The Failure of the Neoliberal Model For Developing Countries

On the 60th Anniversary of Chinese Liberation post, James Schipper says that I should compare China to Taiwan and South Korea instead and see who did better.
I pointed out that a book on China by the reactionary Time-Life Corporation in 1962 at the height of the Cold War noted that Taiwanese miracle was not reproducible in China. They wished it was, but there was no way to do it.
For one thing, one thing that helped create the Taiwanese miracle was a flood of US aid. In order to China to receive a concomitant amount of aid, China would have to have received an unheard-of figure that was simply not possible to achieve at that time, or even now.
Further, there was the problem of feeding the people and rural poverty. Taiwan solved this, mostly by doing a land reform, but Taiwan is a little island, and feeding the island was not an insurmountable task.
The book pointed out that the main problem facing China was feeding the population. Only 26% of the land is even arable and the population is huge. The Taiwanese miracle was not doable in China due to differing conditions.
Everywhere on Earth, US imperialism has always fought the imposition of any kind of national health care, state involvement in the economy and especially land reform. Many nations have been overthrown by the CIA and other agents of US imperialism for attempting even those most meager reforms. Indeed, all Hugo Chavez seems to be doing is trying to create some sort of social democracy in Venezuela.
Yet in Taiwan and South Korea, the US agreed to national health care, massive land reform, trade barriers, heavy state involvement in the economy, the whole works.
This is because I believe that the US knew that all of these were necessary to develop an economy. Taiwan and South Korea were intended by imperialism to be “showcases against Communism”, to be sparkling examples of what “capitalism” could do better than say North Korea or China.
It’s really amazing how cynical imperialism is, but if imperialism has to do a bit of a socialist dance to fight Communism, then that’s what it will do.
The sad thing is that if the North Korean, Soviet and Chinese “threats of a good example” did not exist, there would be no reason for imperialism to create these “anti-Commie showcases” and the model for those countries may well have been the Philippines, Thailand or Indonesia instead.
I would like to point out a few other things, mainly that we are comparing one socialist country to another, since I consider Taiwan at least to be a socialist country and South Korea to be a partly socialist country. As I’ve said on this site, I support all kinds of socialism. The main thing is that we are not comparing a socialist China to a neoliberal capitalist South Korea or Taiwan.
Taiwan at least is a very socialist country. They did a land reform, and they have universal health care that even includes dental care! I don’t know much about South Korea, but I know that they did a land reform. It’s important to note how essential that land reform was developing those two nations. Neoliberal dumbasses never seem to figure that out.
You have to deal with the problem of feeding your people and take care of the problem of rural poverty by doing a land reform, and then you can think about becoming a developed country. Until then, the best you can hope for is some backwards clusterfuck wreck like Brazil or Equatorial Guinea.
Also, neither Taiwan nor South Korea are examples of neoliberal capitalism. Both were very heavily state-directed, state-guided and even state-involved economies. The state was pretty much setting economic policy and telling the corporations what to do. The state and the business sector were very much tied together. It was almost a “national socialism.”
Also both countries protected their budding industries with huge trade barriers until they got big enough to compete with the big guys. All developing countries need to protect their budding industries from competition with huge economies – otherwise you are never going to develop.
Of course all of this – land reform, national health care (including dental!), heavy state involvement in the economy, trade barriers to protect budding industries until they are big enough to compete – are anathema to the neoliberal agenda that holds sway over the entire world, mostly due to US imperialism.
Neoliberalism never developed one undeveloped country ever, and probably never will.

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11 thoughts on “The Failure of the Neoliberal Model For Developing Countries”

  1. Yet in Taiwan and South Korea, the US agreed to national health care, massive land reform, trade barriers, heavy state involvement in the economy, the whole works.
    This is because I believe that the US knew that all of these were necessary to develop an economy.

    I’d it’s mostly due to the politics of McArthur and Truman. Harry Truman, who tried to nationalize US Steel Mills (and was thwarted by the US supreme court.. ) and rail in speeches against war profiteering.
    Hell, even Nixon had a National Health Care proposal that would considered more radical than Obama’s current plan.

