Bad Samarians

Ha-Joon Chang is a Cambridge heterodox economist, who specializes in development economics and the abject poverty of the Third World countries. Trained at the University of Cambridge, he has served as a consultant to the World Bank, the European Investment Bank, and various United Nations agencies. Since 1992 he has also served on the editorial board of the Cambridge Journal of Economics, he is the author and contributor of many researches in economics.

The objective of this essay – to review his views described in his controversial new book “Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism,” and to compare it with the more traditional views where it possible. Bad Samaritans Mostly in his book Ha-Joon Chang appeals to his opponents, orthodox economists, and generalists in particular. Ha-Joon Chang has wide personal experience because he was born in the country that was one of the poorest on Earth that time. The new book starts with the description of economic downturn in Korea after the Korean War.

It is hard to believe, but the famous Samsung Company that time was subsidized by sugar refining and textile enterprises. Another big company, Pohang Iron and Steel Co. , or POSCO, which now is the third largest steel company in the world, was state-owned and couldn’t get the support from the World Bank. Analyzing the development of other economics in the 1960s, the author notices that Japanese government refused to follow the politics of free trade that time and this decision had a positive impact on Japanese car manufacturing industry.

In other case modern famous Japanese companies could be the filials of Western companies, and nothing more. This thonking leads the reader to the concept of what Ha-Joon Chang calls the “Bad Samaritans. ” As the author described, “people in the rich countries who preach free markets and free trade to the poor countries in order to capture larger shares of the latter’s markets and preempt the emergence of possible competitors. They are saying ‘do as we say, not as we did’ and act as Bad Samaritans, taking advantage of others who are in trouble.

” Chang divides “Bad Samaritans” into two groups: first are the leaders working in the “unholy trinity” of global financial organizations: World Bank, World Trade Organization and International Monetary Fund, and second are the ideologues – “those who believe in Bad Samaritan policies because they think those policies are ‘right,’ not because they personally benefit from them much, if at all. ” The common feature of both groups is the adherence to a doctrine called “neoliberalism”, which is dominating in the global economy from 1970s till nowadays.

The worst in this doctrine, according the opinion of the author, is the fact that those countries that propagate this doctrine all over the world reject its implementation in their own economical systems. The key characteristics of neoliberalistic economics were called “Golden Straitjacket,” which is the only root to economic success according its advocates, like “unholy trinity”. They actively implement this economic policy in poor and developing countries.

As it known from the Nobel-awarded researchers of orthodox economists, the Golden Straitjacket policy struggle for trade liberalization, reducing corruption and state bureaucracy, privatization of state-owned enterprises and pensions, balancing the national budget, intellectual rights protection and other trends and policies which are intended to guarantee the stable economic growth. In real life the implementation of these policies in developing countries leads to creation of economical dependence from global financial organizations.

At the same time the most developed countries don’t implement the Golden Straitjacket policy. Ha-Joon Chang writes: “Practically all of today’s developed countries, including Britain and the US, the supposed homes of the free market and free trade, have become rich on the basis of policy recipes that go against neo-liberal economics. ” Rich countries protect their manufacturer from the foreign investments and use subsidies and protections to protect their industries. The WTO sanctions are considered by rich countries as the lesser evil.

Chang enumerates prominent men from different countries whose economic solutions became the basis of their countries flourishing. All of them struggled for the development of the national production and used protectionists’ politics. Chang notices out that nowadays the most developed countries do the same, especially the USA. He claims the Third World War has already begun and the USA tries to maintain its position as global hegemon. There are already conquered sides in this war, and one of them is the African countries. As the result of neoliberalism policy,

The living standards in Africa are falling within the recent thirty years, because IMF and World Bank run most of African economies virtually. All the features of neoliberalizm described above were implemented in African countries. As the result the struggle with corruption ruined the system of communities existed before, the struggle with bureaucracy left courtiers without the perfect executive power branch, the intellectual property protection prevented the development of sciences, and pension privatization left the elder people to the poverty.

Chang criticizes the struggle with the corruption because, according his words, “Most of today’s rich countries successfully industrialized despite the fact that their own public life was spectacularly corrupt. ” Another object of sharp critics of the author is the concept of cultural influence on the economical performance of the country. The popular idea tells that the culture if the country defined the business methods of its people and thus their economic success. First this idea is an intolerant and chauvinists’ one, second, cultural differenced fail be the main explanation for economic success.

He claims that the culture of the country is the result of economical development and not the cause. Using the chapters describing the mechanisms of economical development in different countries Chang proves that cultural explanation is just the screen to mask the real reason: the richest countries are afraid of competitors from below and do their best to annihilate the possible competition in the moment of origin. Generally, Chang writes, the policy of protectionism is absolutely normal, because it exists for ages. The problem is in hypocrisy surrounding “free trade”.

According to Chang, “Belief in the virtue of free trade is so central to the neo-liberal orthodoxy that it is effectively what defines a neo-liberal economist. You may question (if not totally reject) any other element of the neo-liberal agenda—open capital markets, strong patents, or even privatization—and still stay in the neo-liberal church. However, once you object to free trade, you are effectively inviting ex-communication. ” Analyzing the existing situation on the global market, Chang concludes that the golden straitjacket fits the healthy countries only.

This policy allows production distribution between countries, and poor countries are forces to specialize in the sector s that “offer low productivity growth and thus low growth in living standards. This is why so few countries have succeeded with free trade, while most successful countries have used infant industry protection to one degree or another. ” Thus, the free trade, according the Chang, is a fiction and the tool for rich countries and “unholy trinity” for redistribution of wealth. Conclusion

The views of Ha-Joon Chang to the development of global economy nowadays are contradictory and don’t correspond to the mainstream in the economical science. However there are many writers and scientists with the same mind who share Chang’s ideas that the ideology of free trade and its implementation are two different things, and the first of them can be used as the powerful tool of economical influence. Reference Ha-Joon Chang. 2007. Bad Samaritans:The Myth of Free Trade and the Secret History of Capitalism. Bloomsbury Press