Summary
"Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism" by Ha-Joon Chang challenges the conventional wisdom of neo-liberal economics, particularly the notion that free trade and deregulation are the universally beneficial paths to economic development for all countries. Chang, a heterodox economist, argues that today's wealthy nations, including Britain and the United States, did not achieve prosperity through the free-market policies they now advocate for developing countries. Instead, they employed protectionist measures, subsidies, and strategic state intervention to nurture their nascent industries until they could compete globally.
The book delves into historical evidence, revealing that policies such as tariffs and export subsidies, now frowned upon by international institutions like the IMF, World Bank, and WTO, were instrumental in the economic ascent of countries like the US, Germany and Japan. Chang exposes the double standards in the economic advice given to developing nations, contrasting it with the actual practices of developed countries during their periods of growth. He contends that the insistence on free-market policies for developing countries serves to "kick away the ladder" that allowed richer nations to climb to the top, hindering the ability of poorer nations to develop competitive industries and escape poverty.
Chang critiques the neo-liberal narrative of globalization, arguing that it distorts the history of capitalism to fit a self-serving agenda. He points out that the economic performance of developing countries was often better during periods of state intervention and protectionism than under the free-market policies pushed by international financial institutions. The book challenges the notion that free trade and deregulation are the only paths to success, presenting evidence that strategic, selective integration into the global economy, combined with domestic policy autonomy, has been a more effective approach for developing countries.
Furthermore, "Bad Samaritans" addresses the role and governance of international economic organizations, highlighting how the IMF, World Bank, and WTO are disproportionately influenced by wealthy nations, leading to policies that may not serve the best interests of developing countries. The book also examines issues such as foreign investment regulation, intellectual property rights, and macroeconomic policies, providing a historical and theoretical basis for questioning the current orthodoxy. Chang advocates for a more nuanced and context-specific approach to development, one that recognizes the importance of policy space for developing countries to pursue their own strategies for economic growth and social progress.
Ultimately, Chang argues that the "bad samaritan" policies being imposed on developing countries are not only ineffective but also harmful, and he calls for a more equitable and historically informed approach to global economic governance.