Seated, from left to right: British Prime Minister Winston Churchill, US President Theodore Roosevelt and Russian premier Joseph Stalin at Yalta in February 1945
the project wholeheartedly economically, politically and militarily. “Once the communist threat had dissolved, the developed
countries rapidly started applying a policy that had the opposite effect in poor countries, a type of economic policy that resembled old British colonial policy at its worst. It was against this policy of premature free trade that the US itself had industrialised, and it was against this policy that [President Franklin] Roosevelt, with great moral authority, stood up to [the British Prime Minister Winston] Churchill and his colonial policy during the Second World War.” Here, Reinert is referring to a disclosure made by President Roosevelt’s son, Elliot, about the famous meeting in 1941 between his father and Churchill in the warship berthed off Newfoundland. Churchill was trying to use all his charm to convince Roosevelt to enter the war, forgetting about the histori- cal injustice of British economic policy. Elliot tells the story in his own book about how his father’s
frustration boiled over as Churchill pressed on with his sweet tongue. Elliot says: “Churchill shifted in his armchair. ‘Te Brit- ish Empire trade agreements,’ Churchill began, ‘are...’ “Father broke in: ‘Yes. Tose Empire trade agreements are a
case in point. It’s because of them that the people of India and Africa, of all the colonial Near East and Far East, are still as backward as they are’. Churchill’s neck reddened and he crouched forward. ‘Mr President, England does not propose for a moment to lose its favoured position among the British Dominions. Te trade that has made England great shall continue, and under conditions prescribed by England’s ministers.’ “ ‘You see,’ said Father slowly, ‘it is along here somewhere that
there is likely to be some disagreement between you, Winston, and me. I am firmly of the belief that if we are to arrive at a stable peace, it must involve the development of backward countries. Backward peoples. How can this be done? It can’t be done, obvi- ously, by 18th century methods. Now...’ “ ‘Who is talking about 18th century methods?’ Churchill cut
in. Father replied: ‘Whichever of your ministers recommends a policy which takes wealth in raw materials out of a colonial country but which returns nothing to the people of that country in consideration. Twentieth-century methods involve bringing industry to these colonies. Twentieth-century methods include increasing the wealth of a people by increasing their standard of living, by educating them, by bringing them sanitation – by making sure that they get a return for the raw wealth of their community.’” You can imagine the colour and countenance of the British
bulldog at this point in the conversation. And Reinert adds: “Tus, 60-odd years ago, the USA was using all its power to contest the [neo-liberal] economic theory that all countries could become wealthy no matter what they produced. From 1776 to the Second World War (1939-45), American economic practice in fact consti- tuted a prolonged war against the economic theories which they today force on the developing world.
THE TOOLBOX OF ECONOMIC EMULATION AND DEVELOPMENT
1. Observation of wealth synergies clustered around increasing returns activities and continuous mechanisation in general. Recognition that “we are in the wrong business”. Conscious targeting, support, and protection of increasing returns activities.
2. Temporary monopolies/protection given to targeted activities in a certain geographical area.
3. Recognition of development as a synergic phenomenon, and consequently the need for a diversified manufacturing sector (“maximising the division of labour”).
4. A manufacturing sector solves three policy problems endemic to the developing world simultaneously: increasing national value added (GDP), increasing employment, and solving balance of payments problems.
5. Attracting foreigners to work in targeted activities (historically, religious persecutions have contributed to this in an important way).
6. Relative suppression of landed nobility and other groups with vested interests based in the production of raw materials (from Henry VII in the 1480s to South Korea in the 1960s). Physiocracy, the originator of today’s neo-classical economics, represented the rebellion of the landowning class against the policies on this list in pre-Revolutionary France. The American Civil War is a prototype conflict between free traders and raw materials exporters (the South) on the one hand and the industrialising class (the North) on the other. Today’s poor countries are the nations where “the South” has won the political conflicts and civil wars. Opening up too early for free trade makes “the South” the political winners. Standard economics and the conditionalities of the Washington institutions de facto represent unconditional support of “the South” in all poor countries.
7. Tax breaks for targeted activities. 8. Cheap credit for targeted activities. 9. Export bounties for targeted activities.
10. Strong support for the agricultural sector, in spite of this sector being clearly seen as incapable of independently bringing the nation out of poverty.
11.Emphasis on learning/education (UK apprentice system under Elizabeth I, Francis Bacon’s New Atlantis, scientific academies, both in England and on the continent).
12. Patent protection for valuable knowledge (Venice from the 1490s).
13. Frequent export tax/export ban on raw materials in order to make raw materials more expensive to competing nations. (This started with Henry VII in the late 1400s, whose policy was very efficient in severely damaging the woollen industry in Medici Florence.)
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