Modern democracy means one dollar one vote

Tom Gallagher has a nice review of Ha-Joon Chang's Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism in the San Francisco Chronicle.

"The people referred to in the title of Ha-Joon Chang's book, "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism," are advisers from rich nations who tell poor countries to embrace free-trade policies that rich nations themselves never practiced. Quoting a 19th century German economist on the British, Chang writes that today's rich nations are effectively "kicking away the ladder ... in order to deprive others of the means of climbing up" after them. But the history of capitalism has been so thoroughly rewritten, Chang says, that most of these "Bad Samaritans" suffer a form of "historical amnesia" and "do not even realize that they are hurting the developing countries with their policies."...

As Chang describes the way it really was, you realize how amazing it is that free market ideologues have been able to shoehorn Great Britain into a free-trade version of world history, given that it rose to economic dominance while building a world empire.

"The truth," he writes, "is that the free movement of goods, people, and money that developed under British hegemony between 1870 and 1913 - the first episode of globalization - was made possible, in large part, by military might, rather than market forces." And this period of imperial free trade followed long years of high tariffs and careful protection and nurturing of selected British industries..

One American who was having none of that, Chang points out, was Alexander Hamilton, who became the country's first treasury secretary and implemented an array of policies to protect the country's "infant industries" (a term coined by Hamilton): "protective tariffs and import bans; subsidies; export ban on key raw materials; import liberalization of and tariff rebates on industrial inputs; prizes and patents for inventions; regulation of product standards; and development of financial and transportation infrastructures."...

"[M]arket and democracy clash at the fundamental level," Chang writes. "Democracy runs on the principle of 'one man (one person), one vote.' The market runs on the principle of 'one dollar, one vote.' " Chang's point may seem obvious, yet it is one infrequently made, due, presumably, to the power of wealthy individuals and nations. But just as obvious is Chang's conclusion that if developing countries "want to leave poverty behind" and nurture their fledgling industries just as today's rich nations once did, "they have to defy the market.""