In a November 2010 article titled Reinventing the Wheel economist William Easterly put forward a simple reason for differences in development around the world: access to technology dating back several centuries. Nations which had access to technologies such as written language, the wheel, and iron tools three millennia ago; and technologies such as oceangoing ships, firearms, and the printing press 500 years ago are much more likely to be rich today than those that didn’t.
If asked to give advice to a poor country’s finance minister, Easterly quips that he would state the following: “Make sure your country was well caught up on technology — 500 years ago.”
He does go on to say, however, that his assertions don’t necessarily “imply a fatal determinism”. There are examples of countries, including Finland, which have defied the trend he describes. In today’s globalized world developing countries can catch up by borrowing technologies from rich countries. Reflecting on the fact that access to technology and innovation lead to economic growth, he prescribes a bottom-up approach to development, rather than the traditional top-down model. If Africa’s “plague of poor governments” stopped getting in the way of innovation, the continent would have a much easier time getting on the path to development.
Okay. I have a few issues with all this.
In the words of historian Mike Davis, such a “view of history deletes a great deal of very bloody business.”
Whatever the internal brakes on rapid economic growth in Asia, Latin America or Africa, it is indisputable that from about 1780 or 1800 onward, every serious attempt by a non-Western society to move over into a fast lane of development or to regulate its terms of trade was met by a military as well as an economic response from London or a competing imperial capital.
Now, Easterly doesn’t deny the above. (Although, he remarks that North America was “nearly empty” when the settlers came. That’s a really nice myth. In reality, there were an estimated 12 to 15 million Natives living north of modern-day Mexico when Columbus first arrived, and by the time the US had expanded all the way to the Pacific, there were only about 200,000 left thanks to infectious disease and lots and lots of genocide.) For the most part his article just discusses research which compares access to technology over history and the level of development today. I presume readers are supposed to fill in the “bloody business” for themselves. And that would be fine if leaving it out wouldn’t have an influence on the conclusions he arrives at and the recommendations he offers, but the fact is, it would.
Taking the “bloody business” into account, let’s try postulating another simple argument for the unequal levels of development around the world: those who were able to resist Western domination are likely much richer today than those who weren’t able to do so.
Noam Chomsky takes a similar stance:
… the countries that have developed economically are those which were not colonized by the West; every country that was colonized by the West is a total wreck… Japan was the one country that managed to resist European colonization, and it’s the one part of the traditional Third World that developed.
Comparing Japan to the Ashanti kingdom, which existed in modern-day Ghana, Chomsky goes on to say the following:
… if you look at Japan when it began its industrialization process [in the 1870s], it was at about the same development level as the Asante [sic] kingdom in West Africa in terms of resources available, level of state formation, degree of technological development, and so on. Well, just compare those two areas today. It’s true there were a number of differences between them historically, but the crucial one is that Japan wasn’t conquered by the West and the Asante kingdom was, by the British—so now West Africa is West Africa economically, and Japan is Japan.
Having resisted Western domination Japan was able to obtain technologies from outside and industrialize rapidly. This would likely have taken place elsewhere if more nations had been able to successfully resist the European onslaught, even given the technology gap between them and Europe at the time.
If being “well caught up in technology — 500 years ago” is a prerequisite in being developed today, it is only so to the extent that it could have helped in fighting off colonization. It isn’t important just for the sake of having a small gap, and hence having less to catch up on, to begin with.
In exploring the development of countries since the ending of official colonization, we find that the story is much the same. Countries that have developed have done so by defying Western dictates while those who’ve followed the advice of Western countries and the international financial institutions, often through coercion, have not done so well.
While poor countries have been hounded into liberalizing their economies – lowering tariffs, privatizing government-owned industries, etc. – those that have developed have done so, Chomsky writes, by “radically violating free market doctrine.”
State intervention was a vital component in contributing to the development of Europe and the East Asian tigers, just as it is for China’s development today. Conventional wisdom holds that instituting “free trade” policies helps countries to develop. Economists Joseph Stiglitz and Andrew Charlton set the record straight:
The economic literature has been successful in demonstrating the importance of some variables for economic development, including education, institutions, health, and geography. However, the relationship between trade liberalization and growth is much more controversial.
Citing penicillin as an example, Easterly contends that “development is not about what you dictate, but what you discover.” However, if it wasn’t for public funding of pharmaceutical research, we wouldn’t be discovering very many things in that field. The state’s role in facilitating innovation is undeniable.
Having a mixed economy seems to go a long way in helping countries to develop. Rich countries consistently intervene in the market while telling poor countries not to do the same. Economist Michael Hudson writes that “any nation pursuing free trade principles, in a world where governments of other countries [are] financing, subsidizing or otherwise regulating their commerce, [makes] its foreign trade a derivative function of foreign regulation.” Stiglitz and Charlton explain that “trade liberalization may make countries more vulnerable to external shocks, and for countries in which trade looms large in GDP, the result may be greater macro-economic volatility.” Just as with resisting domination in the days of colonialism, poor countries seeking to develop today must head down a sovereign path in order to develop.
Easterly puts a good amount of blame on the “plague of poor governments” for hindering Africa’s development. When ascribing fault for the failure of poor countries to develop, we should make sure to include an agent much more deserving of blame: Chomsky refers to it as the “plague of European civilization”.
1. Mike Davis, Late Victorian Holocausts (Verso, 2002), p. 295
2. Noam Chomsky, Understanding Power (New Press, 2002), p. 65
4. Noam Chomsky, Old Wine in New Bottles: A Bitter Taste
5. Joseph Stiglitz and Andrew Charlton, Fair Trade for All (Oxford University Press, 2007), p.33
6. Michael Hudson, Global Fracture (Pluto Press, 2005), p. 135
7. Ibid. 5, p. 172
8. Ibid. 2, p. 136