Ha-Joon Chang has written many excellent books, on this blog I have covered Kicking Away the Ladder and 23 Things They Don't Tell You About Capitalism. With the encouragement of Oxfam's Duncan Green, in 2007 Chang published "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism". The book aims for a general audience, and in many ways puts the arguments in the above two books in a more accessible way, often conveyed via story. For the details, see his other books. Many of the examples are getting dated, but still a useful read. Some notes:

"This neo-liberal establishment would have us believe that, during its miracle years between the 1960s and the 1980s, Korea pursued a neo-liberal economic development strategy. The reality, however, was very different indeed. What Korea actually did during these decades was to nurture certain new industries, selected by the government in consultation with the private sector, through tariff protection, subsidies and other forms of government support (e.g., overseas marketing information services provided by the state export agency) until they 'grew up' enough to withstand international competition. The government owned all the banks, so it could direct the life blood of business—credit. Some big projects were undertaken directly by state-owned enterprises—the steel maker, POS CO, being the best example—although the country had a pragmatic, rather than ideological, attitude to the issue of state ownership. If private enterprises worked well, that was fine; if they did not invest in important areas, the government had no qualms about setting up state-owned enterprises (SOEs); and if some private enterprises were mismanaged, the government often took them over, restructured them, and usually (but not always) sold them off again." (p. 14)

"Unfortunately, another lesson of history is that rich countries have 'kicked away the ladder' by forcing free-market, free-trade policies on poor countries. Already established countries do not want more competitors emerging through the nationalistic policies they themselves successfully used in the past. Even the newest member of the club of rich countries, my native Korea, has not been an exception to this pattern. Despite once having been one of the most protectionist countries in the world, it now advocates steep cuts in industrial tariffs, if not total free trade, in the WTO." (p. 61)

"Markets have a strong tendency to reinforce the status quo. The free market dictates that countries stick to what they are already good at. Stated bluntly, this means that poor countries are supposed to continue with their current engagement in low-productivity activities. But their engagement in those activities is exactly what makes them poor. If they want to leave poverty behind, they have to defy the market and do the more difficult things that bring them higher incomes—there are no two ways about it." (p. 210)

"Knowing what policies are right for your particular circumstances is not enough. A country must be able to implement them. Over the past quarter of a century, the Bad Samaritans have made it increasingly difficult for developing countries to pursue the 'right' policies for their development. They have used the Unholy Trinity of the IMF, the World Bank and the WTO, the regional multilateral financial institutions, their aid budgets and bilateral and regional free-trade or investment agreements in order to block them from doing so. They argue that nationalist policies (like trade protection and discrimination against foreign investors) should be banned, or severely curtailed, not only because they are supposed to be bad for the practising countries themselves but also because they lead to 'unfair' competition. In arguing this, the Bad Samaritans constantly invoke the notion of the 'level playing field.' The Bad Samaritans demand that developing countries should not be allowed to use extra policy tools for protection, subsidies and regulations, as these constitute unfair competition." (p. 217-218). 

Ha-Joon Chang has written a number of excellent books, I've only covered one (Kicking Away the Ladder) on this blog so far. Another of his books – also very accessible and clearly written for non-specialists, is "23 Things They Don't Tell You About Capitalism" (2010). This argument has become more mainstream since Chang started to provide counter narratives a couple of decades ago (Kicking Away the Ladder came out in 2003). A few quotes:

"what we are told by the free-marketers - or, as they are often called, neo-liberal economists - was at best only particularly true and at worst plain wrong. As I will show you throughout this book, the 'truths' peddled by free-market ideologies are based on lazy assumptions and blinkered visions, if not necessarily self-serving notions. My aim in this book is to tell you some essential truths about capitalism that the free-marketers won't." (p. xv)

"The free market doesn't exist. Every market has some rules and boundaries that restrict freedom of choice. A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them. How 'free' a market is cannot be objectively defined. It is a political definition. The usual claim by free-market economists that they are trying to different the market from politicly motivated interference by the government is false government is always involved and those free-marketeers are as politicly motivated as anyone." (p. 1)

"The wage gaps between rich and poor countries exist not mainly because of differences in individual productivity but mainly because of immigration control. If there were free migration, most workers in rich countries could be, and would be, replaced by workers from poor countries. In other words, wages are largely politically determined." (p. 23)

"When reminded of the protection past of the US, free-market economists usually retort that the country succeeded despite, rather than because of, protectionism. They say that the country was destined to grow fast anyway, because it had been exceptionally well endowed with natural resources and received a lot of highly motivated and hard-working immigrants. It is also said the countries large internal market somewhat mitigated the negative effects of protectionism, by allowing a degree of competition among the domestic firms. But the problem with this response is that, dramatic as it may be, the US is not the only country that has succeeded with policies that go against the free market doctrine. In fact, as I shall elaborate bellow, most of today's rich countries have succeeded with such policies" (p. 69)

"Even when it comes to higher education, which is supposed to matter more in the knowledge economy, there is no simple relationship between it and economic growth. What really matters in the determination of national prosperity is not the educational levels of individuals but the nation's ability to organize individuals into enterprises with high productivity." (p. 179)

