You’ve probably heard the Gospel of Free Market: if a country wants to break the cycle of poverty and achieve economic growth and prosperity, it should deregulate, open up its market, welcome investors, and unleash the power of the private sector. Nationalisation is anathema; protection is heresy; subsidies are so passé. This pervasive neo-liberal orthodoxy is driven with unrelenting vigour by the “unholy trinity” of International Monetary Fund (IMF), the World Bank and the World Trade Organisation (WTO).

Ha-Joon Chang, the “heretic”, set out to challenge this orthodoxy in Bad Samaritans. The title, of course, is a play on the biblical story of the Good Samaritan – the man who went out of his way to help a man left for dead on the road by armed robbers. Here the parable is flipped: The Bad Samaritans are the rich nations, and they have gone out of their way not only to give, but to force free market orthodoxy down the throat of unsuspecting, and often helpless, poor countries. They use the “unholy Trinity” to great effect in this relentless crusade for free market.

Chang, though, is not all sound and fury. He is meticulous and rigorous in his attention to details. For good measure, to the extent that he is a believer in globalisation, he is hardly a revolutionary. He may be critical (of free market), but he is not a radical. His overall thesis is simple: the developed countries of the world are not honest about the policies and strategies they deployed on their way to greatness, notably infant industry protection, subsidies and the leadership role of government in industrial policies and other forms of interventions. It was only when these nations attained a high of level of technical competence, technological leadership and industrial competitiveness that they opened up their markets. On the contrary, the “advice” – and it is more than mere advice – they are giving to poorer countries today amounts to forcing a football team of 11-year-old girls to compete with the Brazilian national team on a “level playing field”. It is a level playing field of unequal competitors – a clear contradiction in terms.

The book is organised into nine chapters, in addition to the prologue and epilogue. The first chapter explores the myths and facts about globalisation; the second chapter provides a historical analysis of industrial policies of rich countries. In the next three chapters, Chang critiques – but by no means dismiss – free trade, foreign investment, and private enterprise. After this, in chapters six, seven and eight, he highlights some main obstacles that developing countries face in their struggle to remount the ladder of economic prosperity – intellectual property roadblocks; restricted access to international finance; and weak institutions. In the final chapter nine, he deals with the subject of false national stereotypes.
Chang begins with his homeland of South Korea. In 1961, the average South Korean yearly income stood at $82 per person, which was less than the average income of $179 per person in Ghana at that time. In short, South Korea was one of the poorest countries in the world. Within 40 years, however, the per capita income in South Korea has grown about 14 times in terms of purchasing power. “It took the UK over two centuries and the US around one and half centuries to achieve the same results”. So how did the South Korean “miracle” come about? Chang’s riposte is worth quoting at length:

(The) neo-liberal establishment would have us believe that, during its miracle years between the 1960s and the 1980s, Korea pursued a neo-liberal economic development strategy. The reality, however, was very different indeed. What Korea actually did during those years (and) decades was to nurture certain new industries, selected by the government in consultation with the private sector, through tariff protection, subsidies and other forms of government support…until they ‘grew up’ enough to withstand international competition (page 14).

The South Korean government was pragmatic, rather than revolutionary, in its approach. It did not, like the communists, reject the market; neither did it embrace free market blindly. It saw the market as an opportunity that can only be harnessed by means of appropriate policy interventions, led by the government.
There is a question, though: is South Korea an outlier, and an exception to the gospel of free market? Quite the contrary, says Chang, and here he throws a “bombshell”: the prevailing history of capitalism is one bad fiction, and today’s poor countries are the main casualties. For, as the rest of the book then sets forth, practically every developed country today became rich “on the basis of policy recipes that go against neo-liberal economics.”

Enter Great Britain. Until the time of the Tudor monarchs, Britain was “a relatively backward economy, relying on exports of raw wool to finance imports”. At that time, Belgium and the Netherlands were the leaders of the Woollen manufacturing industry, which was Europe’s high-tech industry at the time. In order to turn things around, the British government “used protectionism, subsidies, distribution of monopoly rights, government-sponsored industrial espionage and other means of government interventions to develop England’s woollen manufacturing industry”. These protectionist policies arguably reached its peak during the 21-year prime ministership of Robert Walpole (1721-1742). Export subsidies were given, tariffs on foreign goods were significantly raised, and British manufacturing industries were subsidised and encouraged to export.

