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Market-friendly policies

Editor: Dr. Róbinson Rojas Sandford
Róbinson Rojas - 1998
A market-friendly strategy for development
Since the mid-1970s in the case of Chile and the early 1980s in the case of the rest of the countries in the region, Latin America have been applying "a market-friendly strategy for development" (see R. Rojas, International capital and intellectual dishonesty).
The model, being based on what I call "free-market fundamentalism", develops very well defined features, which will affect one factor of production (labour) in several negative ways while it will give the other factor of production (capital) the opportunity to become stronger, and more efficient. (The effects on the pattern of production, mainly leading to a fractured and dependent capitalist economy, are described in R. Rojas: 15 years of monetarism in Latin America: time to scream ).
Róbinson Rojas: - 1999
International capital and intellectual dishonesty
The basic rationale of what loosely is quoted or misquoted as "export- led growth" has its foundation on the ideological position that capitalist market always clears, and therefore delivers goods and services as needed by those members of society who can buy them.
The old triple alliance between the state, domestic monopolic capital and foreign capital was changed to a double alliance (domestic monopolic capital and foreign capital) with a political warden (the state) making sure that the domestic market was firmly in the hands of the double alliance.
In a more sophisticated fashion, the intellectuals employed/hired by the World Bank did put together, in 1991, the following conceptualization:
"The Report looks at the relation between governments and markets under four broad headings: human development, the domestic economy, the international economy, and macroeconomic policy. These areas of activity are interrelated. A relatively undistorted domestic economy rewards those who build up their human capital more generously than does a distorted one; at the same time, education makes the domestic economy more productive by speeding the adoption of new technology. To take another example, a stable macroeconomy helps the domestic price system because it clears away the fog of inflation. But microeconomic efficiency also makes it easier to keep inflation low: with fewer unviable enterprises, there will be less need of subsidies to swell the public sector deficit. All four sets of actions are worth doing in their own right. But because of such linkages, the results will probably be disproportionately strong if done together" (World Development Report 1991, World Bank, 1991, page 6)
K. Watkins - 1997
Globalization and Liberalization: Implications for Poverty, Distribution and Inequality
Some concepts come to define entire economic policy eras. For the 1990s, 'globalisation' will be recorded as the dominant theme. States are in retreat in the face of powerful international economic forces which, we are constantly told, are circumscribing their sphere of action. The resurgence of laissez faire economic theory celebrates the fact. While carrying different connotations for different people, globalisation encapsulates both a description of changing patterns of world trade and finance, and an overwhelming conviction that deregulated markets will achieve optimal outcomes for growth and human welfare. Seldom since the heyday of free trade in the nineteenth century has economic theory inspired such certainty - and never has it been so far removed from reality.
To the detached observer, noting the contrast between the presumed benefits of globalisation and developments in the real world, the international economy displays a number of worrying trends. Most obviously, poverty, mass unemployment, and inequality have grown alongside the expansion of trade and foreign investment associated with globalisation. In the developing world, poverty continues to increase in absolute terms, and the gap between 'successful' and 'unsuccessful' countries is widening. In the industrialised world, unemployment has reached levels not witnessed since the 1930s and, in some countries, income inequalities are wider than at any time this century. In a world of disturbing contrasts, the gap between rich and poor countries, and between rich and poor people, continues to widen. It is increasingly apparent that this reality will not be changed through growth alone. As the Pakistani economist Mahbub ul Haq once wrote:
"In country after country, economic growth is being accompanied by rising disparities, in personal as well as in regional incomes. In country after country, the masses are complaining that development has not touched their ordinary lives. Very often, economic growth has meant little social justice. It has been accompanied by rising unemployment, worsening social services and increasing absolute and relative poverty (ul Haq 1976)."

