Debt Slavery

In economic theory, free trade – that is, trade unimpeded by government regulations and protection of domestic industries – improves the allocation of resources and therefore world economic growth. The theory of comparative advantage explains why this is the case. However, the theory of comparative advantage is based on very restrictive assumptions about the way the world works, and in particular it ignores economic power relations. Yet, it has been an important back-up to the neoliberal position that growth will be highest when governments remove themselves from the allocation of resources and allow markets to work. The modern push for increasing globalization, free trade agreements, free trade blocks and the increasing integration of international financial markets are evidence of the success of this argument. The Washington consensus – which argues for free trade, deregulation of industries, and privatization of State’ assets – also derives from this neoliberal position on economic development. Often, developing countries have had to follow the Washington consensus to receive loans from the International Monetary Fund and World Bank. It has been argued that this does not help to end poverty and encourage growth in developing economies but rather stacks trade in the favor of the rich……