Grant debunks free trade
For the last 25 years or so, the
West has forced the developing world to accept neo-liberal economic “reforms” –
the unrestricted movement of goods and capital, balanced budgets,
privatisation, deregulation and lower taxes – as a condition for economic
assistance. But consider the following:
“You are visiting a
developing country as a policy analyst. It has the highest average tariff rate
in the world. Most of the population cannot vote, and vote buying and electoral
fraud are widespread.
“The country has never
recruited a single civil servant through an open process. Its public finances
are precarious, with loan defaults that worry investors. It has no competition
law, has abolished its shambolic bankruptcy law, and
does not acknowledge foreigners' copyrights. In short, it is doing everything
against the advice of the IMF, the World Bank, the WTO and the international
“Sounds like a recipe for
development disaster? But no. The country is the US - only that the time is
around 1880, when its income level was similar to that of Morocco and Indonesia today. Despite wrong
policies and sub-standard institutions, it was then one of the fastest-growing
- and rapidly becoming one of the richest - countries in the world.” (History debunks
the free trade myth, Ha-Joon Chang, Guardian,
24 June 2002)
At this time, Britain was preaching free trade
to the world, having become rich on the basis of protectionism, not to mention
the slave trade and plunder. The
following was the response of US President, Ulysses S
Grant, to this preaching:
“For centuries England has relied on
protection, has carried it to extremes and has obtained satisfactory results
from it. There is no doubt that it is to this system that it owes its present
strength. After two centuries, England has found it convenient
to adopt free trade because it thinks that protection can no longer offer it
anything. Very well then, gentlemen, my knowledge of our country leads me to
believe that within 200 years, when America has gotten out of
protection all that it can offer, it too will adopt free trade.” (quoted in Capitalism and Underdevelopment in Latin America by AG Frank, Monthly Review
Press, New York, 1967).
Once the US had become the most
powerful economic power in the world after World War II, it also began to
preach free trade to the world. Today,
it is an official dogma of the American state.
Just look in The National Security Strategy of
the United States published by the White House in September 2002.
The US President is obliged to
submit a National Security Strategy to Congress periodically. The Bush edition received an unusual amount
of attention because of its unprecedented assertion of the US right to strike its
enemies pre-emptively, as well as its vow to maintain American military
supremacy over all rivals indefinitely.
But, it also asserts over and over again the virtues of free trade.
Contrary to the US’s own historical
experience, the President declared in its foreword:
“Free trade and free
markets have proven their ability to lift whole societies out of poverty – so
the United States will work with individual
nations, entire regions, and the entire global trading community to build a
world that trades in freedom and therefore grows in prosperity.”
One of the eight elements of the
Strategy is to “Ignite a New Era of Global Economic Growth through Free Markets
and Free Trade” (Chapter VI). There free
trade is declared to be a universal moral principle, which been known to man
(but not to Ulysses S Grant) from the dawn of time:
“The concept of ‘free
trade’ arose as a moral principle even before it became a pillar of economics.
If you can make something that others value, you should be able to sell it to
them. If others make something that you value, you should be able to buy it.
This is real freedom, the freedom for a person—or a nation—to make a living. (p18)
In September 2002, when this was
published, immorality was rife in the US: a few months earlier,
the President had imposed tariffs on imported steel, in order to protect steel
production, and steel jobs, in Mid-Western states. Watch out for further bouts of American
immorality in the near future, as more and more Chinese manufactured goods flow
into the US market and Chinese
companies attempt to buy up US companies.
Last year, when a state-owned Chinese oil company made an offer for the
major US oil company, UNOCAL,
which has access to oil in the Caspian basin, it was made clear it wasn’t going
to happen. Boeing isn’t to become
Chinese any time soon.
One doesn’t have to be a genius to
realise that the US conversion from the
principle of tariff protection to the principle, if not the practice, of free
trade has got more than a little to do with its own economic interest, just as
it was in the case of Britain a century earlier.
Chang has written a very informative book on the environment in which Western
countries developed, an environment that is very different to that which the
West seeks to impose on developing countries today. It is entitled Kicking Away the Ladder - Development Strategy in Historical Perspective and
was published in 2002 by Anthem Press, London.]
& Trade Union Review
7 January 2006