Poverty From the Wealth of Nations : Integration and Polarization in the Global Economy since 1760

Rating:
Summary: A Challenge to the Prevailing Economic Worldview
Review: "Poverty from the Wealth of Nations" provides concrete evidence to support the argument that European imperialism devastated, rather than enhanced, the economic development of much of the rest of the world. The author, M. Shahid Alam, brings in the factors of sovereignty and racism to show that market mechanisms alone were not the only factors determining success or failure. Alam shows that the initial disparities between now advanced and now lagging countries were not as great as once supposed, and that the subsequent divergence was due more to exploitation and racist policies rather than to the innate qualities of particular peoples. In doing so, he challenges the prevailing, if unconscious, tenets of Eurocentric ideology.

The more sovereignty a state had, the more it was able to shape its economic policy to its own advantage. Sovereign countries usually did this by instituting protectionist measures to enable their nascent industries to establish themselves domestically and then get a foothold in the global market. Dependencies, quasi-colonies, and colonies were proportionally less and less able to do this, and were thrown into a vicious downward spiral.

Alam meticulously demonstrates the sovereignty differentials among these categories in terms of the countries' export orientation, industrialization, human capital, and growth rates. Non-sovereign countries' markets were forced open, providing a cheap source of raw materials to the imperial power, while cheaper manufactured imports prevented any domestic manufacturing sector from developing. Meanwhile, the colonial powers used their technological gains to create their own "import substitution" at home, improving their agricultural techniques and creating synthetic replacements for other primary goods (e.g., dyes), while denying these advances to the colonies, so that the colonies' range of potential exports progressively narrowed.

Infrastructure in colonies was designed with export in mind, causing markets for domestically produced goods to wither. Also, social policies were influenced to keep education, job advancement opportunities, and wages at a minimum, as this kept the prices of primary goods low as well, maximizing profits and savings for the colonial power. Over time, the cumulative effects of these phenomena brought about the extreme disparities in wealth between nations that we see today.

Alam's findings should be carefully examined by economists and other scholars who are willing to consider the possibility that our prevailing economic worldview is fundamentally flawed.

Rating:
Summary: A Challenge to the Prevailing Economic Worldview
Review: "Poverty from the Wealth of Nations" provides concrete evidence to support the argument that European imperialism devastated, rather than enhanced, the economic development of much of the rest of the world. The author, M. Shahid Alam, brings in the factors of sovereignty and racism to show that market mechanisms alone were not the only factors determining success or failure. Alam shows that the initial disparities between now advanced and now lagging countries were not as great as once supposed, and that the subsequent divergence was due more to exploitation and racist policies rather than to the innate qualities of particular peoples. In doing so, he challenges the prevailing, if unconscious, tenets of Eurocentric ideology.

The more sovereignty a state had, the more it was able to shape its economic policy to its own advantage. Sovereign countries usually did this by instituting protectionist measures to enable their nascent industries to establish themselves domestically and then get a foothold in the global market. Dependencies, quasi-colonies, and colonies were proportionally less and less able to do this, and were thrown into a vicious downward spiral.

Alam meticulously demonstrates the sovereignty differentials among these categories in terms of the countries' export orientation, industrialization, human capital, and growth rates. Non-sovereign countries' markets were forced open, providing a cheap source of raw materials to the imperial power, while cheaper manufactured imports prevented any domestic manufacturing sector from developing. Meanwhile, the colonial powers used their technological gains to create their own "import substitution" at home, improving their agricultural techniques and creating synthetic replacements for other primary goods (e.g., dyes), while denying these advances to the colonies, so that the colonies' range of potential exports progressively narrowed.

Infrastructure in colonies was designed with export in mind, causing markets for domestically produced goods to wither. Also, social policies were influenced to keep education, job advancement opportunities, and wages at a minimum, as this kept the prices of primary goods low as well, maximizing profits and savings for the colonial power. Over time, the cumulative effects of these phenomena brought about the extreme disparities in wealth between nations that we see today.

Alam's findings should be carefully examined by economists and other scholars who are willing to consider the possibility that our prevailing economic worldview is fundamentally flawed.

Rating:
Summary: Superb critique of the new imperialism
Review: Alam's brilliant and original book studies the growing polarisation between the economically advanced and lagging countries since 1760. He marshals extensive cross-country evidence and concludes, "The results showed a strong positive correlation between sovereignty and industrialisation."

As he writes, "Sovereignty did matter! Countries which had it would grow faster than countries which did not. The logic of it is simple. Colonization of lagging countries led, via forced integration, to the loss of manufactures, a shrinking comparative advantage in primary production, and the displacement of indigenous capital, skills and enterprises; it also led to monopolization and direct appropriation of their resources. Only sovereign lagging countries - free to structure their integration into the world economy - could avoid or minimize the adverse consequences of integration. Ergo, loss of sovereignty retarded economic growth. ... Countries will structure their international relations to develop manufactures and indigenous capital, enterprises and technological capabilities; they will impose at the outset, or gradually, policies that regulate the entry of imports and foreign capital, labor and enterprises. ... These asymmetries ensure that loss of sovereignty will produce lower levels of industrialisation, lower levels of productivity in the subsistence sector, lower levels of human capital, lower rates of taxation and public expenditure and, finally, lower growth rates of per capita income."

Countries winning their independence after 1945 achieved substantial increases in their manufacturing industry. 1980 saw the imperial counterattack; the international financial institutions, egged on by the key capitalist states, attacked the lagging countries and reimposed dependency. The Soviet Union's demise orphaned the lagging countries; they lost the most powerful counterweight to the USA.

World Bank and IMF policy packages are identical to the EU's demands: end fiscal deficits, privatise industries and services, open government contracts to foreign firms, end state subsidies, remove controls on capital accounts of the balance of payments, end barriers to foreign enterprises' entry.

Without economic sovereignty, all other forms of sovereignty are shadows. The economy is the root of sovereignty: without control over how we work and produce, we are slaves.

Rating:
Summary: Globalization: What is New?
Review: This is a very timely book. At a time when globalization is sweeping aside the sovereignty of developing countries and imposing free-trade regimes on their debt-ridden governments, this book provides a historical critique of these policies through a systematic examination of a similar globalization that swept across countries in Asia and Africa starting in the nineteenth century. It shows that the results of colonization and free trade were devastating for these economies. Thankfully, these results are established with a theoretical perspicacity and empirical rigor that are lacking in neo-Marxist critiques of the global economy. The strong parallels between quasi-colonialism and the IMF-WTO regime suggest that this new round of imperialism will also deepen global inequalities.