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

24

Annual per capita GDP growth rate between 1975 and 2003 was 4% in Chile, 4.9% in Singapore and 6.1% in Korea. See UNDP (2005), Human Development Report 2005 (United Nations Development Program, New York).

25

Chile’s per capita income (in 1990 dollars, as all the following figures are) was $5, 293 in 1970, when Salvador Allende, the left-wing president who was subsequently deposed by Pinochet, came to power. Despite the bad press Allende has been getting in the official history of capitalism, per capita income in Chile rose quite a lot during his presidency – it was $5, 663 in 1971 and $5, 492 in 1972.After the coup, Chile’s per capita income fell, hitting the bottom at $4, 323 in 1975. From 1976, it started rising again and peaked at $5, 956 in 1981, mainly thanks to the financial bubble. Following the financial crash, it fell back to $4, 898 in 1983 and recovered the pre-coup level only in 1987, at $5, 590. The data are from Maddison (2003), Table 4c.

26

Public Citizen’s Global Trade Watch (2006), ‘The Uses of Chile: How Politics Trumped Truth in the Neo- liberal Revision of Chile’s Development’, Discussion Paper, September 2006. Downloadable at http://www.citizen.org/documents/chilealternatives.pdf.

27

The output figure is from World Bank (2006). The trade figure is from the WTO (2005), World Trade 2004, ‘Prospects for 2005: Developing countries’ goods trade share surges to 50-year peak’ (Press Release), released on 14 April, 2005. The FDI figures are from various issues of UNCTAD, World Investment Report.

28

M. Feldstein (1998), ‘Refocusing the IMF’, Foreign Affairs, March/April 1998, vo. 77, no. 2.

29

The decisions in 18 most important areas at the IMF need a 85% majority. The US happens to own 17.35% of its share. Therefore, it can unilaterally veto any proposal that it does not like. At least three of the next four biggest shareholders are needed in order to block a proposal (Japan with 6. 22%; Germany with 6.08%; Britain or France each with 5.02%). There are also 21 issues that require a 70% majority. This means that any proposal regarding these issues can be defeated if the above-mentioned five biggest shareholders band together against it. See A. Buira (2004), ‘The Governance of the IMF in a Global Economy’, G24 Research Paper, downloadable at http://g24.org/buiragva.pdf

30

Luddites are the early-19th-century English textile workers who tried to reverse the Industrial Revolution by destroying machines. At the World Economic Forum in Davos, Switzerland, in 2003, Mr Richard McCormick, the chairman of the International Chamber of Commerce, called the anti-globalization protesters ‘modern-day Luddites who want to make the world safe for stagnation … whose hostility to business makes them the enemy of the poor’. As reported by the BBC website on 12 February, 2003.

*

The idea behind import substitution industrialization is that a backward country starts producing industrial products that it used to import, thereby ‘substituting’ imported industrial products with domestically produced equivalents. This is achieved by making imports artificially expensive by means of tariffs and quotas against imports, or subsidies to domestic producers. The strategy was adopted by many Latin American countries in the 1930s. At the time, most other developing countries were not in a position to practise the ISI strategy, as they were either colonies or subject to ‘unequal treaties’ that deprived them of the right to set their own tariffs (see below). The ISI strategy was adopted by most other developing countries after they gained independence between the mid-1940s and the mid-1960s.

*

These include the Asian Development Bank (ADB), the Inter-American Development Bank (IDB), the African Development Bank (AFDB) and the European Bank for Reconstruction and Development (EBRD), which deals with the former communist economies.

Chapter 2

1

Richard West (1998), Daniel Defoe – The Life and Strange, Surprising Adventures (Carroll & Graf Publishers, Inc., New York) and Paula Back-scheider (1990), Daniel Defoe – His Life (Johns Hopkins University Press, Baltimore).

2

However, he was not the first to try it. Earlier English kings, such as Henry III and Edward I, tried to recruit Flemish weavers. In addition to recruiting Flemish weavers, Edward III centralized trade in raw wool and imposed strict control on wool exports. He banned the import of woollen cloth, thus opening up space for English producers who could not compete with the then dominant Flemish producers. He was also a very good political propagandist who understood the power of symbols. He and his courtiers wore only English cloth to set an example for his ‘Buy English’ (like Gandhi’s swadeshi) policy. He ordered the lord chancellor (who presides over the House of Lords) to sit on, of all things, a woolsack – a tradition that has survived until today – to emphasize the importance of wool trade for the country.

3

Henry VII ‘set the Manufacture of Wool on Foot in several Parts of his Country, as particularly as Wakefield, Leeds, and Hallifax, in the West Riding of Yorkshire, a Country pitch’d upon for its particular Situation, adapted to the Work, being fill’d with innumerable Springs of Water, Pits of Coal, and other Things proper for carrying on such a Business …’ (A Plan, p. 95, italics original)

4