Schedium

New York City Stock Exchange (by LeoTar, via Wikimedia Commons) In mainstream economics free markets are considered the linchpin of a free and prosperous economic and political system. As t he  CATO Institute , a think tank "dedicated to the principles of individual liberty, limited government, free markets and peace", explains in his website: "To survive and to flourish, individuals need to engage in economic activity. The right to property entails the right to exchange property by mutual agreement.  Free markets  are the economic system of free individuals, and they are necessary to create wealth. Libertarians believe that people will be both freer and more prosperous if government intervention in people’s economic choices is minimized." However, the concept of "free market" is nothing but a construct created by ideologues more interested in abstract theories than in practical analysis. Indeed, what are "free markets"? As ec...

"The Wealth of the Nation" by Seymour Fogel via Wikimedia Commons In his bestseller Free to Choose economist Milton Friedman offered a vision of American economic history that revolved around the idea of freedom. He wrote: "Ever since the first settlements of Europeans in the New World America has been a magnet for people seeking adventure, fleeing from tyranny, or simply trying to make a better life for themselves and their children ... When they arrived, they did not find streets paved with gold; they did not find an easy life. They did find freedom and an opportunity to make the most of their talents. Through hard work, ingenuity, thrift, and luck, most of them succeeded ... "The story of the United States is the story of an economic miracle and a political miracle that was made possible by the translation into practice of two sets of ideas .... One [of them] was embodied in the Wealth of Nations, the masterpiece [by] Adam Smith [w...

Volkswagen plant in Wolfsburg, Germany (photo by VW_Werk_Altes_Heizkraftwerk.jpg: Richard Bartz derivative work: Diliff via Wikimedia Commons) A white paper released by the British government in 2017 described the United Kingdom as an " open, liberal market economy ", whose foundation lies in "the power of the competitive market - competition, open financial markets, and the profit motive". Despite recognizing the government's "strategic power and leadership role" in developing and disseminating technologies and industries, the white paper rejected protectionism and equated industrial policy mostly with Research and Development (R&D), education and infrastructure. Nowadays there is a widespread belief that countries develop because of "free market" . Therefore, economically poorer regions, such as Greece, southern Italy or Portugal, are responsible for their own poverty, either because of their cultural shortcomings, ...

Taipei skyline (Photo by CEphoto, Uwe Aranas via Wikimedia Commons )   In a world dominated by  neoliberal  mainstream economic thinking, the wealth of nations is often explained in culturalist terms. A country is rich because its people are hard-working and enjoy the freedom to pursue profitable economic activities. A country is poor if its people are lazy and / or its politicians are corrupt and inefficient. However, it would be wrong to underestimate the role of the government in promoting economic development, especially in the case of Taiwan. First of all, an industrial revolution does not come about through hard work alone. Asian people have always been renowned for their laboriousness, but for a long time their industry lagged behind that of the West. A rural country whose people are mostly hard-working peasants does not automatically shift production from agriculture to industry. Economists  Ha-Joon Chang  and  Erik Reinert  hav...