The Persistence of the Ladder Metaphor#
In 1841, the German economist Friedrich List observed a curious behavior among the world’s most powerful nations. He noted that once a country reaches the summit of economic greatness, it often “kicks away the ladder” it used to climb up. This prevents others from following the same path to prosperity. Today, this metaphor remains the central pillar of Ha-Joon Chang’s critique of modern development economics. Rich nations and international bodies now demand that developing countries adopt free trade and minimal state intervention. They label these “good policies” despite never having used them during their own ascent. This creates a fundamental paradox in global economic history. We are told that liberalization is the only way forward, yet the historical record suggests it was never the way up.
The Policy of “Do as I Say, Not as I Did”#
The modern development orthodoxy, often called the Washington Consensus, assumes that today’s rich countries became wealthy through laissez-faire policies. This narrative insists that Britain’s industrial success proved the superiority of free-market energy. It further claims that the United States only achieved greatness after abandoning protectionism. Chang argues this is not just a misunderstanding but a “selective and misleading” rewriting of history. The reality is that the West’s affluence is the product of exactly the state control they now deny to others. By enforcing these new rules, the developed world is stifling the economic prospects of the Third World.
The Protectionist Roots of the Industrial Giants#
Britain was the first country to perfect the art of “infant industry promotion”. From the 14th century under Edward III to the 18th century under Robert Walpole, the British state used high tariffs to protect its wool industry. They essentially banned superior imports from competitors to ensure their own manufacturers could grow. The United States was perhaps even more aggressive, becoming the “bastion of modern protectionism” for over a century. Throughout the 19th century and until the 1920s, the USA was the fastest-growing economy in the world while being the most protectionist. Alexander Hamilton’s “American System” explicitly rejected British free trade theory as unsuited for a catching-up nation.
The Productivity Gap and the Limits of Theory#
The current demand for low tariffs in developing countries ignores the massive productivity gap between nations. In the 19th century, the income ratio between the richest and poorest industrializing nations was roughly 2 or 4 to 1. Today, that gap can be as high as 60 to 1, meaning LDCs need more protection to achieve the same effect. Neoclassical theory argues that free trade benefits all, but historical evidence suggests it only benefits the “leader” country. When Britain repeal its Corn Laws in 1846, it was an act of “free trade imperialism” designed to halt industrialization in Germany and the US. It was only after achieving overwhelming technological supremacy that the West began preaching the virtues of unregulated exchange.
The Disappointing Harvest of Neoliberal Reform#
The implementation of neoliberal “policy reforms” since the 1980s has produced a disappointing growth record. Between 1960 and 1980, when interventionist policies were more common, GDP per capita in LDCs grew at 3.1% annually. Under the Washington Consensus era of 1980 to 2000, that growth rate plummeted to just 1.4%. In Latin America, growth was stagnant at 0.3% during the late 20th century compared to 2.8% in the previous era. These failures suggest that “good policies” are ineffective if they deny nations the tools that historically proved to work. The global economic order is effectively rigged to prevent catching up.
Synthesizing Historical Realism#
The historical data suggests that the “one-size-fits-all” model of neoliberalism is a developmental dead end. We must recognize that state intervention and infant industry protection were not flukes but the very engines of Western success. The tragedy of our time is that rich nations continue to hide the “secrets of their success” behind the veil of economic freedom. This forces a rethink of modern development strategies that must move beyond abstract models and return to historical realism. If we are to achieve global equality, we must allow developing nations the same policy space once enjoyed by their predecessors. Only then can the ladder be lowered once again for those still climbing.