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In contrast to the liberal consensus of letting the economy follow its own course is the school of national political economy and one of its exponents, Friedrich List argues that rather than pick a laissez-faire approach, protectionism in the form of tariffs actually helps in the development of national industries, and in turn, the economy as a whole (List, 1966 pp. 105-6). Determining that governmental policy and British control of key ports and economic supplies formed the cornerstone of British economic progress, List suggested that government had the responsibility of creating a strong economy by, contrary to the liberal consensus, playing an active role in economic development (List, 1966 pp. 119-120). Liberals tend to argue the state should restrict its role, Social democrats are more inclined for a big government role working they hope for the common good. List argues that state policy must play an active part, nothing that “the individual chiefly obtains by means of the nation and in the nation mental culture, powers of production, security, and prosperity, so is the civilization of the human race only …. possible by means of the civilization and development of the individual nation. (1966, pg. 141)”. List was writing his National Political Economy in the face of British commercial supremacy and was trying to determine a way of creating a stronger German state, and for List the only way to accomplish this was by creating a strong economy (List, 1966, pp. 31-2). Liberalisation of an underdeveloped economy results in the domestic market being dominated by large foreign multinationals or (more frequently) unfavourable terms of trade which increase exposure to international economic volatility, or the dominance of the economy and the sustenance of people’s lives by foreign outsiders who may not have an interest in the welfare of the nation as a whole at heart (List, 1966, p 24 & pp 47-8, & p 162).
List explains that while an active government role is crucial, it must also be under strict coordination with other factors in mind which most liberal thinkers usually tend to ignore-mainly, the development of resources and culture within a country (List, pp. 191-2). Fukuyama (1999, p. 11-14) on his part explains that the fast growth and the efficiency of government can be linked to the unique cultural structure of East Asian societies which made possible policy coordination required for massive-scale economic development in the East Asian economies. This is also a point that is reflected in the thinking of Clark and Chan (1994), who in the paper “Market, State & Society in Asian Development” who refine further Fukuyama’s arguments on trust and social values, stating: “…there are probably parts of most (if not all) cultures that are conducive to development, while other parts can be stupefying. What is necessary is to search for the conditions that make different aspects of a culture operative in affecting a political economy… (1998, p. 37)”
Economic nationalism and development of the 3rd worldEdit
In early 2009 at least one person hoped for this.
The recent arrival of Barack Obama on the stage of American politics and the global slowdown may well mark an end to Western hypocrisy in terms of free trade. It is hoped however that with Barack Obama in office, a new round of reexamination may occur in which the West may realise that its economic barriers cause nothing but problems for the Third World and subsequently desist from maintaining them.
- Friedrich List, The national system of political economy (New York : Kelley, 1966).
- Steve Chan, Cal Clark and Danny Lam (eds.), Beyond the developmental state : East Asia's political economies reconsidered (Basingstoke : Macmillan, 1998)
- F. Fukuyama, Trust : the social virtues and the creation of prosperity (London : Penguin, 1996)