"Capitalist economies are in large part planned. Governments in capitalist economies practice planning too, albeit on a more limited basis than under communist central planning. All of them finance a significant share of investment in R&D and infrastructure. Most of them plan a significant chunk of the economy through the planning of the activities of state-owned enterprises. Many capitalist governments plan the future shape of individual industrial sectors through sectoral industrial policy of even that of the national economy through indicative planning. More importantly, modern capitalist economies are made up of large, hierarchical corporations that plan their activities in great detail, even across national borders. Therefore, the question is not whether you plan or not. it is about planning the right things at the right levels." (p. 199-200) 

Cambridge professor of development studies, Ha-Joon Chang, is likely more known is the 'Global South' than within universities in North America or Europe – mainly because his writing takes a different approach, sometimes rather boldly so. Of his long list of publications, "Kicking Away the Ladder: Development Strategy in Historical Perspective" (2002) is the most cited. The book explores policies and institutions that were used by 'now developed countries' in order to reach their current position, and compare that with what the international development community recommends / demands of currently developing countries. In many ways, Chang challenges an entire sector with this book – the findings "will undoubtedly disturb many people, both intellectually and morally" (p. 12), as assumptions and myths are busted. In this review I focus on policies (the institutions component is also good, but has been developed by others significantly since – to be explored in future posts).

The author summarizes the objective, and the main finding, in the first two pages, writing: "There is currently great pressure on developing countries from the developed world, and the international development policy establishment that it controls, to adopt a set of 'good policies' and 'good institutions' to foster their economic development… As we shall see later in the book, there have been heated debates on whether or not these recommended policies and institutions are in fact appropriate for today's developing countries. Curiously, however, many of those critics who question the applicability of these recommendations nevertheless take it for granted that these 'good' policies and institutions were used by the developed countries when they themselves were in the process of developing" (p. 1). "This book pieces together various elements of historical information which contradict the orthodox view of the history of capitalism, and provides a comprehensive but concise picture of the policies and institutions that the developed countries used when they themselves were developing countries. In other words, what this book is asking is: 'How did the rich countries really become rich?' The short answer to this question is that the developed countries did not get where they are now through the policies and the institutions that they recommend to developing countries today. Most of them actively used 'bad' trade and industrial policies" (p. 2).

The title of this book comes from Chang's description of how nations gain advantage, and then seek to disable other nations from attaining a level of comparative status to prevent competition. Change writes "the current policy orthodoxy does amount to 'kicking away the ladder'. Infant industry promotion (but not just tariff protection, I hasten to add) has been the key to the development of most nations, and the exceptions have been limited to small countries on, or very close to, the world's technological frontiers, such as the Netherlands and Switzerland. Preventing the developing countries from adopting these policies constitutes a serious constraint on their capacity to generate economic development" (p. 10). The basis of the argument draws from the fact that "virtually all NDCs [now developed countries] actively used interventionist industrial, trade and technology (ITT) policies that are aimed at promoting infant industries during their catch-up periods" (p. 18), but current 'good' policy bars such policy.

What role do the interventionist policies play? Primarily they serve to level the playing field. Chang writes "the common problem faced by all the catch-up economies is that eh shift to higher-value-added activities, which constitutes the key to the process of economic development, does not happen 'naturally'. This is because, for a variety of reasons, there exist discrepancies between social and individual returns to investments in the high-value-added activities, or infant industries, in the catch-up economies. Given such discrepancies, it becomes necessary to establish some mechanisms to socialize the risk involved in such investments" (p. 126).

The main finding of the book – that currently recommended policies for developing countries are not what now developed countries used to develop – begs an important question: "aren't the developed countries, under the guise of recommending 'good' policies and institutions, actually making it difficult for the developing countries to use policies and institutions which they themselves had used in order to develop economically in earlier times?" (p. 3). Chang further explains: "Once a country gets ahead of other countries, it has a natural incentive to use its economic and political powers to pull ahead even further. Britain's policies, especially those of the eighteenth and nineteenth centuries, are the best examples of this. What is disconcerting is that these policies have so many parallels with those pursued in our time by developed countries in relation to their developing counterparts" (p. 51). "The plain fact is that the Neo-Liberal 'policy reforms' have not been able to deliver their central promise – namely, economic growth. When they were implemented, we were told that, while these 'reforms' might increase inequality in the short term and possibly in the long run as well, they would generate faster growth and eventually life everyone up more effectively than the interventionist policies of the early postwar years had done. The records of the last two decades show that only the negative part of the prediction has been met. Income inequality did increase as predicted, but the acceleration in growth that had been promised never arrived" (p. 128).

Chang does not leave readers to read between the lines in suggesting parallels with current and colonial practices. "By demanding from developing countries institutional standards that they themselves never attained at comparable levels of development, the NDCs are effectively adopting double standards, and hurting the developing countries by imposing on them many institutions that they neither need nor can afford' (p. 135). The author concludes that "the currently recommended package of 'good policies', which emphasizes the benefits of free trade and other laissez-faire ITT policies, seems at odds with historical experience" (p. 127) and that in numerous accounts the 'good' development policy is, in fact, 'kicking away the ladder' and hindering economic growth in developing countries.