The Americans followed Britain’s protectionist example when, in 1791, Alexander Hamilton submitted to the US Congress his Report on the Subject of Manufactures. The key measures proposed by Hamilton include: protective tariffs and import bans, subsidies, export ban on key raw materials, and regulation of product standards. Abraham Lincoln took this further in his presidency, earning the reputation as “the Great Protector”, on account of his strong advocacy for infant industry protection. Curiously, throughout the 19th century and right up to the 1920s – when the US was the most protectionist country in the world – it was also the fastest growing economy.


Chang does not romanticise protectionism and state-led industrialisation as the one magic wand that will solve all the problems of poor countries. He admits that “not all countries have succeeded through protection and subsidies, but few without them”. He also highlights some obstacles developing countries may face if they adopt protectionist strategies. Perhaps a weakness of the book is the absence of detailed historical analysis of failures experienced by some developing countries who adopted protectionist and import substitution policies in the past, notably some Latin American countries in the 1960s and 70s. Developing countries planning to adopt protectionist strategies could learn a few things from past pitfalls. Chang also recognises that it will be much more difficult today for these strategies to succeed if the “bad Samaritan” countries are not persuaded that it is in their own enlightened interest too – especially with regard to new and bigger markets – if poorer countries employ protectionist strategies to grow their economies before opening up their markets.

Seun Kolade is a Lecturer in International Development at the London South Bank University, United Kingdom.  You can reach him through seunkolade2014@gmail.com

Author: Paulo Freire      Publisher: The Continuum Publishing Company                               Date: 1970

When Paulo Freire wrote Pedagogy of the Oppressed, the world was in the middle of fierce ideological war. The iron curtain was firmly shut, and the fire of anti-colonial struggle was burning wildly in the countries of Africa and Latin America. Nine years earlier, the Americans had invaded Bay of Pigs, and Frantz Fanon had published Wretched of the Earth, shortly before his death. It is therefore a telling commentary on the enduring nature of the work that Pedagogy of the Oppressed has continued to gain resonance and relevance today, especially outside its (apparent) immediate constituency of political philosophy and activism, to the world of theory and practice of education.

The book itself is organised into four chapters. In the first chapter, the author explores the nature of the historical struggle between the oppressed and the oppressor, making the case for the pedagogy of the oppressed. In chapter two, he analyses what he called the “banking model” of education, which is cast as the favourite method of the oppressor, by which they seek to “deposit” knowledge, define the reality of the oppressed and contain their ambition for freedom. This is contrasted with the “problem-posing model”, in which both the teacher and the student are recognised as co-creators of knowledge. The next chapter then explores in greater detail the “dialogic” method used in “problem-posing” education, and the various stages of investigation. In the final chapter four, Freire examines at length the struggle between mutually opposing dialogic and anti-dialogic model; the former an instrument of liberation, the latter an instrument of oppression.

Freire sets out the fundamental principle that “concern for humanization leads at once to the recognition of dehumanization, not only as an ontological possibility but as an historical reality”. Both humanisation and dehumanisation are real alternatives for people, the latter being a negation of the former. In a classical collision of opposites, dehumanisation affirms and validates humanisation by negating it. Dehumanisation is therefore a “distortion of the vocation of being more fully human”. In the noble struggle to regain their humanity, the oppressed cannot afford to become like the oppressor, but rather the liberator of both the oppressor and the oppressed. The oppressor is himself “dehumanized because he dehumanizes others”, but it is only the oppressed, and not the oppressor, that is capable of liberating himself and others. This, then, is the historical task to which the oppressed must commit.

To succeed in this task, the oppressed need a critical pedagogy, by which they can objectify the oppressor and the world of oppression in order to transform them. This praxis- this combination of critical reflection and action- must begin with a process of self-discovery, first as members of the oppressed class, but also as bearers of the “image of the oppressor” which they have internalised as a model of being. For it is this duality which makes the oppressed yearn for freedom, yet fear it. It is this internal contradiction that summons the oppressed to liberty, yet tempts them to become like their oppressors. The conflict for the oppressed, says Freire, “ lies in the choice between being wholly themselves or being divided; between ejecting the oppressor within or not ejecting them; between human solidarity or alienation; between following prescriptions or having choices; between being spectators or actors; between acting or having the illusion of acting through the action of the oppressors; between speaking out or being silent, castrated in their power to create and re-create, in their power to transform the world.”

