AMY GOODMAN: Can you explain what are neoliberal policies? And then you can critique them.
HA-JOON CHANG: Yes. Well, basically, the reason why it’s called “neoliberal” is that it’s a successor to nineteenth century classical liberal doctrine. I mean, “liberal” in American usage usually means kind of the left to the center, but in the European usage, “liberal” means basically belief in the free market and private ownership and basically rule of money.
Now, neoliberals have moderated some of the old liberal beliefs. For example, the old liberals actually thought that democracy was bad for capitalism. You know, they thought if you have democracy, poor people vote and create things like income tax, which they have, but, I mean, it actually helped the economy rather than destroyed the economy like the liberals said. So the neoliberals [inaudible] some degree of progressive income tax. The liberals used to be against, for example, having a central bank. The neoliberals actually like the central bank pumping money into the economy when things are going wrong. So it has modified the classical liberal doctrine, but neoliberalism still has, in its core, belief in free market, free trade, deregulated economy and private ownership.
AMY GOODMAN: Do you find it funny that you’re saying—that Gordon Brown is saying what you have been saying for a while—
HA-JOON CHANG: That’s right, yeah.
AMY GOODMAN: —talking about the hypocrisy of the West? But explain what that is, what the US has done or what the West has done with poorer countries when they’re in trouble, and then what we do when we’re in trouble.
HA-JOON CHANG: That’s right, yeah. For example, when the developing countries go into financial crises like the rich countries are experiencing today, they were told by the IMF and the World Bank, and ultimately the rich country governments which control these institutions, that they have to cut spending; ideally, they should run budget surplus. They have to raise interest rate to 30, 50, even 80 percent in some countries. And basically, they have to tighten the belt. Now that the rich countries have the financial crisis, they have cut interest rate to practically zero. You know, I mean, when South Korea had its financial crisis back in 1997, the IMF insisted that the country runs budget surplus equivalent to one percent of GDP. This year in the US alone, budget deficit is estimated to be equivalent to something like 12 percent of GDP.
Now, I mean, how do you explain that? I mean, that these policies are not good enough for you? I mean, “We’ll use one set of policy, which we think are the good ones, but you have to use something else.” You know, the American writer Gore Vidal once upon a time famously said that the American economic system is socialism for the rich and capitalism for the poor, and the international macroeconomic policies have been like that. I mean, it’s what I call monetarism for the poor and Keynesianism for the rich. So when the rich countries have a fall in demand, they think nothing of boosting it up by printing money and increasing government spending; the poor countries shouldn’t do that.
Now, it’s not only the macroeconomic policy where this hypocrisy has a role. For example, the rich countries have been telling the developing countries to adopt free trade and told them, “Look, I mean, all countries in history probably, with the possible exception of Japan, have become richer through free trade. So how do you think that you guys can manage it otherwise?” Well, actually, if you look at the British history, American history, you find that today’s rich countries used protectionism, center, left and right, when they were developing countries. You know, I mean, for about one century, until the Second World War, the United States was actually the most protectionist country in the world. You know, there’s something there when Pat Buchanan said free trade is not free American, because in its 200 years of history, it has practiced free trade only for about fifty years.
http://www.democracynow.org/2009/3/10/economist_ha_joon_chang_on_the
