23 Things They Don’t Tell You About Capitalism

In these days of such intellectual conflict over economic issues, I have a confession: before I saw the light, I trained as an economist. Well actually as an economic historian too, and that did it. As economics became ever more theoretical, mathematical and in love with ‘free market fundamentalism’ (aka Wahhabism), I just could not square the theory with any historical reality I had studied. So I went through the cult removal process, and I also learned to sell all my stocks when ever I heard the magic words: ‘this time it’s different.

So, of course, I loved the Korean Ha-Joon Chang’s latest book ‘23 Things They Don’t Tell You About Capitalism. In a world of increasing polarity, he manages to break out of the simple models of free markets without throwing the baby out with the bath water. These are my top ten favorite from among his 23 ‘things’ (with my quick paraphrases of his arguments in parentheses) :

  1. There is no such thing as a free market (they all have rules)
  2. Companies should not be run in the interest of their owners (the owners change too often to allow a company to work on that basis)
  3. The washing machine has changed the world more than the internet (by freeing women from domestic drudgery)
  4. Assume the worst about people and you get the worst (no company assumes its workforce continuously cheats it or it would seize up)
  5. Free market policies rarely make poor countries rich (the US and all other developed countries and recently developed countries like China, India and South Korea all used government interference and tariffs to become wealthy)
  6. We do not live in a post-industrial age (manufacturing still matters immensely)
  7. Governments can (and do pick) winners
  8. Making rich people richer does not make the rest of us rich (we were better off when our societies were more equal and certainly grew faster)
  9. We are not smart enough to leave things to the market (the market over-complicates many things and needs some regulation for its own good and ours)
  10. Good economic policy does not require good economists (countries whose economic policies were run by engineers or lawyers tend to have done better than those run by economists taught fundamentalist free market economics)

So criticism is all well and good, but what does he suggest as an alternative approach? He lists 8 principles to be adopted:

  1. He makes it clear that in his view as Churchill said of democracy: capitalism is the worst economic system except for all the others.
  2. We should build our new economic system on the recognition that human rationality is severely limited
  3. While acknowledging that we are not selfless angels, we should build a system that brings out the best, rather than the worst in people
  4. We should stop believing that people are always paid what they ‘deserve’
  5. We need to take ‘making things’ more seriously
  6. We need to strike a better balance between finance and real activities
  7. Government needs to become bigger and more active
  8. The world economic system needs to ‘unfairly’ favour developing countries. AndI would add a couple more that are implicit in his approach:
  9. We should study the economists who actually understood the complexity of the world rather than give up on economists altogether: Keynes, List, Kindleberger, Galbraith, Minsky, Schumpeter, Hirschman and even old Marx, though the latter with care.
  10. We should actually study economic history and learn from it, rather than endlessly repeat past errors

This is Ha-Joon Chang and his book is strongly influenced by the experience of South Korea, his country of birth, that went from being one of the poorest countries on earth in 1950 that was ravaged by war in 1950-3 and went on to become a very wealthy manufacturing country by the government picking winners :

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About creativeconflictwisdom

I spent 32 years in a Fortune Five company working on conflict: organizational, labor relations and senior management. I have consulted in a dozen different business sectors and the US Military. I work with a local environmental non profit. I have written a book on the neuroscience of conflict, and its implications for conflict handling called Creative Conflict Wisdom (forthcoming).
This entry was posted in Conflict Book Reviews, Conflict History, Conflict Processes, Economic Conflict, Top Ten Conflict Tips from Great Thinkers, Ways to handle conflict and tagged . Bookmark the permalink.

One Response to 23 Things They Don’t Tell You About Capitalism

  1. Great info, ive been visiting your site weekly and really impressed with the content on your site. Thank you.

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