Geopolitical Myths by Adnan Khan

The last three decades have seen Capitalism dominate the international development scene. It has completely monopolised economic development and enforced its formula upon the world. The Asian tiger economies of China, South Korea, Taiwan, Singapore and Hong Kong are shown regularly as successful nations who adopted liberalism and progressed. The IMF alongside the World Bank proclaimed industrialisation and the diffusion of liberal economic ideas would transform traditional economies and societies. These influences would place poor countries on a path of development similar to that experienced by Western industrialised nations during the Industrial Revolution.

Today poverty is the state for the majority of the world’s people. Three billion people in the world live on fewer than two dollars a day; another 1.3 billion people live on less than one dollar a day.

1.3 billion have no access to clean water; three billion have no access to sanitation and two billion have no access to electricity. Liberalism has actually been the cause of the wealth disparities in the world and the poverty the majority of the world’s people face. Liberalism has resulted in the Western world feeding off the remainder of the world. Liberalism has in no way helped alleviate poverty, it actually contributed to it, and hence any continuation of liberal economic policies in the third world will result in the poor getting even poorer.

Liberalism has even created huge wealth disparities in the West and this can be seen by looking at just the US and the UK. The UK for example generated wealth (GDP) of £2.2 trillion in 2005, this was an increase from the previous year which for liberal economists means people have more wealth, have more to spend thus they must be happy. However, if we look at how much the 60

million population of the UK received of this generated wealth, 2005 statistics from HM Revenue and Customs show that the richest 10% have more then 50% of the nation’s wealth and that 40% of the British population shared in only 5% of this wealth. This has resulted in the majority of the population resorting to borrowing to fund their lifestyles and this is why UK consumer debt is more than £1.3 trillion, more than the actual economy. The US situation is even worse; the US may generate $13 trillion a year in wealth but national debt is $8.5 trillion. This means US citizens are funding their lifestyles by borrowed money rather than the $13 trillion the economy generated. In a 2005 Harvard report it was calculated that 10% of the population owned 71% of the wealth, and the top 1% controlled 40%. On the other hand, the bottom 40% owned less than 1% of the nation's wealth.

Hence liberalism has created an enormous wealth disparity even in the developed world who have lived under free markets for over a century.

The Western world themselves developed with policies completely opposite to what they are propagating today. In his groundbreaking work, Kicking Away the Ladder (2003), Professor Ha Joon Chang of Cambridge University documented the development of every industrialised country, showing that protectionist policies were a fundamental part of development strategy in almost every case. The process of development that emerges from this story is not maximizing comparative advantage but rather shifting comparative advantage to high value goods through calculated market distortions. In the case of the UK and the United States, those market distortions originally came in the form of colonialism and slavery. But market distortions continue in the US today in the form of agriculture and steel subsidies, not to mention the tremendous government spending on biotechnology and defence, which largely serves as a subsidy for those sectors.

Hence liberalism is the obstacle for development in the third world not the solution. It is the direct cause of poverty for the third world.