CATO Institute - U.S.A.
From CATO:
"Today, those who subscribe to the principles of the American Revolution--individual liberty, limited government, the free market, and the rule of law--call themselves by a variety of terms, including conservative, libertarian, classical liberal, and liberal. We see problems with all of those terms. "Conservative" smacks of an unwillingness to change, of a desire to preserve the status quo. Only in America do people seem to refer to free-market capitalism--the most progressive, dynamic, and ever-changing system the world has ever known--as conservative. Additionally, many contemporary American conservatives favor state intervention in some areas, most notably in trade and into our private lives.
"Classical liberal" is a bit closer to the mark, but the word "classical" connotes a backward-looking philosophy.
Finally, "liberal" may well be the perfect word in most of the world--the liberals in societies from China to Iran to South Africa to Argentina are supporters of human rights and free markets--but its meaning has clearly been corrupted by contemporary American liberals.
The Jeffersonian philosophy that animates Cato's work has increasingly come to be called "libertarianism" or "market liberalism." It combines an appreciation for entrepreneurship, the market process, and lower taxes with strict respect for civil liberties and skepticism about the benefits of both the welfare state and foreign military adventurism.
The market-liberal vision brings the wisdom of the American Founders to bear on the problems of today. As did the Founders, it looks to the future with optimism and excitement, eager to discover what great things women and men will do in the coming century. Market liberals appreciate the complexity of a great society, they recognize that socialism and government planning are just too clumsy for the modern world. It is--or used to be--the conventional wisdom that a more complex society needs more government, but the truth is just the opposite. The simpler the society, the less damage government planning does. Planning is cumbersome in an agricultural society, costly in an industrial economy, and impossible in the information age. Today collectivism and planning are outmoded and backward, a drag on social progress.
Market liberals have a cosmopolitan, inclusive vision for society. We reject the bashing of gays, China, rich people, and immigrants that contemporary liberals and conservatives seem to think addresses society's problems. We applaud the liberation of blacks and women from the statist restrictions that for so long kept them out of the economic mainstream. Our greatest challenge today is to extend the promise of political freedom and economic opportunity to those who are still denied it, in our own country and around the world."

UNCTAD: World Investment Report 1998: Trends and Determinants(press)
Markets, Politics and Globalization: Can the Global Economy be Civilized?
By Gerald Karl Helleiner - 2000
Professor Emeritus, Department of Economics and Distinguished Research Fellow,
Centre for International Studies
University of Toronto, Canada
Market forces are powerful ... and they can be powerful for good. But every professional economist, and all but the most ideologically encrusted, recognize that, left unchecked, they can yield socially deleterious outcomes. The economic theory of perfectly competitive markets takes careful account of Amarket failures@ in the forms of externalities, public goods and the like; and begins, it is important to remember, by entirely abstracting from the equity of income distribution and the distribution of power. Empirical reality also presents us with an imperfection-ridden market system B imperfectly competitive, imperfectly informed, with many markets missing entirely. It also presents us with grotesquely inequitable Ainitial conditions@. To many, if not indeed by now the majority, inequities in the distribution of income, wealth and power are both the most important determinants of economic outcomes in market systems and the most important targets for international economic policy.
Markets have never, of course, been the sole or even the primary basis for human interaction. Markets are not involved when we interact within families, within private businesses (including transnational corporations), or within communities, universities, governments or indeed all manner of bureaucracies, nations and international institutions. Within these various institutions there are all manner of relationships B hierarchical ones, gifts, gift exchanges, and other transactions that do not lend themselves easily to simpleminded "market analysis".
Institutions, customs, laws and traditions carry influence upon the functioning of markets. The people of the Atransitional economies@ have learned, to their very great cost, that there are important institutional and legal prerequisites to the effective and socially harmonious functioning of markets, without which free market behaviour can approximate the law of the jungle. More recently, financial crises in scores of countries have underscored the social and economic disorder that may arise when markets function freely within fragile and/or inappropriate institutional frameworks. Modern economic theory, in fact, devotes a great deal of attention to the origins, functioning and role of non-market institutions.
Mahbub ul Haq - 1992
The Myth of the Friendly Markets
Developing countries are being denied at least US$500 billion of economic opportunities in the global markets every year because of trade restrictions, immigration controls, and uneven capital flows. This is about ten times the amount of foreign assistance they receive.
The poorest 20 percent of the world's population receives only 0.2 percent of global commercial credits, 1 percent of world trade, and 2.7 percent of global foreign private investment.
The indebted nations of Latin America paid four times higher real interest rates in the 1980s compared to the industrial countries ( 17 percent compared with 4 percent ) because of the major fall in their commodity prices.
Capital markets worked in such a fashion in the 1980s that the poor nations started transfering US$50 billion a year of net resources to the rich nations every year by the end of the decade.
Commodity markets worked in such a way that primary commodity prices (excluding oil) declined to their lowest levels since the great depression and Sub-Saharan Africa alone lost more than US$50 billion in export earnings between 1986 and 1990 because of depressed commodity prices.
The real income disparity between the top 20 percent and the bottom 20 percent of the world's population exploded to 150 times by 1990 -more than twice the level of 1960- as a natural working of the global markets.

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