Democracy an 'imperative' of industrial world, aid expert says

Communists theorize that history is on their side, that the world will move inevitably toward its kind of socialism. John K. Wilhelm, executive director of the Commission on Security and Economic Assistance, whose report on a review of US aid will be printed next week, says that's nonsense. He speaks of the ''industrial imperative'' moving the world toward democracy.

Here is his argument: At a low economic level, a central government can make most major decisions as to the location and construction of roads, ports, airports, and major industrial plants, say a steel mill. But once per capita annual income reaches $800 to $900, the economy becomes too complicated for efficient centralized decisionmaking.

It is, he says, the nature of the productive process in modern society to require millions of decisions. In producing needed goods and services, managers must take major and minor actions constantly. So the central government must delegate authority to the heads of these business institutions if they are to act efficiently.

It doesn't matter how many computers or modern techniques it has, a centralized government cannot make all these decisions, Mr. Wilhelm continued. So power must be decentralized.

He says the ''jury is in'' on whether state control of the economy works or not. ''It can limp along. But it doesn't work well.''

Once economic power is decentralized, those with that power will use it more broadly. ''You cannot give economic power without giving political power,'' he said.

''A democratic process, if you want a modern functional society, is not optional - it is functional. It is the industrial imperative. You cannot escape it.'' So developing countries, if they wish to continue developing, must at some point introduce more open economies, greater economic incentives, and some degree of democracy. The same logic applies to communist nations.

Mr. Wilhelm, a veteran State Department official with ''on-the-ground experience'' in some 75 countries, notes that in such nations as the Philippines and Thailand it is the business community that is pressing the governments for political and economic reform. In the Philippines, most anti-Marcos demonstrations are taking place in the business district. Businessmen do not want a return to the Wild West atmosphere that prevailed before the declaration of martial law by President Marcos a decade ago. But they do want political freedom.

That, says Wilhelm, should not be surprising in view of the history of the development of democracy in Western Europe, where it was the bourgeoisie that pressed the monarchies for a share of power. The wealthy in a developing nation may plan on fleeing should the political situation deteriorate. But small and middle-size businessmen can't afford flight, and they press for change in the social and political structure. ''They demand sound government,'' he maintained.

As executive director of the 42-member bipartisan Commission on Security and Economic Assistance, Wilhelm has just completed an intensive review of United States military and economic foreign aid. The commission, chaired by Frank C. Carlucci, president of Sears World Trade and former deputy secretary of defense, was appointed by Secretary of State George P. Shultz last February, largely because of the increasing difficulty in achieving a consensus on foreign aid and getting aid bills through Congress.

Secretary Shultz has already reviewed the commission's recommendations with President Reagan, and it is hoped the entire commission will meet with the President Jan. 23 or 24 or after the first week in February, when the President's budget and economic reports are out of the way.

At that time, it is hoped that the congressional leadership and the President will issue a joint statement ''endorsing the conclusion that foreign security and economic cooperation programs are mutually supportive and interrelated, and together constitute an essential and integral part of the foreign policy of the United States.''

It is also hoped that the President will name an advisory committee to start work on ''a citizens' network'' to inform the public on its interest in programs of foreign assistance.

A third hope is that the President and Congress will agree to call a White House conference early next year on the subject of US security and economic assistance.

All three of these actions were proposed by the commission, along with more substantive recommendations. These include raising the level of foreign assistance and coordinating that assistance better by placing various programs in a single organization under a single administrator.

Mr. Wilhelm, in a telephone interview, argued that the public concept of US foreign aid is outdated. Today, he said, the US is only one of many aid donors and no longer the dominant donor. In Africa there are some 50 donor countries or institutions, and the US provides only 7 percent of the money.

''We are not the critical player anymore,'' he said. ''If we were to withdraw our resources, the political damage (to the US) could be worse than the economic damage (to the developing nation).''

As a result, he says, foreign aid can encourage but not compel necessary changes for economic development in a nation. The US can ''link up'' with the forces of reform in a nation. ''Throughout the entire developing world, the name of the game is change,'' he said. ''It is not the preservation of the status quo.''

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