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Bad Samaritans: A Review
by Jim Miles
 Every now and then a ‘prize’ of a book comes along that includes all the elements of good writing. Bad Samaritans is one of them.
Using straightforward language that generally avoids using the lexicon of economists, and explains it well when it is used, Ha-Joon Chang writes a strong narrative about the ills of the capitalist world.
It is a combination of anecdotal history and comparative history that uses many good statistical elements to support his common sense arguments.
Bad Samaritans:
The Myth of Free Trade and the
Secret History of Capitalism
by Ha-Joon Chang
Bloomsbury Press, New York, 2008
Most chapters begin with an interesting anecdotal tale that
illustrates the theme of that chapter, and all chapters end with an
effective summary of his arguments. His title is most appropriate as
he readily supports his position that free trade is a myth, and a
realistic presentation of the history of capitalism demonstrates the
reality behind the myth.
The main underlying position that
demolishes the myth of capitalist free trade and its supposed successes
with globalization is that all the current wealthy countries achieved
their wealth not through free trade, but through the use of highly
protective tariffs and effective use of subsidies and laws that
regulated foreign business within their own country. He starts with
his own country, Korea.
According to the neo-liberal economists
– the supporters and apologists for free trade capitalism – Korea
succeeded because “it followed the dictates of the free market.” The
combination of this belief with Korea’s export success created a
“popular impression” of this ‘truth’.
As clearly explained by Chang;
- “The Korean miracle was the result of a clever and pragmatic mixture of
market incentives and state direction.”
Extending the same argument
further he states what is his main theme on the history of capitalism
as being;
- “so totally rewritten that many people in the rich world do
not perceive the historical double standards involved in recommending
free trade and free market to developing countries.”
Chang
then starts his journey around the globe. Along the way, he exposes
this double standard, as well as debunking myths about democracy as an
accompaniment to free trade and economic development, and also
eliminates culture as a reason for success or lack thereof, and
corruption as an excuse for failure.
Using per capita income as his
measure, rather then the neoliberals’ cherished GDP figures, he
journeys through Hong Kong, Africa (with its “damning indictment of the
neoliberal orthodoxy”), on to Taiwan, Singapore, China, India and Chile
to sum up that;
- “the truth of post-1945 globalization is almost the
polar opposite of official history…peddled in order to mask the failure
of neo-liberal policies.”
Using Britain, and an anecdotal tale
of Daniel Defoe (author of Robinson Crusoe), to answer the question
“How did rich countries become rich?” Chang concludes “Britain adopted
free trade only when it had acquired a technological lead over its
competitors ‘behind high and long lasting tariff barriers.’”
The next
step is to the United States and an examination of the policies of
Alexander Hamilton, Lincoln, and Henry Clay where;
- “Despite being the
most protectionist country in the world throughout the 19th century and
right up to the 1920s, the US was also the fastest growing economy.”
Both Britain and the U.S. had the highest tariff protection of all
countries ever (except for Spain in the 1930s).
From these
leading examples and conclusions it is easy to further the argument
that free trade is not working because it forces developing countries
to eliminate the very same protective barriers that the rich countries
used to gain their wealth.
Mexico is the main example at this point,
before Chang turns to more ‘pure’ arguments on free trade theory and
carefully deconstructs them. Rather than free trade, the argument
turns to support the idea of using protective tariffs and subsidies in
areas where undeveloped countries need them, in order to grow their
economies as the rich countries initially did.
At this point
the reader also needs to consider the tendencies of “full spectrum
dominance” both militarily and economically as an imperial tendency of
the United States. There is no real desire on the part of the American
neo-liberals (nor their counterparts elsewhere) to actually aid the
world.
In geographical terms it becomes a heartland – hinterland
relationship with the poorer countries remaining poor and supplying raw
materials to the gathering wealth of the heartland. There is no
genuineness for the current western governments to help developing
countries become economically stronger and more competitive.
