Review - Bad Samaritans, by Ha-joon Chang

Hajoon Chang’s “Bad Samaritan” Book Summary and Main Arguements

In the 1980s, as developing countries across the world struggled with crushing debt burdens and slow-growing economies, they were pushed—by the United States and international financial institutions—to embrace a set of policies that promised to rescue them. These policies, which are often grouped under the label neoliberalism, proceeded from the assumption that developing countries interfered too much with the workings of their markets. Instead, countries needed to lower tariffs and embrace free trade, privatize state-owned industries, end subsidies to businesses and consumers, balance their budgets, and be friendlier to foreign investment. If a country got its financial house in order and let the free market work its magic, in other words, the country could have a good chance of watching its economy boom.

But neoliberalism turned out not to be the panacea its advocates promised. Even as developing countries opened up their markets, sold off assets, and cut back on spending, their economies for the most part stagnated. In fact, over the past twenty-five years, growth rates in most of the developing world have been lower than they were during the 1960s and '70s, when state interventionism was in economic vogue. And while there have been some massive success stories in recent decades—most obviously China and India—the gap in wealth between the developed world and most developing countries has actually widened.

Plenty of explanations have been given for neoliberalism's failure, including the persistence of corruption, the importance of culture, and the simple failure on the part of many countries to follow the neoliberal agenda completely. But in his new book, Bad Samaritans, the Cambridge economist Ha-Joon Chang offers a more succinct solution to the puzzle: Neoliberalism didn't work because the advice it gave made no sense. In thrall to the "myth of free trade," Chang argues, neoliberals ignored the "secret history of capitalism": If developing countries' embrace of the free market has failed to deliver what it promised, it's because "free markets are not good at promoting economic development".

Critical Analysis

Trade between countries is a fundamental part of global connectivity and in shaping the global economy. Benjamin Franklin, in 1774 stated, “No nation was ever ruined by trade” (Franklin, 1774). Proving trade is still a large part of today’s discussion more recently is Barack Obama, President of the United States when he stated, “Trade has been a cornerstone of our growth and global development. But we will not be able to sustain this growth if it favors the few, and not the many” (Obama, 2010). The on-going discussion on free trade and capitalism between countries harbors different perceptions, views and realities that take into account political agency and power dynamics that shape them.
Hajoon Chang is the author of ‘Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism”. In his book he criticizes the idea of “free” trade between developed (rich) and developing (poor) countries. He challenges the main principles of liberal free trade that include privatization, patent laws and copy right protectionisms. When critically examining Chang, it is clear that he uses a tunnel vision of solely economic perspectives in order to explain positives and negatives as a result of free trade. This is demonstrated through his failure to take into account social interactions and gender inequality as a tool of measurement of economic growth. Also, in Chang’s lack of acknowledging the role of dependency. Chang also uses generalized terms that are non-specific to one particular country when using stating his analysis. These factors are integral in framing a picture of a country's development that is not solely focused on economic gains and losses. But rather how free trade and capitalism between countries affects arenas outside of the economic one.

Ha-Joon Chang

The forgotten impact of social interactions
Chang, being an economist, focuses largely on the economic perspectives and reasons that developing countries do not benefit from free trade and globalization. Chang states that, “Economic development is all about absorbing advanced foreign technologies. Anything that makes it more difficult, be it the patent system or a ban on the export of advanced technologies, is not good for economic development. It is as simple as that” (Chang, 2008). His self declared simple view of the tie between technological and economic development leaves out other important determinants of the growth of an economy. A country, regardless of being considered developed or developing has individual social agencies that have varying influence on economic policies. Change or stasis arises from social interaction, such as bargaining, but is not reducible to it because all agency is structured (Sell, 2005). This demonstrates that the social aspects of a society are as influential in shaping structures of policies and agency as economic factors are. This is something that Chang fails to take into consideration when he looks solely at economic principles for reasons of trading.

Social interactions include domestic issues within the state. Many of Chang’s assumptions distinguish between ‘developed’ and ‘developing’ countries. The problem with this is that it simplifies inter-state domestic conflicts or divisions within a country. Social interactions and relations within a country are large factors in determining economic prosperity or disparity. “Social interaction, and the role of agency, may result in structural change, depending on how bargaining power is converted into negotiating strength between agents” (Sell, 2005). The social realm is important when distinguishing the structural effects of how trade agreements are enacted. When comparing developed and developing countries Chang should not have just associated that they are two whole entities, instead of individual countries with complexities within it that have large varying influences.