yourself policy in the Maritime sector. They have put into practice protectionist measures to obtain cargoes for their shipping lines. They now look

to the UNCTAD code for their salvation. You certainly all know how the code developed and what it signifies. Its text, as you also know, leaves room for different interpretation. The basic kernel, however, is formed by the distribution of cargoes, which certainly does not have to conform to the 40:40: 20 formula, but can conform to It. But this formula is now no.longe.r the object of a North-South conflict, hut of a conflict between the Western shipping nations. The so-called "cargo-generating countries" accept the fOrmula - the countries whose carrier lines are deeply involved in the crosstrade, reject it. Which demonstrates once again, that Ideological, principles are motivated by interests. The signatures which were appended to the relative international Convention are hardly sufficient, and some still lack the necessary ratifications to enable them to come. into operation. The. fate

of the code is still, for this reason, uncertain at the moment. At the last meeting of the shipping commission of UNCTAD, the developing countries warned against delaying tactics. This warning was clearly directed above all against the manoeuvres of the British shipowners who wanted the elaboration of an alternative document. In a certain sense, India occupies a key position. It is known to have played an important role when the UNCTAD code was drawn up. But today it belongs to the leading

longer completely identical with those of other

developing countries. The German shipowners tried to force India to ratify the agreeient relating to the code, but their British colleagues wanted to win this country far their revision project. Political

considerations

will probably be the deciding factor in the end..

The British shipowners declare that today they accept the de1and of the developing countries for fixed cargo quotas. In! the OECD and in the European Community, moves are in progress to make no distinction between the 40% which goes

to the national lines of theWest and the 20 which the Western lines can demand as cross-traders, and to open 60%

to the shipping lines of the West asa whole. This corresponds to a Norwegian conception. At the Geneva conference of

_1973/1974

Norway had already brought into play, but had not Officially tabled for discussion,, the idea of guaranteeing the developing countries a fixed cargo share of 40% and liberalising all

other traffic., This concept would probably also correspond with the interests of the Netherlands shipping industry. The developing countries now regard the share of 40% as already fixed, withoi without the code. It is therefore only a question of more or less protectionism on the side of these countries, which also do not on the whole shrink from extending protectionism to the tramp shipping business and the tanker business. Unfortunately, a strong tendency in favour of national cargo quotas also exists in the USA.

With or without the UNCTAD code, the eolution in relation to the developing countries, as has already been said, lies

in the word "co-operation."

These countries, which need capital and know-how, must be convinced that collaboration with the West in shipping, and also in the field of port operations and combined transport systems, brings them advantages. The initiative must come from the West - from governments, trade associations and individual firms. However, I cannot go into any more detail about it here.

The developing countries are strengthened in their rejection of Western liberal principles by the Soviet Union, on political grounds. The Soviet Union reserves itself the right to agree

bilateral cargo sharing arrangements with the countries in question on a 50:50 basis. On the other hand, it wants to make use of Western liberal principles in order to make massive inroads into the business of the Western

ppg lines, everywhere where these principles are valid. You all know the drama which is being played out here. You know that the Soviet lines are continually penetrating into new routes. You know that undercutting ofrates follows, which goes as high as 50%. You also know that no possibility whatsoever, has been granted to the Western lines to obtain Soviet cargo on a commercial basis 'in the crosstrade. And I have recentlyheard that in bilateral traffic between the Netherlands and the USSR, only 5% of goods are conveyed

under the flag of your country. Igor Averin, of the Soviet Ministry of the Merchant Navy recently reproached the Western

lines for politicisin the problem of competition with the Comecon countrIes. That is astonishing. The problem is a political problem. It is so, precisely because commercial factors come intO play Only orie-sidedly, on the Western Side. The East German textbook on the "Economics of Ocean Transport" says: "In all measures connected with ocean transport policies, the socialist State consistently puté into action the unity of politics and economics". It is further said that the carriers of the socialist countries "'inOrease their anti-imperialist influence on the cargo lIner market in. the interests of the developing countries, too". It seems to me that, in reality, economic self-interest is always in 'the foreground. The Indian shipping industry recently complained that in bilateral traffic with the

Soviet Union, based on the principle of

a 50:50

cargo sharing1 Soviet shipping secured the high-priced cargoes for itself.

