Cover Story Africa “During the 1950s and 1960s when the nations bordering com-
munism were so successfully industrialised, the USA knew very well how to make poor nations rich: they employed their own 19th century strategy. How come the USA no longer understands the link between industrialisation and ‘civilisation’ perceived so clearly from George Washington to George Marshall? “How come the West, instead of contributing to produce world
welfare – as the USA did after the Second World War – now stages terrible carnage in futile attempts to bomb pre-industrial nations into democracy?”
At the beginning Serious historians attest that “most civilisations that have existed have not been European, and an important part of the Euro- pean story is the emulation of technologies and skills from other continents, from the Muslim world, from Asia, and also from Africa.” (As we go along, do please remember that emulation is the overriding theme of the economic toolbox that developed all those nations in Europe and elsewhere). Tus, for Africa to get out of poverty into prosperity, it must
first study how the rich countries became rich. “History is im- portant”, says Henry Kissinger, repeating what Mr Eric Arthur Blair (aka George Orwell) put so poetically in the days of yore: “He who controls the past, controls the future. He who controls the future, controls the present.” So what is the economic “past” of the rich countries? Reinert
and Chang, in their separate books, tell how it all began in 1485 when Britain under King Henry VII decided to emulate the economic successes of the city-state of Florence in Italy and the Dutch Republic in today’s Netherlands. According to Sebastiano Franci, the Milanese Enlightenment
reformer, who wrote in 1764: “Around the 13th century, the Florentines, Pisans, Amalfitans, Venetians and Genoese began adopting a different policy for enhancing their wealth and power because they noticed that the sciences, the cultivation of land, the application of the arts and of industry, and the introduction of extensive trade could produce a large population, provide for their countless needs, sustain great luxury and gain immense riches without having to add more territories.” Around this time, the city-state of Florence and the Dutch Re-
public were far and away the best economic success stories in the then poverty-stricken Europe because they both had flourishing industrial sectors, manufactured woollen cloth, and had attained the elixir of triple rents – a triple market power of manufacturing, a virtual monopoly in an important raw material, and profitable overseas trade. Strangely, the source of their most important raw material – wool – was England! Te English were content with exporting the raw wool that
went to make Florence and the Dutch Republic rich while the English themselves wallowed in poverty. In 1581, the English author, John Hales, a man who, in hindsight, can be said to have been light-years ahead of his countrymen, who clearly understood the importance of the manufacturing multiplier for national wealth, lamented: “What groseness of wits be we of... that will suffer our owne commodities to go and set straungers at worke, and then buy them againe at theyr handes.” Hales saw the logic in the fundamental economic law, which says by exporting raw wool to Florence and the Dutch Republic,
12 | April 2011 New African “ When a country exports raw
materials and imports industrial goods, this is considered bad trade. When a country does the opposite, it is considered good trade.”
England was exporting employment and all its multipliers, to its own disadvantage. As Reinert points out: “Between raw materials and the finished product lies a multiplier: an industrial process demanding and creating knowledge, mechanisation, technology, division of labour, increasing returns and – above all – employ- ment for the masses of underemployed and unemployed that always characterises poor countries... “In the 1700s, it was a rule of thumb developed for economic
policy in bilateral trade, a rule that rapidly spread throughout Europe. When a country exported raw materials and imported industrial goods, this was considered bad trade. When the same country imported raw materials and exported industrial goods, this was considered good trade.” Tat incidentally was the basic insight found in all the coun-
tries that industrialised, after England. Te same principles, Ha- Joon Chang says, were applied in Japan, Taiwan and South Korea in the second half of the 20th century. But long before John Hales’ lamentation, English eyes were firmly closed to the incongruity in what they were doing – exporting raw materials and remain- ing poor. Until King Henry VII ascended the throne in 1485!
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