Given that the task of transforming the situation of oppression involves struggle and resistance, is violence inevitable? To this Freire offered that violence has already begun with the establishment of “the relationship of oppression”. Even when it is sweetened by false generosity, “any situation in which “A” objectively exploits ‘B’ or hinders his or her pursuit of self-affirmation as a responsible person is one of oppression, and in itself constitutes violence”. For good measure, “any situation in which some individuals prevent others from engaging in the process of inquiry is one of violence”. Violence as such “is initiated by those who oppress, who exploit, who fail to recognize others as persons—not by those who are oppressed, exploited, and unrecognized. It is not the unloved who initiate disaffection, but those who cannot love because they love only them- selves…”

Turning his attention now to the Teacher-Student relationship, Freire says that the prevailing model of education is one in which the teacher is cast in the role of the narrator in an act akin to depositing in a bank. The student, on the other hand is cast as “container” and “receptacle”, uncritically absorbing, and then regurgitating, the teacher’s deposit of knowledge. In this model, “the teacher presents himself to his students as their necessary opposite; by considering their ignorance absolute, he justifies his own existence”. The students, submerged in this reality, calmly accept their fate as justifiers of the teacher’s existence. This type of “education” is therefore an instrument of the oppressor to make the oppressed accept and adapt to the situation of oppression.

Problem posing education is entirely opposite. In this model, both the teacher and the student are seen as co-creators of knowledge, learned as well as learning. Here, “the teacher’s thinking is authenticated by the authenticity of students’ thinking”. The student is therefore not merely subordinated to the teacher, but both the teacher and the student are jointly responsible for the process of learning and creating knowledge. While the teacher may have attained a higher level of consciousness of themselves and of the world, they can only help raise the consciousness of others in an ongoing process of dialogue, not by “depositing” knowledge in the student.

This dialogic process is in clear contradiction to the anti-dialogical method of the “banking” model. The one entails a practice of freedom; the other, of domination. “Banking education resists dialogue; problem-posing education regards dialogue as in-dispensable to the act of cognition which unveils reality. Banking education treats students as objects of assistance; problem-posing education makes them critical thinkers. Banking education inhibits creativity and domesticates (although it cannot completely destroy) the intentionality of consciousness by isolating consciousness from the world, thereby denying people their ontological and historical vocation of becoming more fully human.” In the dialogic process of problem-posing education there are “neither utter ignoramuses nor perfect sages. Only learners.

Paulo Freire says nothing in this book about which methods of assessment and examination is suitable for the “problem-posing” model, or indeed about how the dialogic method can justify the role of the examiner. Admittedly, this is an introductory, exploratory book, but there will be ongoing debates about whether or not “problem-posing” education can accommodate some “banking” elements, especially in the initial stages, say with respect to summative assessment of students. Nevertheless his central thesis is highly stimulating and thought-provoking, even if it is, in many respects, a re-invention of the ancient method of Socratic dialectics.

Transworld Publishers, 2000

276 pages

“The hour of capitalism’s greatest triumph is its hour of crisis”. This is Hernando De Soto’s opening statement in what has now become a classic of property rights. He starts with a brief description of the “triumph” of capitalism and the end of the cold war. “Capitalism”, he says, “stands alone as the only feasible way rationally to organise a modern economy. At this moment in history, no responsible nation has a choice”. So then, the “responsible” nations of former communist and third world territories embraced capitalism with considerable enthusiasm, following the fall of Berlin Wall. And wait for it: they came away with bitter disappointment. And how did the leaders and Capitalist America and Europe respond? With the same old “wearisome lectures: stabilize your currencies, hang tough, ignore the food riots, and wait patiently for the foreign investors to return”

Why has capitalism prospered in the West, and generally failed elsewhere? That is the Big Question De Soto sought to address in this book. Of course, 15 years after it was originally published, some of the claims are now dated, but the key ideas continue to gain traction in policy and development research circles.

De Soto empathically rejects the suggestion that “Third World” peoples are lacking in entrepreneurial spirit or market orientation. On the contrary, he says, the inhabitants of poor countries are highly entrepreneurial, and have such a ready grasp of technology that American Businesses, for example, are “struggling to control the unauthorised use of their patents abroad”. So then, again, why has capitalism failed so woefully in these poor countries?

De Soto’s big idea is “Property”, and with it the explanation of the inability of these poor nations to produce capital, which is in turn the “lifeblood of the capitalist system”, the means by which it “raises productivity of labour and creates the wealth of nations”. The curious paradox is that most of the poor already possess the assets to make a success of capitalism. By one estimate, “the value of savings among the poor is… forty times all the foreign aid received throughout the world since 1945”. The poor have things, “but they lack the process to represent their property and create capital. They have houses but no titles; crops but not deeds; businesses but not statues of incorporation.

