What is wrong with the ‘Official History of Capitalism’?
Capitalism is an economic system that is very controversial in terms of Economic Development, especially for third world countries. For the author, the ‘official History of capitalism’ refers to the way most economists perceive the economic history of rich countries. According to him, there are many errors in their versions however; they succeeded in redefine the history. Given the fact, that on the one hand, most neoclassical economists think that they have found a model of development that is imposed to third world countries, and on the other hand they affirm that History is on their side to support their recommendations, the author finds it necessary to explain that in fact, there are many mistakes or they did not take into account many important aspects or details since the 19th Century.
First, according to neoclassical economists, in the 19th century, Britain abandoned its mercantilist practices and became the leader of the ‘liberal’ economic order. Its economic success proved that its free market free trade system was the best way to develop a country, so, the other countries started leaving its mercantilist policies. By 1870, the system spread and the ‘laissez faire’ policies were perfected by many countries. However, the First World War made them create trade barriers again. After the second War, the GATT encouraged trade liberalization again and in the 1980’s the rise of Neo-liberalism and the fall of Communism let ‘laissez-faire’ policies define the future of many developing countries. However, the author thinks that this version is very misleading. Firstly, between 1860 and 1880 tariff protections were reduced drastically everywhere, however, many of the countries were forced to do so because they practiced free trade through colonialism. Secondly, before WWII, the lack of taxes had a negative impact in the government’s budgets. Thirdly, Britain an d the USA the major exponents of