Moreover, not only are successful policies often abandoned, but as the current plight of Argentina and New Zealand suggests, liberalizing policies often fail, too. Robert Wade, a political scientist at the London School of Economics, argues that few nations that were largely dependent on commodity exports, like New Zealand, have been able to transform themselves into successful producers of advanced goods based on such policies.
For Wade, such a transformation still requires an industrial policy. At times, it may require an import-substitution policy of high tariffs to protect developing domestic industries. But such policies were widely criticized as the main source of failure in Latin America in the 1980s. Wade counters that it was the indebtedness of many Latin American nations that created crises and poor growth in the 1980s, not import substitution, and that the establishment has essentially twisted the argument in its favor.
Neither Wade nor Rodrik, whose most recent book is Making Openness Work, believes there is one policy to fit all sizes. Import substitution may be appropriate to some, but not others. Both argue strongly that local conditions should be allowed to determine the right course, not international institutions with universal formulas. To Roberto Unger, however, the author most recently of Democracy Realized: The Progressive Alternative, only more sweeping change has a chance to work. Unger proposes not so much a blueprint but a profoundly new ``direction'' that includes high levels of government investment and taxes, required voting and forced savings to buffer states from the influence of international investors. Unger says his ideas have certainly not caught on among the establishment, but he is attracting a lot of interest from the younger generation. Given the levels of poverty, this is no surprise.
Yet the protesters in Genoa and elsewhere also naively denigrate the value of economic growth. Wade, for example, points out that there is no evidence that local participation in devising economic strategies, so widely advocated by protesting groups, will provide an answer to alleviating poverty unless it is accompanied by other pro-growth strategies.
What is surely the case, however, is that if nations remain under the thumb of single-minded international investors and their institutional surrogates, there will be little room for new ideas.
To mitigate the power of the financial markets requires leadership from the powerful themselves. But such leadership is absent not only in Washington and most other Western capitals but also in this nation's major academic centers.
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