Preface

WHAT HAPPENED TO
REAGAN AND THATCHER?

Twenty years ago I wrote a book in defence of global capitalism. I never thought I would do that. Capitalism, I had thought, was all about greedy monopolists and mighty landlords. But then I began to study the world and realized that it was in the least market-based societies that such elites were protected from the free choice of citizens and therefore had the greatest power. Paradoxically, it was capitalism – in the form of free markets and voluntary agreements based on private ownership – that threatened the powerful. The argument for capitalism is not that capitalists always behave well – if that were the case, we could safely give them monopoly power – but that they oftendo not behave well unless they have to. And it is freedom of choice and competition that force their hands.

In fact, Marx and Engels were right when they observed in that other manifesto, the communist one of 1848, that free markets had in a short time created greater prosperity and more technological innovation than all previous generations combined and, with infinitely improved communications and accessible goods, free markets had torn down feudal structures and national narrow-mindedness. Marx and Engels realized much better than socialists today that the free market is a formidable progressive force. (Unfortunately, they were not sufficiently dialectically minded to understand that communism was a reactionary counterforce that would bring societies back to a kind of electrified feudalism.)

A century and a half later, global capitalism made it possible for ever more people to free themselves from lords and monopolies. The growth of markets gave them the opportunity to choose, to bargain and to say no for the first time. Free trade gave them cheaper goods, new technologies and access to consumers in other countries. It lifted millions and millions from hunger and poverty.

However, at the turn of the millennium capitalism was under fierce attack. An international anti-capitalist movement wanted the government to take more control of the economy with a barrage of tariffs, regulations and taxes. Huge demonstrations took place against the World Trade Organization’s negotiations for more open markets. Free trade, foreign investment and multinational corporations were accused of making the poor poorer. Attac, a French left-wing protectionist movement, spread rapidly throughout Europe. I saw them as a reactionary counterforce that would deprive poor societies of the freedoms they had just begun to take.

I compiled my arguments against them in the bookIn Defence of Global Capitalism, published in 2001. It was a classical liberal manifesto about why global justice takes more capitalism, not less. Timing is everything and the book became an international bestseller, translated into more than twenty-five languages, including Arabic, Persian, Turkish, Chinese and Mongolian.

And eventually, the globalization debate began to change. Supporters of open economies started fighting back. The critics were often driven by sincere anger about global poverty and injustice. We free traders could start from this common ground and show – with realistic explanations and clear statistics – that we needed freer markets to fight poverty and hunger. The more we discussed, the more it felt as if the opponents realized that it was not as simple as they had assumed, and parts of the audience began to change their mind. They had associated globalization with the status quo, the EU, the World Bank and the IMF, and were taken aback when challenged by opponents who were equally dissatisfied with today’s injustices and offered radical solutions. Soon, the most common position in the debate was that poor countries needmore trade, investment and entrepreneurship to develop economically and socially. As UN General Se