Despite the popular believe that free trade is the foundation of world prosperity, a look at the history of capitalism offers a conflicting perspective. According to Chang (1), almost all of the current developed nations used some form of protectionism to promote their national industries.
They employed subsidies, tariffs, and other forms of incentives in their infant industries as opposed to allowing laissez-faire policies. This essay is an attempt to summarise the conclusions made by Chang in his paper “Kicking Away the Ladder: The “Real” History of Free Trade”.
Although it is commonly believed that Britain and United States reached the pinnacle of the global economy through adoption of free trade, these two nations were in fact the most fervent users of the protectionist trade policies in their early stages of development. Chang argues that the distortion of the truth between “real” and “imagined” history of trade policy is most profound in these two nations (1).
From a deep assessment of the history of current developed nations, there emerges a different picture from common belief. Nearly all of the Newly Developed Countries (NDCs) used some form of protectionist strategy in their infant industries during the early stages of development. Ironically, United States and Britain which are regarded as the champions of free trade were the most aggressive users of protectionism (Chang 12).
Netherlands and Switzerland are the odd ones out in these historical patterns. These two nations were at the fore front of technological development in the eighteenth century and therefore did not require much government intervention. Until the seventeenth century, Netherlands set up extraordinary protectionist strategies aimed at protecting and building its maritime and commercial industries.
Chang asserts that Newly Developed Countries (NDCs) employed protectionist measures with the purpose of promoting their new industries. Many nations actively used protectionism in their industries although in different ways. Many nations actually were more aggressive in the use of the protectionism than is evident in current developing nations.
The current advocacy of the free trade and laissez-faire industrial policies is a deviation from what history of trade reveals. The nations which propagate the view of free trade as a basis for their success in trade seem to be “kicking away the ladder” that they used to reach the top so that others do not use it (Chang 13).
The author concludes that free trade has not been able to generate growth in developing nations as promised and in some cases has even resulted in collapse of some economies. Chang recommends a change of the historical facts as regards the developmental experiences of the developed nations. He advocates for wide publication of the right historical facts in order to enable developing nations to make informed choices. The author does not imply that every developing nation should employ active infant promotion strategy.
His opinion is that any strategic choice should be based on the premise that historically developed nations used some form of protectionism in their industries in order to become rich. According to Chang (13), the propagation of the free trade and laissez-faire industrial policies by NDCs as good policies is “kicking the ladder” they used to be rich and should not be forced down on developing nations as the ideal vehicle for development.
The author also suggests a drastic revolution in the policy-related conditions connected to monetary aid. The author recommends funding to the developing nations be that be based on the acknowledgment that the majority of policies that are considered bad are not. According to the author, there is no common best practice policy applicable to all people (Chang 14).
Works Cited
Chang, Ha-Joon 2003, Kicking Away the Ladder: The “Real” History of Free Trade. Web.