From: rhinoceros (rhinoceros@freemail.gr)
Date: Mon Mar 22 2004 - 06:08:45 MST
This is somehow related to last week's chat on poverty, global unequality and "The Economist". You will have to watch an ad to access the full article.
http://www.salon.com/opinion/feature/2004/03/22/economist/
Debunking the Economist -- again
By James K. Galbraith
<snip>
And so we find, in wide circulation, the curious (even weird) claim that worldwide economic inequality has been falling thanks to a "new golden age of global capitalism."
Last August, the Economist put about this claim. I debunked it before the audience of the British Web site OpenDemocracy.net. Clive Crook of the Economist then responded to me, and I rebutted him. All of this is on record, here (http://www.opendemocracy.net/debates/article-7-30-1483.jsp), here (http://www.opendemocracy.net/debates/article-7-30-1485.jsp) and here (http://www.opendemocracy.net/debates/article-7-30-1495.jsp). But some people don't learn, and here we are again.
<snip>
In the new version of its article, the Economist does say of China and India that "Neither country is an exemplar of free market capitalism -- far from it." Funny, I used almost exactly the same words in my first critique of their earlier article, saying: "Anyway, neither China nor India is an exemplar of free-market globalisation." This little bit of crypto-plagiarism tells you all you need to know about the standards the Economist applies, where this issue is concerned.
Both China and India steered free of Western banks in the 1970s, and spared themselves the debt crisis. Both continue to maintain capital controls to this day, so that hot money cannot flow freely in and out. Both continue to have large state sectors in heavy industry to this day. And China, for that matter, continues to be run by the Communist Party, which is not the institution most noted in history for devotion to the free market. (More analysis on China can be found here -- http://utip.gov.utexas.edu/web/workingpaper/utip16.pdf.)
(Confession: In the mid-1990s I served as chief technical advisor to a Chinese State Planning Commission project on macroeconomic reform, a job that centered on advising them as to which Western economists to talk to, and which ones to avoid. I loved the second part of that job.)
<snip>
So once again, we have to ask: Is this the golden age of global capitalism, really? Or is it something closer to a golden age of reformed socialism in two places (China and India) -- alongside an age of disasters for those who followed the prescriptions favored by the Economist? In truth, countries that followed the IMF-World Bank prescriptions to the letter -- Argentina, say, or Russia in the early 1990s -- have seen catastrophe worse in every way than the Great Depression of the 1930s was for us. Is it any wonder that the electorates in both places firmly reject the neo-liberal model?
<snip>
Confronting the problems of the stricken Third World will require a balanced approach. What the poorest countries need perhaps most of all is sustainable finance, permitting them to build their infrastructure, their human resources, their public health systems and their industries -- both for domestic consumption and foreign trade. This is an old formula. But it is one with a track record: It worked in Europe after World War II, and then in Japan, Korea and in China, each of which saw decade after decade of sustained growth and industrial transformation.
Here's the rub: Pursuing these goals will require placing the world's private financiers under a degree of regulation and control -- such as we used to have in the real golden age of development, from 1945 to 1970. That, of course, is not on the Economist's agenda. But it should be on ours.
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