New Imperialists : Ideologies of Empire

quality of water or undertake water conservation measures because these
might impact the ability of companies to turn a profit. 53 In the case of
Bolivian water privatization mentioned above, law no. 2029 made it
illegal for residents in Cochabamba to use water from wells and natural
springs in the area. Peasants who for centuries had been accustomed to
using the water freely provided by nature were suddenly required to
obtain permits if they wished to gather rainwater on their properties. 54
ENDING BARRIERS TO CAPITAL FLOW
HANIEH: Praising Empire 185
A third element to the neoliberal economic program is the abolition of
impediments to the free flow of capital. This can be seen in the calls for
“free trade” through the reduction of tariffs and any other barriers to the
movement of commodities and capital. As a variant on the thesis that
exchange is mutually beneficial, neoclassical trade theory argues that as
long as countries trade without restriction then all will benefit.
According to the World Trade Organization, standard trade theory is “the
single most powerful insight into economics.” 55 The policy prescriptions
flowing from such an approach include ending import quotas, reducing
or eliminating tariffs on imported goods, no state subsidization to
“non-competitive” sectors or goods destined for export, and minimizing
regulatory restrictions on trade and investment.
Neoliberal theory follows a “factor endowment” approach to the question
of foreign trade. This model argues that nations should specialize in
those commodities that utilize the inputs they can supply most cheaply.
Due to the different endowment of natural resources, skill levels, technological
abilities, and labor costs, countries have different prices for each
of these inputs. According to the standard approach, if each country
exports what it can offer most cheaply, then over time the different prices
in each country will tend to equalize. Those countries with an abundance
of capital will find that capital costs begin to rise and labor costs drop,
and vice versa for those countries which have unfortunately been dealt
the curse of a plentiful supply of cheap labor but no capital.
Many critics have pointed out that this approach is essentially a justification
for the status quo. Without investigating the reasons that have led
some countries to become “capital intensive” and others “labor intensive,”
standard trade theory essentially dehistoricizes the process by
which the current form of global hierarchy evolved. To mention only one