Rich countries have ‘kicked away the ladder’ by forcing free-market, free-trade policies on poor countries. Already established countries do not want more competitors emerging through the nationalistic policies they themselves successfully used in the past.
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Ch. 2, Learning the right lessons from history, pp. 45-46Ha-Joon Chang
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Britain and the US are not the homes of free trade; in fact, for a long time they were the most protectionist countries in the world. Not all countries have succeeded through protection and subsidies, but few have done so without them. For developing countries, free trade has a rarely been a matter of choice; it was often an imposition from outside, sometimes even through military power. Most of them did very poorly under free trade; they did much better when they used protection and subsidies. The best-performing economies have been those that opened up their economies selectively and gradually. Neo-liberal free-trade free-market policy claims to sacrifice equity for growth, but in fact it achieves neither; growth has slowed down in the past two and a half decades when markets were freed and borders opened.
Ha-Joon Chang
If a Martian were asked to pick the most efficient and humane economic systems on earth, it would certainly not choose the countries which rely most on markets. The United States is a stagnant economy in which real wages have been constant for more than a decade and the real income of the bottom 40 percent of the population declined. It is an inhumane society in which 11.5 percent of the population, some 32 million people, including 20 percent of all children, live in absolute poverty. It is the oldest democracy on earth but also one with the lowest voting rates among democracies and the highest per capita prison population in the world. The fastest developing countries in the world today are among those where the state pursues active industrial and trade policies; the few countries in the world in which almost no one is poor today are those in which the state has been engaged in massive social welfare and labor market policies.
Adam Przeworski
The history of capitalism has been so totally re-written 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.
Ha-Joon Chang
Markets have a strong tendency to reinforce the status quo. The free market dictates that countries stick to what they are already good at. Stated bluntly, this means that poor countries are supposed to continue with their current engagement in low-productivity activities. But their engagement in those activities is exactly what makes them poor. If they want to leave poverty behind, they have to defy the market and do the more difficult things that bring them higher incomes—there are no two ways about it.
Ha-Joon Chang
I’m very much a free market capitalist, actually. I don’t agree with a kind of totalitarian, one government or sort of universal law. I think what will happen and what is happening now is, in the same way as… In the way that countries make themselves attractive to investors through different pieces of legislation they offer, whether it’s secrecy in the case of the Cayman Islands or Switzerland, I think the fact that some countries now are offering very robust publishing laws, it will be that as information is global, what you might see is that these big internet companies like Google or Facebook, that have their servers, will start to relocate those servers to countries where they have less interference. In a way, you’re creating a kind of free market of freedom of information law.
Heather Brooke
Ha-Joon Chang
Haavisto, Pekka
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