The
arguments against free trade then become more specific concerning
different aspects of the arguments. First, the regulation of foreign
investment is considered, with the prime example being Nokia in
Finland.
The free trader arguments are reversed and applied
common-sensically – if the rich countries believe in free trade so
much, why not let the developing countries decide if they want to
restrict foreign investment or not rather than impose non-restrictive
regulations through trade agreements?
Ending back on Nokia, which was
protected for 17 years and is now a world leader in communications,
Chang concludes that restricting regulations of foreign investment “is
likely to hinder, rather than help, their economic development.”
Looking
more specifically at private versus public enterprise, and again
journeying around the world via Singapore, Korea, Taiwan, China,
Europe, South America, a strong case is made for public enterprise and
highlights some of the “pitfalls of privatization.”
In sum;
-
“State-owned enterprises are often more practical solutions than a
system of subsidies and regulations for private-sector
providers…[and]…may be superior to private sector firms.”
The
next focus is on intellectual ‘rights’, the idea of borrowing ideas.
Once again, historical examples show that the rich countries previously
copied much information and technological information while denying
protection to foreign ideas in order to create their own wealth.
Simply put, if the neoliberals truly believed in promoting development
they would make it easier to acquire the information needed to do so
rather than prevent its acquisition.
Democracy’s relationship
with economic prosperity takes a strong hit, with a discussion of
corruption and its various forms (bribery, employment, voting). Chang,
using examples from America to Zaire, effectively argues against the
neoliberal excuse that poor countries are poor because of corruption,
citing several examples to show the converse, that “economic
development does not automatically reduce corruption”.
He extends the
argument into democracy, saying that the “market runs on the principle
of one dollar, one vote,” rather than the democratic one man, one
vote. He concludes that democracy and markets, rather than being
inseparable as argued by the neoliberals, actually “clash at a
fundamental level.” As he has already demonstrated by this time that
free markets “are not good at promoting economic development” by
extension there is no “virtuous circle linking democracy, the free
market and economic development.”
In fact, “The Bad
Samaritans have recommended policies that actively seek to undermine
democracy in developing countries,” with a corollary that “it is
unlikely democracy will promote economic development through promoting
the free market.” In other words, given a democratic choice, the
people of the world would choose something other than the ‘free market’
as envisioned and dictated by the wealthy neoliberal supporters of the
world.
Chang provides two strong examples of re-directing government
spending away from military spending to education, health, or
infrastructure development, or promoting economic growth through
creating a welfare state (which supports working mothers, children,
education, hospitals, retirement and all those other nasty socialist
ideas that the people of the world want but the neoliberals say hinder
development). It all depends on your definition of development – more
GDP for the transnational corporations, or more security and safety for
the general populace.
Chang’s final conclusion is that if the
neoliberals truly believed in creating economic wealth and development
within the developing world, it would be in their best interest to
“accept those ‘heretical’ policies.” While Chang holds out hope for
changing the minds of neoliberals, I cannot be as optimistic, as the
cumulative entrenched interests would require a strong midcourse
correction from some major event – a catastrophic war, a major
financial downturn….hmmm.
I would hope that peaceful persuasion
as per Chang would succeed, but the state of the world today does not
hold hope for optimism on this front. The rhetoric of free trade
continues, while the wars to back it up and the unequal and oppressive
regulations to control it continue to defy its very basic premise of
freedom and democracy.
A wonderfully accessible work, Bad
Samaritans should be read by anyone and everyone paying any attention
to either national or global political affairs. Those wishing to
refute free trade have a readily accessible volume. Those supporting
“The Myth of Free Trade” had better take a second look at how their own
wealth developed…if they did not already know the “Secret History of
Capitalism.” An excellent work, it should become a cornerstone of the
discussion moving forward to a more democratic and equal world.
Jim
Miles is a Canadian educator and a regular contributor/columnist of
opinion pieces and book reviews for The Palestine Chronicle. Miles’
work is also presented globally through other alternative websites and
news publications.
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