At this point, De Soto introduces his “five mysteries of capital”, and these will be the titles of the next five chapters: The mystery of missing information; the mystery of capital; the mystery of political awareness; the missing lessons of US History; and The mystery of legal failure.

The author now turns his attention to the phenomenon of “dead capital”, and how this is caused and aggravated by the lack of legal documentation and formal representation of property held by the poor. In Haiti, for example untitled real-estate holdings were, as of 1995, found to be worth 158 times the value of “all foreign direct investment in Haiti’s recorded history”. At the time of writing, De Soto and his team estimated that the total value of real estate held but not legally owned by the poor was $9.3 Trillion, which was “about twice as much as the total circulating US money supply”! The poor face great obstacles to legally register their property and businesses. In Haiti, it takes an estimated 19 years to go through all the bureaucratic obstacles to legally own a land! And what is not formally documented, legally owned, cannot be taken to the bank. It is dead capital, and cannot be transformed into usable forms to facilitate or promote economic productivity. The vast assets of the poor, because they are not fixed in a formal property system, are very difficult to move in the market. Formal representation makes assets more fungible.

However, it is instructive that the capitalist nations of the West have in fact been through the often difficult process of transition from undocumented and informal arrangements to legally documented property rights, and this formal representation has been instrumental to economic. In Britain and the rest of Europe, the process took about three hundred years of tumult and turbulence, during which the great numbers of informal settlers and unregistered entrepreneurs came in constant conflict with the law. Ultimately, officials and kings came to the final recognition that the problem was actually with law, and not with the people. The extralegal settlers and businesses had come to stay, and the law needed to catch up and integrate them. Nowadays, the idea of fixed, formalised assets is taken for granted in Europe, and this is partly why the economic preachments of the West often fail to address the peculiar circumstances of the developing world, because certain fundamentals, including property rights, cannot be taken for granted in these poor countries. For example, in sub-Saharan Africa, the vast majority of property held by the poor are untitled, not legally owned, and cannot be used as collaterals in banks, or in other legally binding business transactions. Millions of these innovative entrepreneurs are locked out of the mainstream, left to depend on scraps and crumbs in the informal sector.

The United States has, relatively more recently, gone through a similar process. If we set aside, for a moment, the tragic episode of land grab from native Indians, European settlers in North America were squatters who simply occupied tracts of lands, often secured by a few deadened trees at the boundaries. For a long time they were deemed illegal trespassers by the official governments of the colonies, and threatened now and again with evictions. After years of bloody conflicts between the squatters and the government, they ultimately came to formal agreements on legal documentation of the squatters’ holdings.

Paradoxically, a major obstacle to needed reform in poor countries today is the legal system that is not only unfit for purpose, but also resistant to change. De Soto does not like lawyers, obviously. He considers lawyers to be, by default, stubborn defenders of the status quo against the practical realities of human experience. In a sense, De Soto seems to be saying, by way of an old cliché, that the law was made for man, and not man for the law. A legal system that keeps majority of the population of out official mainstream is bound to fail, sooner or later. A functional law should reflect the reality of how people live, not hinder or stifle human enterprise and creativity. Lawyers should support, and not stand in the way of, necessary reform.

As compelling as De Soto’s arguments are, it is impossible to shake off the nudging feeling that the challenge is a bit over simplified, and that his prescribed solution is a little over-stated. The challenge of under-development may be more complex than antiquated property laws. There are other institutional and leadership challenges. Even at that, his central thesis is persuasive: get rid of artificial, antiquated barriers and give people the rights and opportunities to make the best of their assets. Then stand by and watch them make great, unprecedented contribution to “the wealth of nations”.

Author: Michael E. Porter

Publisher: Palgrave, New York, 1998

855 pages

Unlike David Landes’ Wealth and Poverty of Nations, which was unashamedly an euro-centric take on the political history of development, and unlike Jared Diamond’s Guns, Germs and Steel, the award winning anthropological history of development weakened by its far reaching environmental determinism, Michael Porter’s work may be less entertaining as a prose, but it is, I think, the more rigorous and more credible work of the three. Of course, as we shall soon see, it is not entirely devoid of ideology, even if the author was loathe to admit to any ideological bias.

