Just when you thought the Washington Consensus was dead, along comes the G8…

December 11, 2008

     By Duncan Green     

with an alarmingly retro ‘Declaration on the World Economy’ from this week’s summit in Hokkaido. Look at these two excerpts.

The first is on Trade and Investment: ‘Open trade and investment policies strengthen economies. All countries should take steps to develop, maintain and promote regimes that welcome foreign investment, guarantee non-discriminatory treatment for foreign investment, and ensure freedom to transfer capital and returns from investment.’ [para 6]

The second is on Intellectual Property Rights (IPR): ‘Effective promotion and protection of IPR are critical to the development of creative products, technologies and economies. We will advance existing anti-counterfeiting and piracy initiatives… Firmly believing that an efficient and well-functioning IP system benefits countries at all stages of development, we reaffirm the importance of global patent harmonization and expanding international patent collaboration, including accelerated discussions on the Substantive Patent Law Treaty.’ [paras 17 and 18]

I tackle both these issues in From Poverty to Power (more here on trade liberalization and here on intellectual property).

The G8’s argument on trade and investment is simply ahistoric – countries that have successfully harnessed trade for development (South Korea, China, Malaysia and many more) initially used high levels of state intervention to develop domestic production, often by local firms. They frequently (South Korea, Taiwan) actively discriminated between foreign and local companies in order to build up national industry. In both trade and investment, successful economies have often liberalized later on, as an outcome of development not a cause.

On intellectual property, we’ve been battling with some success against the excesses of the pharmaceutical industry in particular, showing how the level of patent protection is becoming an increasingly dysfunctional form of rent-seeking by large firms and lawyers, in the process depriving poor people of access to life-saving medicines around the world. In 2005, developing countries paid out a net $17bn in royalties and license fees, largely to companies in the industrialized nations.

But if the G8 is still putting out this kind of nonsense, maybe it’s time for a bit of what US politics guru George Lakoff calls ‘reframing’ to change the semantic terrain upon which we argue about these things. The bad guys currently have the best tunes – ‘non-discrimination’ sounds almost like a human rights issue, when what it really means is that countries are being hobbled in their ability to develop a decent industrial policy. Ditto ‘property rights’ – which actually means freedom for large firms to gouge excess profits out of sick people and poor country health systems.

When talking to liberals, I’ve had some success rebranding IP as ‘knowledge protectionism’, which after all, is what it is. But perhaps we need to go broader and start reframing all this as about ‘Access to Knowledge’ (call it A2K) – a campaign for an international A2K convention might work better than dozens of rearguard actions against the iniquitous impact of IP legislation.

Much more on this from Dani Rodrik (on trade liberalization) and Ha-Joon Chang (on both trade and IP) – vital books that seem to have missed the G8 leaders’ reading lists. How depressing. Meanwhile if you want a take on the G8’s declaration on climate change, have a look at my co-blogger Kate Raworth‘s excellent piece.