  2. Dear Robert
    You are quite right in saying that neither Taiwan nor South Korea are or were instances of pure free market economies. Still, in both countries there is considerable private ownership of the means of production and market pricing, which are the essential features of capitalism.
    Government plays an essential role in development, but the total or nearly total elimination of the market and private ownership of the means production hinders sustained economic growth. If we compare West Germany with East Germany, Spain with Poland, Bulgaria with Greece and Austria with Hungary, then the conclusion is inescapable that economic statism produces the worst performance in the long term.
    Much though we may dislike capitalists, we are better-off with them than without them.
    Regards. James

  3. Neoliberalism never developed one undeveloped country ever, and probably never will.
    And arguably.. neoliberalism will be the end of the US democracy as we now know it. Free trade in the context of how it is in the US with other countries is nonsense.

  4. For one thing, one thing that helped create the Taiwanese miracle was a flood of US aid. In order to China to receive a concomitant amount of aid, China would have to have received an unheard-of figure that was simply not possible to achieve at that time, or even now.
    So Communist countries don’t succeed because capitalist countries won’t give them money? And that’s supposed to prove the superiority of communism?

    1. The “Taiwan miracle” of 1949-1962 was in part predicated on a massive flood of US aid in order to make Taiwan look great compared to Red China. It would not have been possible for any nation or group of nations on Earth to have given Red China an equivalent flood of aid per population, hence that aspect of the Taiwan miracle was not reproducible by Red China. This according to my book, “China” published by the virulently anti-Communist Time-Life Books in 1962.

  5. Land reform was easier in South Korea and Taiwan than it was in other anti-communist regimes during the Cold War because the conservative governments had a natural base of support in the anti-communist refugees who arrived not owning any land in their new homes. Elsewhere the landowning classes would have been the base for the regime.

    1. I think you are probably correct there. They may have been anti-Communist refugees, but they still owned no land and were quite poor. IOW, they may have been anti-Communists, but they were not stupid. The reading that I have done indicated that the land reform formed a backdrop to the NICs such as South Korea or Taiwan.
      In fact, just about every major developed economy worth its salt does a land reform at one point or another. You can’t grow very well without producing a lot of your own food and especially with horrible poverty in the countryside. If you don’t do a land reform, you end up with clusterfucks like Latin America, Turkey, Pakistan, India, Nepal, Bangladesh, Philippines, Indonesia, Afghanistan.
      Semi-feudal relations in the countryside is not conducive to any kind of development of a normal and modern economy.

  6. Dear Robert
    Now that I think about it, Hong Kong may be an example of a country that developed according to a neoliberal model. By 1995, it had become a prosperous place under British colonial rule. The Brits didn’t seem to have a policy of economic development for the city. But then, Hong Kong must have benefited enormously from being Red China’s gateway to the world. Still, it seems that Hong Kong developed a lot of internationally competitive industry in mainly laissez-faire conditions.
    Regards. James

  7. 1. Land reform in Taiwan was pushed by the neoliberals in the US aid program. Neoliberals know perfectly well that land reform is the basis of a robust economy. The reform was carried out in part to eliminate the landlords as a class that could oppose the regime.
    2. State guidance of Taiwan’s growth did not really begin until the 1970s. Throughout the 1950s and 1960s the KMT spent about 90% of the budget on the military; economic growth was driven by US aid (see Ho’s _Economic Development of Taiwan 1860-1970_ or Jacoby’s book on US aid to Taiwan. The regime also fought transitioning to an export-led economy as technocrats on the island and US aid officials desired.
    3. The third alternative to state-led growth — partly a myth to justify continued KMT control of the island, so must be handled carefully — and neoliberal convention — is that Taiwan’s economy grew in spite of the state, driven by its small- and medium-sized exporters who were ignored by the State.

  8. Neoliberalism fails everywhere, it’s a diabolical system that is good only for the upper middle class and above and screw the middle class and below.

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