Monday, April 9, 2012

How rich countries got rich... (review)

image from Anthem Press India

Tomorrow morning there will be a small seminar and discussion on the book's topic within the UMB. The review is publicly available and can be read by clicking this link.

Basically, Reinert's book (and his The Other Canon Foundation) is a critique on neo-liberalism from within capitalism rather than from the left. As he points out, there is 'another canon' within capitalism that doesn't fully agree with the current trend of globalization and opposes the abstract 'one-size-fits-all' model that is being spread by the Washington institutions.

Unconditional free trade has up to now only widened the gap between rich and poor. Instead of a convergence of world income, we find that while the rich nations enjoy sustained growth, ninety of the world's nations were poorer in 1997 than in 1990.

This is the risk of the current view on globalization, the value chains of production are broken up in such a way that the rich countries take all the high-skilled jobs while the activities of lower pay are given to the poor countries: poor countries end up specializing in being poor and rich countries specialize in being rich.

To break this trend, just 'making the market' free is not the right answer. Economic growth is a joint product of synergies, a large division of labour, increased returns and new knowledge.

I would recommend all to read the book and form your own opinion.

I have found one incorrect reference though: in chapter 2 "The Evolution of the Two Different Approaches" talks about "post-authistic economics" on page 45, footnote 32 gives a link to Edward Fullbrook's website. This link is misprinted and should be , I hope this will be corrected in newer editions.




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