Ordinary Gweilo

Democracy is a good thing, and free markets are a good thing, so it stands to reason that every country should be moving as quickly as possible towards full democracy and a free market system. Obvious really?
This is a very interesting piece, arguing against the conventional wisdom, and suggesting that we shouldn’t be in a mad rush to impose changes.

Conditions in the developing world make the combination of markets and democracy much more volatile than when western nations embarked on their paths to market democracy. The poor are vastly more numerous, and poverty more entrenched, in the developing world today. In addition, universal suffrage is often implemented wholesale and abruptly, unlike the gradual enfranchisement seen during western democratisation.

The other big change compared to earlier times is that people in poor countries are much more likely to be aware of the higher standard of living enjoyed overseas (notably in the United States). Is it any surprise that when the Americans start promising that life will get better, people get impatient.

What is to be done? Retreating from democracy in Iraq is not an option. Democracy and market-generated growth, in some form, offer the best long-term hope for developing countries. But there are many different versions of free-market democracy and the US has been exporting the wrong version – a caricature. There is no western nation today with anything close to a laissez-faire system. Yet for the past two decades, the US, along with international institutions like the World Bank and IMF, has been pressing poor countries to adopt a bare-knuckle brand of capitalism – with virtually no safety nets or mechanisms for redistribution – that the US and Europe abandoned long ago.

The Americans push for free-trade and then when they feel that their own interests are under threat they impose tarrifs or quotas, or try to persuade countries to revalue their currencies so that the prices of their exports will rise. One law for the rich, and another for the poor!

It’s an interesting, well-argued piece, and not just a tirade against capitalism.