Book in the news… the miracle of capitalism
How Nations Escape Poverty
Vietnam, Poland and the Origins of Prosperity
Encounter Books, £21.99
The issue of inequality and relative poverty in developed countries has shot up the agenda in recent years, and some commentators have even wondered whether democracy will survive the subsequent rise of populism. For many emerging countries, however, the main problem is still growing the pie, rather than deciding how to divide it up in a fairer way. In How Nations Escape Poverty, businessman and historian Rainer Zitelmann looks at two countries, Poland and Vietnam, that transformed their economies, vastly improving living standards and eliminating absolute poverty, by ditching their command economies and embracing the market.
Both countries’ experiments with communism proved disastrous. Like many other Eastern bloc countries, Poland’s economy stagnated, there were chronic shortages of consumer goods, and living standards fell far behind those in the West. In the case of Vietnam, which was already a poor country, the consequences of embracing communism were even worse. Millions had to endure near-starvation conditions. The regimes in both countries responded by either blaming outside forces or trying to make modest tweaks to the system. By the late 1980s, however, both countries were forced to make more radical changes, which unleashed a wave of economic growth.
Zitelmann’s book is a quick read, and it would have benefited from more detail or case studies. It would have been good to hear more about the institutional aspects of creating a market economy, for example, such as property rights, the rule of law and the absence of corruption. Still, the author is good at critically examining prevalent attitudes towards capitalism and wealth creation, and the book is an excellent starting point for those interested in the Polish and Vietnamese economic miracles. It also serves as a timely reminder that ditching communism and embracing capitalism has brought prosperity for billions of people around the globe.