Advantages of Backwardness (Gerschenkron)

from YEAR 501: WORLD ORDERS OLD AND NEW, PART I
by Noam Chomsky
Z Magazine, March 1992

It should be stressed that the economic doctrines preached by the powerful are intended for others, so that they can be more efficiently robbed and exploited. No wealthy developed society accepts these conditions for itself, unless they happen to confer temporary advantage; and their history reveals that sharp departure from these doctrines was a prerequisite for development. At least since the work of Alexander Gerschenkron in the 1950s, it has been widely recognized by economic historians that "late development" has been critically dependent on state intervention; Japan and the Newly Industrializing Countries (NICs) on its periphery are standard contemporary examples. The same is true of the "early development" of England and the United States. High tariffs and other forms of state intervention may have raised costs to American consumers, but they allowed domestic industry to develop, from textiles to steel to computers, barring cheaper British products in earlier years, providing a state-guaranteed market and public subsidy for research and development in advanced sectors, creating and maintaining capital-intensive agribusiness, and so on. "Import substitution [through state intervention] is about the only way anybody's ever figured out to industrialize," development economist Lance Taylor observes, adding that "In the long run, there are no laissez-faire transitions to modern economic growth. The state has always intervened to create a capitalist class, and then it has to regulate the capitalist class, and then the state has to worry about being taken over by the capitalist class, but the state has always been there." Furthermore, state power has regularly been invoked by the capitalist class to protect it from the destructive effects of an unregulated market, to secure resources, markets, and opportunities for investment, and in general to safeguard and extend their profits and power; the Pentagon system of public subsidy for high tech industry is the most glaring example, close to home.

Return to Global Economy