FALSE ECONOMY

Free markets are born of free societies. So why are our markets no longer free? Bad choices were made—therein lies the nub of Financial Times world trade editor Beattie’s excursus into economic history.

Progress, warns the author, is “fragile and reversible,” and there are no inevitabilities involved: Capitalism is neither intrinsically bound to fail nor predestined to succeed; the United States is not wealthy because of exceptionalism, Africa poor because of some sort of original sin. All these conditions turn on choices, some freely made, some made by custom and even accident. For instance, Beattie notes, in the 19th century Argentina had the opportunity to be as wealthy as the United States, with plenty of resources and land and millions of cows with which to feed a hungry Europe. What kept it from emerging as a major power was its rigid adherence to class and caste, with illiterate immigrants doing grunt work while the children of the aristocracy basked. Meanwhile in America, upward mobility was standard. Beattie writes that globalization is nothing new. The late-19th and early-20th-century market was global too, so that wheat farmed in Nebraska cost about as much in London as it did in Chicago and currencies were valued fairly evenly. There are many elements that fuel economic failures: inefficiencies and excessive waste, retreats from globalism, structural impediments (for example, it takes coffee beans a month to get across Africa, held up at one customs stand after another) and corruption. All these figure prominently in Beattie’s lucid exposition, which is often pleasingly arch, as when he likens a longshoreman’s union agitating against containerization to “bandits controlling the mountain pass.”

A readable, timely discussion of the world economic system.