Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism

badsamaritans2Shortly after the death of Venezuelan president Hugo Chavez the western press was flooded with articles denouncing his “anti-American”, “authoritarian” policies. Fairness and Accuracy in Reporting reviewed this misinformation campaign noting “If world leaders were judged by the sheer volume of corporate media vitriol and misinformation about their policies, Chávez would be in a class of his own”. This vitriol could be attributed to one simple fact, namely Chavez’s economic policies which helped to free Venezuelans from the deadly grip of neoliberal doctrines which dominated the region for centuries. In the words of Roger Burbach, Chavez’s policies “[put] forth a vision of a world based on equitable relations among nations and peoples”, a vision that violently clashes with the prevailing orthodoxies of power. Central to this alternative model of international relations was the “economic, social, political and cultural integration of the peoples of Latin America and the Caribbean,” along with the endorsement of “fair trade” over “free trade”. Needless to say these policies sharply conflicted with western interests.

The historical developments which underlie this conflict, and others like it, can be understood in the pages of Ha-Joon Chang’s Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. In this text, Chang traces the economic evolution of today’s richest countries–who he calls Bad Samaritans–and reveals how they, after reaching a position of power, imposed “free market” dogma on poorer nations under the guise of “democracy”, “prudence”, and “responsible” governance. Among the many insightful revelations detailed in this book is how Alexander Hamilton, America’s first treasury secretary, defied the liberal economic prescriptions of Adam Smith by promoting what was called “infant industry protection”. This protectionist policy included the resort to tariffs, import bans, subsidies, “export ban on key raw materials”, “regulation of product standards”, “tariff rebates on industrial inputs”, and even industrial espionage.

Britain followed similar policies during its early industrial period. For instance, in the 19th century Britain banned “cotton textile exports from India” and “in 1699 it banned the export of woolen cloth from its colonies to other countries (the Wool Act), destroying the Irish woolen industry . . .”. Interestingly, if these policies were applied today by “third world” countries they would probably be called “confrontational states” or “communist dictatorships”. In fact, when developing countries tried to do the same thing in the 21st century through the application of tariffs the US blocked it on the pretext that such policies were against the establishment of a “level playing field”. Meanwhile, the US placed protections on products that poor countries exported, a decision which carried harsh consequences. Take for example the stunning fact that in 2002 US protective barriers on garments ensured that “Bangladesh paid almost as much in tariffs to the US government as France, despite the fact that the size of its economy was only 3% of France.”

In addition to exposing the hypocrisy of OECD countries, Chang covers the various devices they deployed to sustain this wealth disparity. One of the major devices these Bad Samaritans used were intellectual property rights. Aggressive use of intellectual property rights by the US and comparable countries are responsible for the fact that “97% of all patents and the vast majority of copyrights and trademarks are held by rich countries . . .” The human carnage these policies inspire are damnable if not criminal. This is no more apparent than in the use of IPR’s in the pharmaceutical industry where patents prevent poorer countries from acquiring the high quality drugs needed to treat terminal illnesses like HIV/AIDs and Vitamin A deficiency. Added to this devastating human toll is a bankrupt ideology that seeks to “depoliticize” all sectors of the economy which play a role in determining living standards. Central banks, under the guidance of international financial institutions, are granted independence from government influence which leaves monetary policy open to be managed by unelected officials. Various myths are then concocted to rationalize these patently anti-democratic models. If it’s not the inevitable “corruption” of government officials, it’s the “national culture” which undervalues the importance of hard work and thrift. Chang also deconstructs these orientalist tropes, debunking stereotypes about “lazy” Japanese workers and “thrifty” Koreans.

Arguably the most vital contribution of Chang’s study is his assertion that markets not only fail to enhance democracy but they, due to structural characteristics alone, undermine democracy. Markets replace the democratic concept of “one person one vote” with that of “one dollar one vote” so naturally it creates a system that overwhelmingly serves the wealthy. One graphic illustration of the violence markets exert on the poor can be observed in the current trial taking place in Guatemala. After more than three decades of struggle, survivors of the US-backed genocide in the 1980s are charging the World Bank with complicity in the killings carried out by the Guatemalan military. A key demand of the plaintiffs is that “all projects from the period from 1954 onwards – and especially between 1978 and 1997 – … be audited,” and “payments on all loans from this period should be immediately suspended.”

Titled Generating Terror: The Role of International Financial Institutions in Sustaining Guatemala’s Genocidal Regimes the report notes that the World Bank and other international financial institutions imposed “odious and illegitimate debt” on Guatemala. It also charges the World Bank and the Inter-Developmental Bank with supporting the Chioxy dam project despite clear evidence that the Lucas dictatorship was carrying out a genocide against the indigenous population or as the study states “the horrific circumstances gripping Guatemala were well understood internationally by the late 1970s, including in the region where the Chioxy dam was built …’not to have known at the time about the violence and repression at Rio Negro would have required an extraordinary and sustained dedication to ignorance on the part of World Bank officials.’” Chang notes similar instances of extraordinary ignorance in describing how bodies of international finance backed the Pinochet dictatorship, writing that some neoliberals “think that democracy may be sacrificed if it becomes necessary in the defense of a free-market, as evidenced by the strong support offered by some neoliberal economists to the Pinochet dictatorship in Chile.”

In its entirety, Chang’s research stands as a towering achievement in the study of free market fundamentalism and what is commonly called neoliberal globalization. The intellectual depth of his analysis, made more interesting by a unique sense of humor and a moral commitment to highlighting the plight of the dispossessed, makes Bad Samaritans an essential read for anyone who seeks a viable alternative to the so-called Washington consensus. In the closing passage of the book he notes that the Bad Samaritans follow policies that hurt the weak not necessarily because they may benefit materially from them but “for the simple reason that it’s easier to be a conformist”. Indeed, it is easier to conform especially when the forces of oppression are constantly erecting new barriers to obscure these largely ignored truths. Overcoming these distortions is an urgent task for the present generation if we wish to follow a course independent of the Bad Samaritans and the dangerous myths to which they succumbed.


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