Ha-Joon Chang‘s Bad Samaritans – The Guilty Secrets of Rich Nations & The Threat To Global Prosperity is not an anti-trade, anti-globalization or even anti-capitalist book. It is more a primer on global economic and global governance processes from the perspective of the Global South as well as an anti-hypocrisy manifesto.
Chang’s book then explores the workings of multilateral institutions (WTO, WB and IMF) and exposes the double standards they impose on countries of the Global South through regulations and conditions that countries of the Global North never followed themselves on their path to economic development. Quite the opposite, actually. And yet, the proponents of neo-liberalization (often operating from the multilateral institutions) behave as if the story of development was one of uninterrupted liberalization and pure free market rule.
Indeed, as Chang demonstrates, this is not the case. Chang illustrates this, for instance, with the fact that it was the first Secretary of the US Treasury, Alexander Hamilton, who came up with the concept of ‘infant industry’. The concept covers the idea that emerging industries should be protected through a variety if regulations until they are strong enough to face competition on the then-international (now global) market. Chang further shows that Western countries indeed exercised enormous protectionism to shield their industries throughout their development. Only once they felt these industries could become internationally dominant did they open their market to international competition.
And yet, the multilateral institutions demand that countries of the Global South open their market, often unconditionally, to global competition and foreign investments without giving these countries the time not just to develop their own infant industries, but even without the solidification of social institutions necessary for a functioning market. The results have been expectedly disastrous, as these institutions themselves have begun to acknowledge.
And let’s not forget the massive agricultural subsidies and intellectual property regulations that countries of the Global North are able to marshal through multilateral institutions while countries of the Global South are prevented from enacting similar measures and sanctioned for doing so.
These few remarks suffice to show that Change is not anti-capitalist or anti-global trade. As mentioned before, he is anti-hypocrisy and double standards. His perspective is more akin to what Manuel Castells calls the “developmental state” (as opposed to “statist” which applies to the former USSR, for instance). Being Korean, it is not a surprise for Chang to adopt such a perspective. Castells indeed demonstrates that the success of the Asian Tigers (Taiwan, South Korea, Singapore, for instance) was based not on openness to the global market but on the support of the developmental state.
All of these countries have had majorly interventionist governments throughout their developmental years. During these years, the developmental states nurtured infant industries, allowing them to not be profitable while growing (Toyota, for instance, was a quasi-bankrupt company for a long time… so was Nokia, for about 17 years). The developmental states limited foreign investment and directed it into specific industries, imposed strong barriers. These countries slowly and progressively opened to the global market when they were ready. For instance, Korea progressively privatized industries once those proved competitive under government ownership. Indeed, the developmental state has been historically the most successful model for economic development.
Based on a developmental conception of the state, Chang then proceeds to debunk, with data, the major tenets of the neo-liberal dogma (as it is promoted with the zeal of religious dogma by the “bad samaritans”). For instance, the idea that government is always less efficient than the market (the current debate about health care in the US provides a nice example of the opposite). Chang also challenges the pillars of modernization theory, especially on the cultural deterministic conception of economic development.
Most of all, Chang’s book is a fairly thorough, data-based, balanced and very readable primer on the global economy, economic history, and global governance. It provides multiple examples from all over the world to expose the basic unfairness of the current regulatory regime (to use Alain Lipietz’s concept).
And, of course, how can one not enjoy a major take-down of Thomas Friedman (although it is like shooting fish in a barrel at this point)?
Many points that Chang makes will be familiar with readers of Manuel Castells (as mentioned above), Joseph Stiglitz or Amartya Sen. Readers will find the same concern for social justice based on rigorous economic analysis. At the same time, Chang also involves social and political factors as they, of course, influence economic decision making and as part of the global governance regime.
For instance, politics and governmentality is important when discussing corruption, often used as a convenient excuse to maintain unfair terms of trade and insufficient levels of aid. Here, to use again one of Manuel Castells’s concept, Chang explores the important of the “Predatory State” as a major explanation for African issues. There is no doubt that African nations have had their share of corrupt dictators that used the means of the state to engage in systematic looting (along with major violations of human rights) of their countries. But here again comes the hypocrisy of Western nations: many of these dictators were installed and supported, often by their former colonizers as part of the neo0colonialist regime. And quite often then, Western nations, now so concerned about corruption, turned a blind eye when a favored dictator engaged in questionable practices.
At the same time, in many developing countries, corruption is what makes things work (something I already discussed here) in the absence of fully developed social institutions regulating social life. And as Chang demonstrates, corruption, in that context, can sometimes even have positive effects on economy and development. So, here again, a balanced view is de rigueur.
This case illustrates as well another failing of the current global governance regime: its imposition of one-size-fit-all programs on developing countries (for instance, through structural adjustment programs) even though the situations in which developing countries find themselves vary wildly.
As I said, one of the strong points of this book is how highly readable it is considering the topic and considering how chock full of data and case studies it is. It addresses all the major issues of the current global system and it is especially relevant in the current context.