Our star economists Ha-Joon Chang (left) and Erik S. Reinart (right)
In reality, British policies were a little more lenient than this may imply: some industrial activities were permitted. But the manu- facture of high-technology products was banned.” But America rebelled, set up its own industries, and following
England’s practice rather than its theory, protected its manufac- turing industry for close to 150 years in clear opposition to the advice of English politicians and economists. Which leads Reinert to say: “Looking at how the USA today
leads in the rhetoric of globalisation, the similarity to the role played by England in the 19th century is striking. It is particu- larly interesting to note that the USA then fought long and hard against the economic theories and policies that today they vehe- mently support. “Te type of economic understanding employed by the pres-
become rich by exporting foodstuffs or raw materials without also having an industrial sector. (See what South Korea, Malaysia, Japan, Taiwan and the others did – from pages 18 to 26.)
The USA In 1750, the German economist, Johann Heinrich Gottlob von Justi, was clever enough to warn that the countries forced to produce only raw materials would soon understand that they were being kept “artificially” poor. At the time, blind patriotism had reduced the great Scottish economist, Adam Smith, and the other English classical economists to telling Britain’s American colonies and the rest of Europe that they should not follow Eng- land’s example of industrialisation. Adam Smith argued that any attempt by the Americans to
“stop the importation of European manufactures [would] obstruct instead of promoting the progress of their country towards real wealth and greatness.” Tank God the Americans did not follow Adam Smith’s advice and went on to establish their own industries. According to Reinert: “An important reason for the 1776
American fight for independence was that, as colonial masters have always done, England had prohibited manufacturing industry in the American colonies (among the exceptions were tar and masts which the English needed)...” Chang adds that under British rule, America was given the
full British colonial treatment. “It was naturally denied the use of tariffs to protect its new industries. It was prohibited from exporting products that competed with British products. It was given subsidies to produce raw materials. Moreover, outright re- strictions were imposed on what Americans could manufacture. “Te spirit behind this policy,” Chang continues, “is best
summed up by a remark William Pitt the Elder made in 1770. Hearing that new industries were emerging in the American colonies, he famously said: ‘[Te New England] colonies should not be permitted to manufacture so much as a horseshoe nail.’
ently wealthy countries during their transition from poor to rich had been lost... To a large extent, the Americans have had their own history hidden from them under a veil of rhetoric and ideology.” For Africa, the US experience is seminal. A prosperous agrar-
ian and raw material producing country, America fought hard to emulate Britain and set up its own industries because they knew that whatever the initial productivity level, agriculture and the production of raw materials would soon run into diminish- ing returns. And if there were no alternative employment, these diminishing returns would eventually cause real wages to fall. Which is why the more a country specialises in the production
of raw materials, the poorer it becomes. “Only industrialisation can create an effective agricultural sector,” Reiner repeats. Tat is what Malaysia has done. (See pp. 24-26.) Even Karl Marx, the father of Marxism, who contributed a
regular weekly column to the New York Tribune, the organ of Abraham Lincoln’s Republican Party, from 1851 to 1862, agreed with Lincoln on the basic formula that creates wealthy nations: industrialisation and technological change. Which is what the Americans and the Europeans applied with the Marshall Plan after the Second World War (see p. 22). In sum, the ball is now in Africa’s court. Te code has been
cracked! Africa now has a choice – it can either use the code to unlock the secrets to wealth or wallow forever in poverty. For centuries, it was understood that having an industrial sec-
tor – even if it was less efficient than those of the richest nations – produced higher real wages than having no industrial sector at all. Get up, Africa; you have nothing to lose than poverty and underdevelopment.
(“How Rich Countries Got Rich ... and Poor Countries Stay Poor” by Erik S. Reinert was published by Constable & Robinson. “Bad Samaritans – Te Guilty Secrets of Rich Nations & the Treat to Global Prosperity” by Ha-Joon Chang was published by Random House. Both books come with high recommendation from New African. Every African worth his/her salt must get copies. Te books should be compulsory reading in higher institutions in Africa).
New African April 2011 | 17
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