Atrios spots a groan-inducing summary of the provisional government’s approach to the Iraqi economy in this Reuters article:
[Paul Brinkley, deputy under-secretary of defense for business transformation in Iraq,] said early economic planners had made the understandable mistake of assuming that a free market would rapidly emerge to replace what he described as Saddam’s “kleptocracy”, and create full employment.This mistaken assumption led to a series of decisions which “sowed the seeds of economic malaise and fuelled insurgent sympathies” after industrial production collapsed and imports flooded in to replace locally made goods.
This is, of course, insane. Not because it’s wrong to think that the move from a corrupt despotism to a free market can launch an economic boom, but because it’s grossly naive to imagine that a “free market” is what you get immediately or automatically just by dint of removing the corrupt despot. This is, I think, the economic correlate of the political error I talked about in this article: The belief that liberal democracy is somehow natural, a kind of default that springs up when the artificial, distorting forces of tyranny are absent.
There is a kind of sense to this. Both systems are characterized by the absence of central direction, by the flourishing of many diverse private plans under minimal and neutral constraints. The more successful a liberal society or economy is, the more invisible its constitutive institutions, its cultural and legal bases, will seem—which may make it easy to forget how difficult they are to establish.
2 responses so far ↓
1 Barry // Aug 13, 2007 at 1:25 pm
In addition, military dictatorships (which is what the Bush administration imposed, to the extent that it could) are rarely free market economies.
2 William Newman // Aug 13, 2007 at 3:19 pm
Has anyone put together a summary of to what extent markets in Iraq have been officially free? (By “officially” I mean free of government-imposed stuff like price controls, officially-granted monopolies, restrictions limiting labor mobility, and whatnot, as opposed unofficial corruption or the way that an ongoing war will tend to lead to unofficial violence cutting off various peaceful commerce also.) I’d expect someone would have published such a summary — if only someone advocating a more-free or less-free policy — but my Google skills seem to be insufficient to drag it up.
I do remember mainstream news stories about gas lines, and niche web pundits pointing out that duh, gas lines and gas price controls go together. (This was back in the day when the occupation was supposed to be successful just like in Germany, and I remember thinking it was funny the occupiers evidently didn’t think they had anything to learn from Ludwig Erhard.) But other than learning that roundabout way about the official gas price controls, I don’t remember seeing anything else about free-market-ness, or lack thereof, of official policy there.