Democracy and the Bad Samaritans

In the Land of the Free, summer is the season for swimming, back yard barbecues, fireworks, and displays of unabashed patriotism. Americans swell with national pride, and meat products, as they salute the flag and watch pyrotechnics burst in mid air. Baseballs and footballs are tossed around in backyards along with words like freedom and democracy. We can hear beer buzzed patio and porch political scientist rattle off catch phrases like “land of the free, home of the brave” and “we never forget”, maybe even the occasional “remember the Maine!”. They debate the future and past of America laying claim to what the nation’s founding fathers envisioned their fledgling nation would become.

Many of the aforementioned amateur political scientists claim the the United States of America was founded on the principles of freedom and democracy and see the nation today as a direct representation of these ideals but as we know many of the founding fathers were slave owners and believed the governing of a nation should be left to the educated elite. The term democracy didn’t enter into the lexicon of the founding fathers, at least not in the sense in which we use the word today. It carried a negative connotation and was associated with mob rule. Most of the founding fathers preferred the term republic. It wasn’t until Andrew Jackson split from the original political party of republicans, different from today’s party, that we started to see the current definition take shape.

Today it would be fair to define our idea of American democracy as having three tenets, which have separate origins. The first of these is constitutional government and the rule of law, the second is popular sovereignty based on the will of the people, and the third is social justice or equality, the natural inalienable rights belonging to an individual as a member of the human race. We can trace constitutionalism and the rule of law back to the Magna Carta but as far as finding the origin of the second two tenets we have to dig a little deeper.

Many like to imagine that our democracy today is a direct decedent of the democracy used in ancient Greece and Rome and while the word is Hellenistic in origin it had a largely different meaning than what we consider democracy to be today. The ancient Greeks used the word to explain the inclusion of the lowest form of freemen, the demos, in public affairs. There was still a rigid hierarchical structure and participation was not a right loftily bestowed on all men but a policy to maintain the health of the polis. It was by no means one man one vote and there was no equality under the law. Roman democracy was even more hierarchical and most of us know that both societies had large slave populations who were not eligible to participate in civic society. For a more accurate picture of where our idea of democracy comes from we have to turn to the middle ages of Europe.

In the Middle Ages all societies were based on two principles, the first was that authority came from above, as in the case of a monarchy. The second was that societies were based on a hierarchy of unequal but interdependent orders. Inequality was an accepted feature of society for the powerful had gained their positions either by cunning and strength or a supposed mandate from god. In the latter case the rulers were supported by the church which cited original sin and the wicked nature of man as the root cause of the hierarchical structure. The king was chosen by god, the king chose his vassals, and so to question the order was to question god or the church.

In the 17th century the enlightenment and the scientific revolution took place, which led to the questioning of the established order. A century later men like Jean Jacques Rousseau openly challenged the established order with works like Discourse on Origin of Inequality. The idea of an immortal soul began to become secularized and made into a social value and with that came the idea that men had unalienable rights. Rousseau marked the shift when he claimed that evil was not naturally inherent to man, as religion had previously supposed, but the result of a defective social contract between men, that evil was social in origin, not intrinsic to man’s nature but that the natural goodness of man could bring about a system based on equality.

It wasn’t until the 1820’s or 30’s that democracy began to take on a positive meaning. In the mid 1830’s the party founded by Andrew Jackson started to refer to itself a the Democratic Party. The name had lost its former unsavory character which had led George Washington to claim that a democrat “will leave nothing unturned to overthrow the government of his country.” Alex de Tocqueville spoke of democracy as egalitarianism and the leveling force of the legal hierarchical estates in Europe. He believed democracy to be a force which would bring greater equality to humankind. “Can it be believed that democracy, after having overthrown the aristocracy and the kings, will stop short before the bourgeoisie and the rich?” For de Tocqueville the natural course for democracy, and civilization was an end to all systems that supported dehumanization or denied human dignity. Woodrow Wilson brought the term fully into the modern era during the First World War when he used it to describe France and Britain’s struggle against Germany as a crusade for popular government everywhere.

At the dawn of the Cold War democracy became a rallying cry for politicians and generals used to stir up feelings of nationalism and pride and a banner under which armies marched. It came to represent an ideal that had to be spread world wide, by force of military might if it need be. Unfortunately during this period it also became synonymous with other ideals such as capitalism and free trade and cost countless millions their lives. If it was indeed democracy that was being spread during the Cold War the the U.S. would have never overthrown democratically elected leaders and supported military dictatorships.

In Bad Samaritans: The Myth of Free Trade and The Secret History of Capitalism Ha -Joon Chang offers a fresh perspective on the history of capitalism and free trade. In recent years neo-liberals, such as Thomas Friedman, have presented a warped and distorted history in the best case and outright lies set on the furthering of an agenda in the worst.
In The Lexus and the Olive Tree Freedman comes up with a set of policies he dubbed “The Golden Straightjacket” which are supposed to ensure economic successes for all countries willing to adopt them. He claims this is the only way for a country to become economically viable in the era of globalization. The tenets of his program state a country must; privatize state owned enterprises, maintain low inflation, reduce the size of government bureaucracy, balance the budget and liberalize trade, deregulate foreign investment, deregulate capital markets, make currency convertible, reduce corruption and privatize pensions. The problem is many of these solutions are based on fault reasoning which is based on a faulty history and in some cases a flagrant misrepresentation of the facts.