Something else must be said In this connection; the Soviet Union has become a World power, .t has created for itself

a strong Navy. It now needs a strong Merchant Navy as a logistic instrument, and also in order to be independent in its relations with friendly nations. Jonkheer van Lennep reminded you , within these very walls, last year of the Cuban crisis. One may fear and regret the growth in the

13.

Soviet Union's power.

It is not up to me to take up a position in this respect. It must however be recognised that a strong Merchant Navy forms a natural attribute of a world power. In this respect it is not only the ships which are involved, but the. assurance of a sufficient number of trained seamen. The West cannot. prevent the expansion of the 3oviet Merchant Navy. But the question is, naturally, whether it should support it.

Strategical motives, as has already been said, are decisive in this expansion. But the motives for which the strengthened Soviet Merchant Navy is seeking business in the West are however, primarily of an economic nature. The trade balance of the USSR, and the other East European countries Is seriously

in deficit. Comecon owes the. West in toto approximately

30 thousand million dollars. Whether the Soviet government could not pay for its comprehensive purchases of the, means of production from the West in gold, is a question for that government itself. It is a fact that it is constrained to balance up. the purchaies in question, in as great a measure as possible, by achIevements in the shipping sector. But it cannot be allowed, that the USSR, through the use and

encouragement of flag discrimination, limit the maritime activitie.s of such nations like the Netherlands and Norway, as are dependent on shipping, and that, on the other hand, It cuts itself a big slice out of 'the cake in the overall cross-trade, where liberal Western principles still apply. In this connection, it is my opinion, that 'it is superfluous to debate whether dumping, in the genuine sense,, is taking place or not. It would also, as an American has said, be

equally superfluous to raise the question of the economIc viability of the Soviet Merchant Marine, as it would be

superfluous to put this question in relation to the US Navy. It is a. fact, that a struggle for supremacy has broken out, which is not to be compared with' the traditional competition between conference lines and outsider lines. It is no

longer a question of individual enterprises risking their existence. It is a question of a competitive struggle with a mighty economic power which, because of its nature, cannot

go bankrupt, whatever its priôing policy may be. In this connection, it is not Just a question of ocean shipping. A rather competitive factor of extraordinary significance

is the Trans-Siberian railway. An American expert James Sherwood of the leasing firm Sea Containers has already

--said that the container traffic between Western Europe and Japan might eventually be completely diverted onto the

so-called Soviet land bridge. That would lead to a far reaching 8uppression of the traditional Far East lines, and bring the Western economy into a dangerous dependent relationship with the Soviet Union.

That is the big problem and I advise short-sighted shippers to recognise i.t as well. The danger exists of an increasing dependence of the western economy on Soviet transport

Organisationa'. One must not ascribe any diabolical, intent

to the Russians in this connection. The British magazine "Seatrade" also said that the expansion of' the Soviet

Merchant Navy is somewhat over-estimated, especially where the building of large container ships is concerned. However, it Is a fact that the USSR disposes today of the biggest general cargo fleet in the, world and that it will still expand this fleet considerably.

The competition which is now in progress has taken on the shape of a struggle for survival, to which an end must be put. The question is "how" ?

Particularly from the German side, the' political si.gnificance of the problem is pushed into the foreground. Aggressive talk has been uttered about it. That has had the result that the public, and the politicians with them, have been scared. The British shipowners express themselves in a more restrained fashion. They are still hoping for an understanding on a

commercial basis. But they, too, want support of the Government if necessary. This support would have to be of a two-fold nature; in the traffic between Great Britain and the USSR, a larger

share in bilateral transactions would have to be secured for the British flag. That is naturally valid, in a analogous fashion, for any other Western country. Moreover, the West European. governments would have to take. simultaneous co-ordinated measures, in order to restrict the competition in the cross-trade, it should however, not be a matter of

15.

action within the framework of the European Community.