As with books of this nature, the author begins with the standard repudiation of the old paradigms for explaining comparative, and disparate, development and under-development of nations. Porter’s central argument, quite persuasive on the face of it, is not so much that old explanations are fundamentally wrong, but that they are weak, inadequate to the task of a comprehensive, holistic explanation. For example, says, Porter, the explanations based on macro-economics is weakened by the fact that some nations, including Japan, Italy and Korea, had experienced significant growth in spite of budget deficits, appreciating currencies, and high interest rates. Similarly, the explanations based on cheap and abundant labour could not account for the giant strides of countries like Germany, Switzerland and Sweden. Also, if growth was based on abundant natural resources, nations like Japan and Switzerland should be lagging behind. Finally, Porter contends that neither government policy, nor management practices, offer a complete, coherent explanation for the progress and regress of nations.

Instead, Michael Porter introduces his central idea of competitive advantage, as opposed to the old idea of comparative advantage. The building block of this competitive advantage is the diamond of factor conditions, demand conditions, related and supporting industries, and firm structure, strategy and rivalry. Taking the firm, rather than the nation, as the main unit of analysis, Porter would return now and again to the diamond in his discussion of the competitive advantage of firms within nations. Thus, you will find some terms and themes oft repeated to support the central arguments.

The book itself is divided to four parts: Foundations, Industries, Nations, and Implications. The three chapters in Foundations were devoted to more elaborate introduction and discussion of his main concepts, including the four components of the diamond. In the following parts and chapters, he would take the readers through an extensive body of data obtained from a large study of 10 advanced nations: United States, Britain, Germany, Japan, Korea (South Korea), Switzerland, Sweden, Italy, Denmark, and Singapore. Considering this study was set in the mid and late eighties, it is curious that the Soviet Union, the second biggest economic and military power at the time, got only a very brief mention in page 1. Of course, this may be partly due to paucity of data and lack of access to the Soviet Union, but in terms of the key arguments effectively advanced in the book against the socialist model, it would have been useful to get a more detailed explanation of how that nation was, outside of Porter’s model, able to achieve competitive advantage for a long term, before and since the second world war.

Porter explains that basic factor conditions- natural resources and cheap unskilled labour are mainly relevant only in the earlier stages of a nation’s economic development. If a nation wants to upwards and onwards on the ladder of development, it needs to move first from basic factors to advanced factors- more educated and highly skilled work-force, and modern infrastructure. This is because, within the paradigm of competitive advantage, it is easier for other competing firms to replicate basic factors (for example by shifting production overseas, something American firms have done vis-a-vis China, or importing cheap raw materials), but advanced factors take much longer to replicate. Even so, right from this early stage, the four components of the diamond work hand in hand. The demand conditions are considered in terms both of quantity and quality. For the former, the sheer number of people within the nation where the firm is operating plays a big role, but this role is not as significant as that played by the quality, or sophistication, of this home demand. Put differently, better informed, sophisticated consumers positively influence the competitive advantage of nations by putting pressures on firms to innovate and upgrade their production. Less informed buyers invariably lead to firms’ stagnation and loss of ground in the global market. The third component of the diamond, related and supporting industry, feeds well into the factors and demand conditions, as spin offs and new start ups agglomerate in clusters to enhance productivity and improve national competitive advantage. This process is mutually reinforcing. For instance, progress in an upstream industry like Materials and Metals lead to spin offs in automobile industry. And as the automobile industry progresses, there is more demand for iron and steel. The fourth component of the diamond –firms structure, strategy and rivalry also integrates well into this. With respect to this fourth component, Porter was especially emphatic about the critical role of domestic rivalry for continuous innovations and upgrading of processes and products in a nation’s industry, and he is critical of mergers and acquisitions, as he is scathing about “counter-productive” government interventions by way of subsidies and protectionism.

Porter’s theory is that the competitive advantage of nations is essentially an aggregate of the competitive advantage of individual firms, across the whole spectrum of sectors, in the nation. Even when firms invest overseas, the home base (where the firm’s central management and R &D are located) play the most significant role in terms of contribution to the nation’s aggregate competitive advantage.

I found the book to be quite interesting and thought provoking, and I find most of its central arguments to be quite persuasive. However, I think Porter was hard pressed to underplay the role of government, and his lack of detailed treatment of the Soviet Union was a weakness. I am not convinced that, without more aggressive and focused government intervention at the early stages, nations of Africa, for example, can adopt Porter’s model as it is, and genuinely expect to achieve competitive advantage in the modern global market. Certainly, recent developments in Brazil and China (not covered in the book, of course), appear to show that more aggressive, even centrally planned, government intervention can in fact work well in a nation’s objective to achieve competitive advantage.