Ha-Joon Chang cites the case of a textile manufacturing company who tried to transition into the sub compact automobile market. Their car, the Toyopet, failed and had to be withdrawn from the U.S. market. The year was nineteen fifty eight and the company was Toyota. Today Toyota is one of the most successful auto manufacturers in the world and Japan’s economy is ranked number three globally. Neither one of these accomplishments were reached using neo-liberal policy or Friedman’s Golden Straight Jacket but using opposing policies; protectionism and government subsidisation. Had Japan donned The Golden Straight Jacket there would be no such thing as a Lexus and Toyota would probably still be manufacturing textiles.

The neo-liberal version of the history of globalization and free trade begins with England at the end of the 18th century when the country adopted free market policies. The story goes they were so successful in adopting free trade that other countries soon followed suit and started to deregulate their economies and liberalize trade. Once other countries adopted the system an unprecedented era of economic growth and prosperity was ushered in.

In the wake of the First World War countries again erected trade tariffs and abandoned liberal policy, with England finally giving into the pressure and erecting trade barriers in 1932, which was the nail in the coffin for the golden age of free trade. What followed was a contraction in the global economy which led to instability.

After World War Two the global economy followed America’s lead and began to once again implement a more liberal economic structure through GATT, the General Agreement on Trade and Tariffs. By the 1980’s most illiberal trade policies had been abandoned. In 1995 GATT became the WTO and further pushed for the liberalization of trade. Neo-liberals, together with the IMF and WTO, claimed this would usher in a new era of prosperity for the global economy.

Ha-Joon Chang offers an alternative take on the history of globalization and free trade. He begins with the history of Hong Kong which was handed back to China on June 30th 1997.

“Hong Kong became a British colony after the Treaty of Nanking in 1842, the result of the Opium War. This was a particularly shameful episode, even by the standards of 19th-century imperialism. The growing British taste for tea had created a huge trade deficit with China. In a desperate attempt to plug the gap, Britain started exporting opium produced in India to China. The mere detail that selling opium was illegal in China could not possibly be allowed to obstruct the noble cause of balancing the books. When a Chinese official seized an illicit cargo of opium in 1841, the British government used it as an excuse to fix the problem once and for all by declaring war. China was heavy defeated in the war and forced to sign the Treaty of Nanking, which made China lease Hong Kong to Britain and give up its right to set its own tariffs.

Chang shows here what really spread free trade not economic prosperity or the hope there of but military might. Most of the countries practicing free trade during the golden era were weaker and forced into free trade as a result of colonial rule or unequal treaties. While the rich countries imposed free trade on weaker nations they kept high industrial tariffs of their own. Britain, until the end of the 19th century, was one of the most protectionist countries in the world. In the 1860’s and 1870’s there was a system in Europe that resembled free trade but tariffs were raised again in the 1880’s and as mentioned earlier Britain reverted to protectionism again in 1932 to block American manufactured goods, which had been developed under protectionism.

England was the pioneer of free trade but if we look at history we see their industry it grew under state subsidisation of industry, protectionist tariffs, duty drawbacks on imports for exported manufacture tariffs, and quality standards on exported manufactured goods. In short the same policies used by Japan and miracle economies like South Korea for rapid growth were first pioneered in England. If Britain would have used neo-liberal policy there wouldn’t be such a thing as free trade, neo-liberals, or the Golden Straight Jacket.

America became an economic super power in the same way as Britain. At the end of the 18th century the U.S. economy was based on shipping primary resources to England and importing finished goods. The popular opinion of the time was exemplified by Adam Smith’s recommendation that the U.S. not to develop manufacturing as it would only obstruct economic progress. Alexander Hamilton challenged this notion in 1791 with his Report on the Subject of Manufactures where he called for the U.S. to develop its industry by adopting a number of measures which included protectionist tariffs, import bans, subsides, export bans on key raw materials, prizes for patents, regulation of product standards, and development of financial and transportation infrastructure. His suggestions fell mostly on deaf ears as many of the men dominating politics at the time were Southern plantation owners who didn’t see the need or have in interest in developing manufacturing industries. It wasn’t until the War of 1812 broke out and America was forced to be independent that these policies were adopted and the U.S. the started on the road to becoming an industrial powerhouse.

Chang equates the policies utilized by neo-liberals as “kicking away the ladder”. Once the rich countries have industrialized they want to keep others from becoming industrialized. They want countries to remain primary resources produces and consumers of their manufactured goods such as automobiles and electronics.

America was once the underdog, a fledgling nation many thought wouldn’t survive its first few years of independence. If the country had not adopted protectionist policies to develop its industry it may not have or would still be a primary resource producing backwater country. These days many of us enjoy chauvinistic displays of nationalism and think of our land as “the greatest nation on earth” but we need to be more honest about the origin of the country, where it fits in today on a global scale, and what it will be in the future. If America truly is the land of freedom and democracy then Americans should support policy that allows other countries to develop the industries and the infrastructure of their countries which will allow them to be more self sufficient , not policies designed to make them reliant on the manufactured goods of industrialized countries. If America believes in democracy then it needs to support this claim by adjusting its policy both on an intra and international scale. If not it needs to be more honest and call itself a plutocracy bent on maintaining the status quo.

Columnist Joshua Lorenzo Newett is a novelist, entrepreneur, and English professor at The Korean Naval Academy in Jinhae, South Korea. Saving Bill Murray, his second novel, was recently published here.

Image courtesy of Shutterstock

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