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Subject Area: Political Theory

The Free Market & the Third World - Leonard P. Liggio, Literature of Liberty, Summer 1980, vol. 3, No. 2 [1980]

Edition used:

Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.

Part of: Literature of Liberty: A Review of Contemporary Liberal Thought, 20 vols. 19781-982

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


The Free Market & the Third World

Peter Bauer

  • London School of Economics; Gonville and Caius College, Cambridge

“The Market in the Dock.” Policy Review (Fall 1979):101–121.

The Third World's political and economic discourse maintains a consistent hostility to the free market. Prof. Bauer traces the origins of this opposition and chronicles the progress of anti-market ideas throughout the twentieth century.

During the hundred years before the Second World War, the market system regulated domestic and foreign trade in much of Asia, Africa, and Latin America. During the period, impressive material progress was achieved over much of this area—notably in the Far East, Southeast Asia, and West Africa. Since the war, however, the Third World has raised a loud outcry against the market. Criticisms range from the liberal economy's “failure” to assure public or private happiness to its inability to provide uniform material progress to all strata of society at the same time. Currently, the anti-market, centralized planning approach to economics is axiomatic in underdeveloped countries.

Although this hostility emanates from the Third World, it originates in the West. For example, developmental economics in Western universities propound a strong centralist position. Third World students trained in those schools return home to spread the message of market failures and state planning successes.

In addition, United Nations agencies and national aid organizations, such as the U. S. agency for International Development, explicitly exclude from economic consultant positions all those who do not espouse the planning model. Finally, international reporting, documentary films, and even the visual arts and entertainment propagate the centralist approach among intellectuals not versed in economics and among the masses in general. As a result, economic debate in the Third World revolves mainly upon the choice of the Soviet or Chinese model of development. The options have thus grown excruciatingly narrow. In Third World economic discussion, protocol discourages citing examples of free market development such as Japan, Taiwan, Hong Kong, and Singapore—areas which have advanced farther and more rapidly than their centrally planned counterparts.

It must be stated, however, that, if Third World socialism originated in the West, Third World conditions allowed it to flourish. The authoritarian tradition of most underdeveloped nations readily accommodates the coercive style of the centralized planners. In addition, Third World politicians, as politicians elsewhere, can rarely resist opportunities to extend their influence. With increased licensing of economic activities, control of foreign trade, and establishment of state trading monopolies, politicians can considerably enhance their power. Also, many intellectuals in poor countries cannot resist the lure of preferment as government consultants or the opportunity to lord it over an unlettered populace. Few such avenues to privilege would exist in a free market society.