the form of higher profits, to labour in the form of higher wages, and to governments in the form of higher taxes,” says Reinert. But then, in what Friedrich List described as “kicking away
the ladder”, Britain and the other nations that emulated Britain and got rich started preaching free trade to other countries while having achieved their economic supremacy through high tariffs and extensive subsidies. List could not bear what he called the British and the others’
attempt to “kick away the ladder” that they had climbed to reach economic prosperity. “It is a very common clever device,” List said, “that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him.”
Colonial policy “Kicking away the ladder” thus informed the colonial policies of Europe at the time. At its core, says Reinert, colonialism was a system that sought to prevent the type of wealth creation in the colonies that had made Britain and Europe rich. Even today the same thinking permeates the policy directions of the rich coun- tries and the multilateral institutions they control. Chang agrees and cites the record of Robert Walpole, who
became British prime minister in 1721, to buttress his point. A highly competent economic manager, Walpole supervised a policy reform that dramatically enhanced British industry and trade, while deliberately preventing British colonies from doing the same. He wanted the colonies to remain raw material producers only. For example, Walpole used the King’s Speech in 1721 to tell
Parliament: “It is evident that nothing so much contributes to promote the public well-being as the exportation of manufactured goods and the importation of foreign raw materials.” Under Walpole, manufacturing exports were encouraged by
“ For several hundred years,
England’s economic policy was based on a simple rule: import of raw materials and export of industrial products.”
that wealthy nations have a tendency to force upon poor nations theories they themselves never have followed and probably never will. Troughout their two books, the two authors go to extra lengths to provide incontrovertible evidence showing that todays’ rich countries got rich because for decades, often centuries, their ruling elites set up, subsidised, and protected dynamic industries and services, as national policy. Tey did not leave anything to chance or wait for God to do it for them as Africa tends to do these days. “Tey all emulated the most prosperous countries at the time,
bringing their productive structures into those areas where tech- nological change was being focused. In this way, they created rents (a return above ‘normal’ income) that spread to capitalists in
a series of measures, including export subsidies. Finally, he in- troduced a law to control the quality of manufactured products, especially textiles, so that unscrupulous manufacturers could not damage the reputation of British products in foreign markets. And crucially, Chang adds: “Tese policies are strikingly simi-
lar to those used with such success in the ‘miracle’ economies of East Asia, such as Japan, [South] Korea and Taiwan, after the Second World War. Policies that many believe, as I myself used to, to have been invented by Japanese policy-makers in the 1950s – such as duty drawbacks on inputs for exported manufactured products and the imposition of export product quality standards by the government – were actually early British inventions. “Walpole’s protectionist policies remained in place for the
next century, helping British manufacturing industries to catch up with and then finally forge ahead of their counterparts on the continent. Britain remained a highly protectionist country until the mid-19th century...” But while good Mr Walpole was doing all this at home, he was
at the same time deliberately putting policies in place to encour- age the British colonies to remain raw material producers only. “Walpole provided export subsidies (on the American side)
and abolished import taxes (on the British side) on raw materi- als produced in the American colonies (such as hemp, wood and timber),” Chang recalls. “He wanted to make absolutely sure that the colonists stuck to producing primary commodities and never emerged as competitors to British manufacturers. Tus they were
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