Better and Better: The Myth of Inevitable Progress

Goklany suggests one response to this critique: the problem is that there has been too little globalization, not too much, and that what governments need to do is step out of the way and let the market be free. There is no doubting the virtue of the free market as a wealth-creation machine, and it is certainly the case that in many countries bad policies (often designed to protect established interests) have discouraged entrepreneurship and scared away capital. Nonetheless, here, too, the evidence is far more ambiguous than The Improving State of the World implies. Take China and India, which together are responsible for almost all of the reduction in poverty in the world in the past two decades. They are great success stories, but when it comes to understanding what they say about how to attain economic growth, they are complicated rather than straightforward stories. China is a long way from a true free-market economy, and it has followed almost none of the rules that the Washington consensus set down. A huge number of its enterprises remain state-owned, the allocation of capital in the country remains largely determined by politics, the country's capital markets are not truly open, there are limitations on foreign ownership, the currency is not convertible, and so on. India, similarly although less dramatically, still has massive tariffs, strict legal restrictions on foreign ownership and on new businesses, and an aggressive regulatory state. The core message of Goklany's book is that economic growth and technological change are the keys to improving people's lives. But the success of China and India suggests that no one really knows how to bring these achievements about, which makes Goklany's wide-eyed optimism about the future seem misplaced.

THE NEW PRAGMATISM

What is missing from The Improving State of the World, in the end, is a sense of just how complex societies and economies really are. Paradoxically, for a book dedicated to celebrating the enormous progress the world has made in the past two decades, it does not sufficiently acknowledge just how miraculous the success of the West and Japan has been and how far from assured it is that the rest of the world will enjoy anything like it. That is not necessarily cause for pessimism -- the opponents of globalization, and the proponents of the immiseration thesis, overlook the very real improvements in everyday life that even some of the world's poorer countries have enjoyed as a result of the spread of technology via globalization. But in some important sense, Goklany's book feels like it might have been written 15 years ago, when the Washington consensus was still all the rage and when it seemed that solving the developing world's problems was just a matter of lowering trade barriers, privatizing industries, and allowing capital to flow freely. Goklany pretends to a certainty about the path to prosperity that no one, at this point, can have. The experience of the last two decades has had a chastening effect on the expectations of many of globalization's most ardent advocates -- even those in places such as the International Monetary Fund. Goklany, apparently, has remained immune.

Again, the point is not to return to the bad old days of protectionism and import-substitution industrialization. The point, rather, is that we simply know a lot less than we thought we did. Take, for instance, Chile and Botswana, two of the only non-Asian developing countries to enjoy meaningful, sustained economic growth in the past 20 years. Chile, under Augusto Pinochet, implemented many free-market reforms, and the privatization of its social security system has made it a darling of free marketeers. But a sizable portion of Chile's wealth actually comes from its copper holdings, which even Pinochet did not privatize. And Chile also limited the flow of so-called hot capital into its markets. Is it the adherence to markets or the deviations from them that account for Chile's success, or is it the combination of the two? Or is it something else entirely, something about Chilean attitudes toward time and work and entrepreneurship? The truth is no one is sure. Botswana, similarly, has followed orthodox economic policies and has a limited state and low levels of corruption, all of which presumably have something to do with its success. But Botswana also happens to have huge diamond supplies, which account for around 40 percent of its annual output. Botswana's intelligent economic policies almost certainly have helped it reap greater benefits from its natural resources (unlike the many countries that fall victim to "the resource curse"). But you can hardly hold it up as a model that other nations could follow, unless you plan to endow them with massive diamond supplies, too.

The fact that every country's experience is different does not mean that there are not deeper truths to be uncovered by looking at the experience of the world as a whole. But the truths thus far uncovered are relatively few in number and often limited in impact. So, yes, free trade is a good thing, subsidies to agriculture and official corruption are bad things, and so on. And policymakers should be aggressive in implementing those practices and policies that there is a good reason to think will work. But they also need to be cautious about taking theoretical pronouncements for reality, and they should be pragmatists rather than evangelists. After decades of misplaced certainty, it may be time to recognize the limits of our own knowledge -- at least if we want the state of the world to continue improving.