A pre-condition for such a co-crdlnated step is, of course, that. In each of the participating countries., the requisite legal bases should exist which would permit measures against the Soviet competition. (The Netherlands retorsion law of May, 1977, has been published meanwhile in the "Nederlandse

Staatsblad"nr. ₃₁₃ of the 14th of June,

₁₉₇₇₎

A commercial understanding would pre-suppose that the Soviet Bhipping Industry turns out to be prepared for a kind of self-limitation, just as the Japanese export industry has already turned out to be prepared for self-limitation., in order to avoid an open conflict with domestic products, especially in the USA. Of course there may be another possibility of coming to a settlement out of court. 'I am

thinking of a self-limitation of the West European shippers. It would be a matter of coming to a gentleman's agreement at top management level, between the, big carriers and the big industrial firms., which would not have to have a boycott of Comecon shipping a; a consequence, but just a strong reserve regarding the tenders from the Eastern side, in-clusive of container traffic via Siberia. Thus the political difficulties which actions at government level meet would be

elegantly avoided. It would also equally be an action in the sense of that self-regulation which is in my mind as 'an ideal. The British shippers, - or to be more precise, the shipping managers of British industry - once stated that in the

selection ofa carrier, they must let themselves be guided by their firms' interests, and not by national feeling. An

understanding with those finally responsible for the firms' interests, which therefore means at top management level, can thus certainly not be avoided in any event. But it Is also necessary if governments have to be involved. The

latter place more weight on export interests than on shipping interest, and they may only act fOr these interests, in fact, with the explicit agreement of the export industry.

However, there are other hindrances. There is the consideration of International agreements, which stand in the way of drastic obstacles. 'And there are external political considerations.

The State Department of the USA, for instance, is oppased' to a law being created against the undercutting of American lines by Comecon lines, which serve the USA as cross-traders. All this must be taken into account. Politicians like to evade difficulties. Arid diplomats are for vague compromises, rather than olear but hard decisions. The men of business, on the other hand, are used to clear decisions.

However, most of them do not see that the spirit of Nachiavelli and a Talleyrand still rules in politics, and not th spirit of an Alexander the Great, who cut

through

the Gordian knot. They are also prone to overlook the fact that politics is the art of the possible, and that the desirable often comes up against too many resistances to be feasible.

Lord Inohcape, whom I have already quoted said,: "I myself regard as an essential ingredient in higher management these days a good deal of hard experience of dealing with govern-ments and inter-governmental bodies in all their manifold complexity. For it is they who nowadays lay down the rules of the game and who impose the constraints within which we all have to work and earn our living. We ignore them at our peril, or we can negotiate with them to our advantage. Similarly, it is clearly a recognised and important function 'of management at the highest level to give, and be seen to

give,' as much attentiOn to Industrial relations as to such functions as finance, marketing, ship-operation and

administration.

The carrying 'out of management tasks of every kind now requires corresponding staff work as a preliminary. In the great shipping firms today, just as in great industrial firms, there are staff departments for public relations. However, these departments should develop their information activity in two directions'; not only from inside outwards, but also from outside inwards. They should therefore at the same time be departments for 'public opinion. The description

"Department for public responsibility" would be attractive. The task of the department in question would be to instruct top management on the dominant tendencies in public opinion and in politics, so that they could find the correct

17.

arguments tO support their positions, and to fulfil the tasks of which Lord Inchcape spoke in a realistic and if you like -Machiavellian sense.

But it is not only a question of Machiavellianism. It is also a question of positive statesmanlike thinking. In the Federal Republic of Germany, a Manager

trainng

centre was created a few weeks ago. Approximately a hundred firms were

its sponsors, and contributed 20 milliOn DN towards it altogether. In seminars whiOh last ten weeks, and cost over

100 DM in subsCription, subjects are handled such as

business administration, p1arining marketing, balance sheets and taxes, but also personnel

management

and psychology; and something which is especially remarkable the subjects of "Social obligations of the enterprise" and. "Management ethics," All this assists the idea of "enlightened.free enterprise, "

as the president of the Confederation of British industry, Lord

Watkinson.,

recently called it.

The free enterprise system. is as little the gate of the new Jerusalem as any other economiC or political system. But it is a system of economic efficiency. It can also be improved. As I have tried to set out, thi following ingredients can be

added to t: planning, co-operation and seif-regalation.

Shipping - and especially cargo liner shipping - has something to contribute in this respect. It should do thi# Tend engage in

a

pioneering work for new oonoeptso