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Economic Liberalism: a revised version of Mercantilism

Despite the 2008-09 global economic meltdown, the architects and proponents of economic liberalism still believe in the sanctity of the system which, they maintain, has brought prosperity to countries adhering to its core principles, i.e. free trade, free flow of capital, limited government interference and last, but not the least, freedom of expression. Assuming that the concept works as advertized, why is it that China whose economic and political system is the exact opposite of what have been prescribed by the architects of economic liberalism prospering while other developing countries are reeling. More to the point, why hasn’t the system worked in Haiti and Africa?

While most economists are quick to point out the contrast between mercantilism, the economic system that existed from the sixteenth to the nineteenth century, and economic liberalism; the two systems, at first glance, remain identical to the core as both rest on the premise of protecting the prosperity of the economically advanced countries. For example, mercantilism relies on protecting an economy with subsidies for local industries and high tariffs on imported goods, which automatically increase exports to and restrict imports from the other side. By the same token, economic liberalism prevents the other side from subsidizing its industries and imposing high tariffs that would enable it to export more goods while restricting or controlling the volume of its imports. As they say: there is nothing new under the sun.

Simply put, economic liberalism is a revised version of mercantilism, which like the old system, is backed by force and coercion that guarantee its acceptance by the least developed countries (LDC). This helps explain why China, a giant and powerful country, could not be folded into the system while poor African nations and Haiti are forced into it through coercive measures, including military intervention. With the IMF (International Monetary Fund), World Bank and WTO (World Trade Organization), acting as enforcers, any poor country that resists their directives finds itself unable to finance its development projects or accused of hampering world trade through protectionism.

The rigidity of the enforcers is such that funding for basic development projects like water purification and sanitation in the underdeveloped world is sometimes withheld until the targeted country accepts to “restructuring its economy”, code word for opening its internal market to unrestricted and subsidized imports. Facing high unemployment, political instability (induced or conventional) and other social pressures associated with the lack of economic development, the beleaguered country inevitably capitulates and accepts the onerous demands formulated by the IMF, World Bank and WTO.

Two particular situations involving Japan and Haiti explain the paradox or one-sided approach to the implementation of economic liberalism in favor of economically advanced countries. Up to the mid-1980s, Japan, one of the world’s leading exporters of manufactured goods, not only subsidized its rice growers but also protected them from foreign competitors on the ground of national security. Starting in the mid-1980s, Haiti, a primarily agricultural country, was forced to end subsidies to its farmers and lower its tariffs on imported agricultural products as a condition to receiving development loans from the World Bank and other international financial institutions. Consequently 380.000 Haitian farmers lost their jobs and migrated to Port-au-Prince with their families, creating the overcrowding conditions that led to the catastrophe of January 12, 2010.

Making matters worse, state-owned enterprises such as the country’s flour mill, sugar refinery and the only producer of cement were privatized and then closed to facilitate imports. The lost of jobs notwithstanding, Haiti is now a net importer of these commodities it once produced for internal consumption. Apparently the system is not working in Haiti, but incredibly it is being advertized as the only remedy to the country’s chronic poverty, economic doldrums and political instability. Aptly, the rush to integrate the country into the global economy without the prerequisites, i.e. an industrial base, a vibrant middle class and good political and economic governance, was the reason behind the February 29, 2004 invasion not political instability as the Security Council resolutions pretend.

While dictatorships are proficient at quelling dissent and imposing their will, democracy, a political system easily subverted by outsiders as well as insidious insiders, generally remains the Trojan horse of economic liberalism, in economically unstructured and corrupt countries. The reason: democracy provides a legitimate cover for the implementation of the system, which usually involves economic dislocation and other social ills, as is currently the case with Haiti and many undeveloped countries in Africa.

Most importantly, in injecting social and political freedom as an integral part of economic liberalism, the architects of the system are simply trying to make it palatable to the freedom-starved and economically destitute Third World, although China’s robust economic growth and authoritarian political system naturally take the sail out of that notion. Beijing’s success however cannot be replicated in Haiti and African countries partly because of induced political instability, hence the dilemma.

So what are Haiti and Africa to do? Touted as America’s little Africa, Haiti is on her knees, with her arms bound, calling to her ancestors for deliverance since the January 12th quake that puts her on the receiving end yet again. Not surprisingly, the architects of economic liberalism find a plethora of loopholes from which to impose economic measures that undermine Haiti’s sovereignty under the veils of Democracy, Manifest Destiny and Empire. Unless there is a geopolitical realignment, these countries cannot do anything at this juncture, except engaging in passive resistance.

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Haitian Times

Haitian Times

The Haitian Times was founded in 1999 as a weekly English language newspaper based in Brooklyn, NY.The newspaper is widely regarded as the most authoritative voice for Haitian Diaspora.
Haitian Times
May. 05, 2012

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