ISBN 9781905211371. “Bad Samaritans – The Guilty Secrets of Rich Nations & the threat to global prosperity” by Ha-Joon Chang was published by Random House in 2007. This paperback has 276 pages with Acknowledgements, Prologue, nine chapters, Epilogue, Notes and Index. Chang is a new author to the pages of Post-Carbon Living and an unusual choice as his work doesn’t directly address climate change or peak oil. However his work is enlightening in the economic sphere as it serves as a timely defence of Keynesianism. In these neo-Liberal times, where Governments throw up their hands in horror at the idea of brokering a Green New Deal, it remains a salutary lesson to recall, as Chang demonstrates, that all our modern Western countries became industrialised because they adopted the very policies we now need to build low-carbon economies.
But as soon as they become wealthy they decried these methods in favour of a new-found religion of the “free market” which, as Chang points out, means that other economies are NOT FREE TO CHOOSE any alternative path. Ironic. The apt phrase Chang chooses is “kicking away the ladder” of economic development from the developing nations. It keeps them firmly where they already are – poor.
The trouble is that we are all now “re-developing” nations. We are in transition through a new industrial revolution towards a post-carbon economy. Now is not the time to forget the lessons of history for reasons of pure dogma. This could place this book somewhere between Chomsky and Korten but this is not anti-capitalist rant. It is more an appeal to reason. The author surveys the evidence in the history books to compare the reality of how economic development happens versus the rhetoric of the World Trade Organisation and the “Washington Consensus” supplied by the World Bank and International Monetary Fund. Some of this history is quite personal as Chang often refers to his home country Korea as an example of a successful and wealthy modern developed nation who got there precisely because it did the opposite of everything this “consensus” would have developing countries do. Other examples come to light – such as Finland and Japan. Chang points out that if these countries had not adopted the protectionist policies they did in the post-war era then there would be no Lexus, no Toyota and definitely no Nokia. All these companies started out in raw material commodities such as forestry and invested heavily over many tens of years to develop modern manufacturing know-how.
The knee-jerk reaction of most on the right-wing of politics will be to declare such revision of history as nothing short of a full-on march back to some form of communism. But reflect again upon Korea. It is already split into a Communist North and Capitalist South. Then think of China! Then think of Germany and Great Britain. Or even the USA. Chang shines a light into periods of history now so swiftly forgotten in the carefully-re-edited history of modern free-mark capitalism. Today’s modern beacons of capitalism were themselves using tariff barriers and protectionism to protect their own “infant industries”.
As the book closes Chang asks “Can things get better?”. He concludes that they can if we fall out of love with financial services and re-adopt a strategy for manufacturing industry. Here again he comes up with some most surprising statistics about places such as Singapore, which we think of as being wealthy due to service industries – apparently not true – they have a much greater per capita manufacturing base than western nations. We could learn so much. Chang has written a masterpiece that turns modern economic thinking on its head. He concludes that “Free trade” reduces freedom of choice in poor countries. Keeping foreign companies out may be good for poor countries in the long term. Investing in a company that makes a loss for 17 years may be an excellent proposition (he cites Nokia). Some of the world’s best firms are run by the state. Borrowing ideas from foreigners is essential for economic development. Low inflation and government prudence may be harmful for economic development. Corruption exists because there is too much, not too little, market. Free markets and democracy are not natural partners. Countries are poor not because their people are lazy; their people are “lazy” because they are poor. In short: everything you have learnt about globalisation is a myth. The so called “level playing field” is rigged in the favour of rich nations. The playing field may be level but the players do not have equal ability. This is not fair. Rich countries are so keen to impose such regimes only because they benefit. Chang asks “why not just leave countries to choose whatever approach they want and then let foreign investors punish or reward them?”
Chang even rounds on the banks writing “It is a myth that central bankers are non-partisan technocrats. It is well known that they tend to listen very closely to the view of the financial sector and implement the policies that help it, if necessary at the cost of manufacturing industry”. On page 198 Chang adds this insight “we do not need a cultural revolution before economic development can happen. A lot of behavioural traits that are meant to be good for economic development will follow from, rather than be prerequisites for, economic development.” The lesson is clear: Government does have a role in developing the post-carbon economy. The revolution in people’s thinking can be top-down as well as bottom-up. On page 201: “in order to promote behavioural traits that are helpful for economic development, we need a combination of ideological exhortation, policy measures to promote economic development and the institutional changes that foster the desired cultural changes.” Then, finally this on page 219 “Rich countries can further help by transferring their technologies on favourable terms; this will have the added benefit of making economic growth more compatible with the need to fight global warming”. To that we might add “and help them with energy security”. This book certainly covers all the bases. An eye- opener. Recommended.