Reviving the Invisible Hand is an uncompromising call for a global return to a classical liberal economic order, free of interference from governments and international organizations. Arguing for a revival of the invisible hand of free international trade and global capital, eminent economist Deepak Lal vigorously defends the view that statist attempts to ameliorate the impact of markets threaten global economic progress and stability. And in an unusual move, he not only defends globalization economically, but also answers the cultural and moral objections of antiglobalizers. Taking a broad cross-cultural and interdisciplinary approach, Lal argues that there are two groups opposed to globalization: cultural nationalists who oppose not capitalism but Westernization, and "new dirigistes" who oppose not Westernization but capitalism. In response, Lal contends that capitalism doesn't have to lead to Westernization, as the examples of Japan, China, and India show, and that "new dirigiste" complaints have more to do with the demoralization of their societies than with the capitalist instruments of prosperity.
Lal bases his case on a historical account of the rise of capitalism and globalization in the first two liberal international economic orders: the nineteenth-century British, and the post-World War II American. Arguing that the "new dirigisme" is the thin edge of a wedge that could return the world to excessive economic intervention by states and international organizations, Lal does not shrink from controversial stands such as advocating the abolishment of these organizations and defending the existence of child labor in the Third World.
Deepak Lal is James S. Coleman Professor of International Development Studies at the University of California, Los Angeles, professor emeritus of political economy at University College London, and former Research Administrator at the World Bank. He has advised many governments and international agencies and is the author of numerous books on economic development and public policy, including "In Praise of Empires" (Palgrave Macmillan), "The Poverty of Development Economics", and "Unintended Consequences". In 2007, he received the International Freedom Award for Economy from the Societa Liberia.
PREFACE ix Introduction: The Origins of "Capitalism" 1 Globalization 9 Chapter 1: Liberal International Economic Orders 17 Mercantilism 20 The Nineteenth-Century LIEO 22 Pax Britannica and Economic Development 32 The End of the First LIEO 36 Recreating a New LIEO 40 Chapter 2: From Laissez Faire to the Dirigiste Dogma 48 Classical Liberalism and Laissez Faire 48 Poverty and Industrialization in Nineteenth-Century Britain 52 "Manna from Heaven" Distributivism 53 Competition and Monopoly 56 The Rise of "Embedded Liberalism" in the United States 59 Chapter 3: The Changing Fortunes of Free Trade 62 The Rise, Fall, and Rise of Free Trade 62 U.S. Economic Policy 65 The New Protectionism 68 The Rise of Preferential Trading Arrangements 71 Another Globalization Backlash? 80 Adjustment Assistance? 85 Whither the WTO? 86 APPENDIX: FREE TRADE AND LAISSEZ FAIRE IN THEORY 91 Chapter 4: Money and Finance 95 International Monetary Regimes 97 International Capital Flows 105 The Global Financial Infrastructure 122 Chapter 5: Poverty and Inequality 127 Poverty Head Counts 128 Income Gaps 135 Foreign Aid 139 Chapter 6: Morality and Capitalism 150 Introduction 150 Analytical Framework 151 Changing Material and Cosmological Beliefs 154 Communalism versus Individualism 157 From Victorian Virtues to Modern Values 160 Modernization and Westernization 165 Conclusions 180 Chapter 7: "Capitalism with a Human Face" 182 Introduction 182 Justice and Freedom 183 Rights 185 Social Paternalism and Dirigisme 187 Moral Paternalism and the New Victorians 189 Capitalism and Happiness 192 The Corporation under Attack 195 Conclusions 203 Chapter 8: The Greens and Global Disorder 205 Introduction 205 The Rise of the NGOs 205 Sustainable Development 211 The Greens and Ecological Imperialism 214 Toward World Disorder 227 Chapter 9: Conclusions 231 Notes 237 Bibliography 279 Index 307