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The authors of this book challenge prevailing ideas about free markets and globalization. They question whether globalization is a technological reality that cannot be stopped and ask if the US economy really outperformed its competitors in the 1990s. They show how in each key area—trade and industrial policy, privatization, intellectual property rights, investment and financial policies, exchange rate and currency policy, labour and social welfare —there are alternatives to neoliberal policies that the ...
The authors of this book challenge prevailing ideas about free markets and globalization. They question whether globalization is a technological reality that cannot be stopped and ask if the US economy really outperformed its competitors in the 1990s. They show how in each key area—trade and industrial policy, privatization, intellectual property rights, investment and financial policies, exchange rate and currency policy, labour and social welfare —there are alternatives to neoliberal policies that the historical experience of particular countries prove really works.
Part I. Introduction
• Part II. Myths and Realities About Development
• Myth I: History Shows that Free Markets Are Best.
• Myth II: Neo-Liberalism Works.o Myth III: Globalisation Cannot and Should Not Be Stopped.
• Myth IV: The (Neo-Liberal) American Model of Capitalism Represents the Ideal that All Developing Countries Should Seek to Replicate.
• Myth V: The East Asian Model is Idiosyncratic; The Anglo-American Model is Universal.
• Myth VI: Developing Countries Need Discipline. Discipline is Provided by International Institutions Like the IMF and the WTO, and by Independent Domestic Institutions, Such As Currency Boards.
• Part III. Policy Alternatives
• Policy Alternatives I: Trade and Industry
• Policy Alternatives II: Privatisation and Property Rights
• Policy Alternatives III: International Private Capital Flows
• Policy Alternatives
• Domestic Financial Regulation
• Policy Alternatives V: Macroeconomic Policies and Institutions
• Part IV. Conclusion
Posted March 2, 2009
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This is a brilliant, superbly-organised book. They aim to reclaim development from the neoliberal orthodoxy that has failed developing countries and yet has dominated policy and debate for the last 25 years.
Chapter 1 refutes the myth that developed countries succeeded because they embraced the free market. Post-1945 Japan and France, for example, subordinated their financial sectors to industry's needs and grew far more rapidly than Britain and the USA, which let finance dominate industry.
Chapter 2 refutes the myth that neoliberalism works. In 1960-80, with active, interventionist policies, GDP per head grew by 75% in Latin America and the Caribbean, and by 34% in sub-Saharan Africa. In 1980-2000, under neoliberal policies, it grew by just 7% in the former and fell by 15% in the latter. 1980-2000's best-performing countries were India and China - hardly neoliberal models!
Chapter 3 refutes the myth that globalisation is unstoppable. India, Sweden, Austria, Netherlands, France and Germany all have very different policies and institutions from Britain and the USA.
Chapter 4 refutes the myth that the USA is the model for all. Despite its 1990s 'boom', 10% of US families were poor in 2000, as in 1989. It grew no faster in 1980-2000 than in 1960-79.
Chapter 5 refutes the myth that Anglo-American history is the norm. The British and US experiences were abnormal - slavery and empire, for instance. During their own development, both used East Asian-style trade and industry policies.
Chapter 6 refutes the myth that developing countries need the international financial institutions and independent central banks. Neoliberals denigrate the public sector as self-interested, but this doesn't seem to apply to the staff of the World Bank, the IMF, the WTO and the central banks.
In Part 2, each chapter presents the neoliberal case, counter-arguments, and a range of alternative policies.
Chapter 7 examines trade and industry policies. The neoliberals promote free trade as the supreme good. But India and China have grown using infant industry protection and interventionist trading policies. Industry gains with subsidies, licences, managed credit and investment, R&D and training, all tied to meeting performance guidelines. Firm capital controls and financial regulation promote long-term, stable investment.
Chapter 8 looks at privatisation and intellectual property rights (IPRs). Austria, France, Finland, Norway and Singapore all have dynamic state sectors. IPRs reduce technology transfer and innovation, and increase companies' powers at the public's expense. Education and government support for R&D are more important to innovation than protection of IPRs.
Chapter 9 studies financial liberalisation, which increased the opportunities and incentives to speculate. Restrictions on capital flight, on currency speculation and on access to foreign currency and loans protected India and China during the Asian financial crisis.
Chapter 10 examines domestic financial regulation, Chapter 11 macroeconomic policy. Independent central banks like the European Central Bank and the Bank of England bring not economic growth or more jobs or stability but excess credit growth and inflated stock and real estate prices.
These kinds of policies for equitable and stable development, growth and jobs, are good not just for developing countries but also for any country that wants to survive the present crisis.