23 Things They Don’t Tell You About Capitalism
Poor Countries are poor not because of their poor people, many of whom can out-compete their counterparts in rich countries, but because of their rich people, most of whom cannot do the same — Ha-Joon Chang
What is the book about?
“23 Things They Don’t Tell You About Capitalism” is written by Ha-Joon Chang, a Professor of Economics at the University of Cambridge and author of other economics-oriented bestsellers like “Bad Samaritans”.
“23 Things” is a book critiquing free-market capitalism. Ha-Joon Chang questions basic assumptions we take for granted and gives us a new and original perspective into the problems caused by this version of capitalism. Ha-Joon is also careful to point out that while he thinks capitalism is still the best economic system invented, it is free-market capitalism he is against.
What does it cover?
“23 Things They Don’t Tell You About Capitalism” has 24 chapters; 23 of which are the “things” with the 24th on moving away from the mess created by free market capitalism. These 23 things question the efficient market hypothesis and the neo-liberal economic policies which have become popular in the ’70s and ‘80s.
The 23 things are
- There is no such thing as a free-market
- Companies should not be run in the interest of their owners
- Most people in rich countries are paid more than they should be
- The washing machine had changed the world more than the internet has
- Assume the worst about people and you get the worst
- Greater macroeconomic stability has not made the world economy more stable
- Free-market policies rarely make poor countries rich
- Capital has a nationality
- We do not live in a post-industrial age
- The US does not have the highest living standard in the world
- Africa is not destined for underdevelopment
- Governments can pick winners
- Making rich people richer doesn’t make the rest of us richer
- US managers are over-priced
- People in poor countries are more entrepreneurial than people in rich countries
- We are not smart enough to leave things to the market
- More education in itself is not going to make a country richer
- What is good for General Motors is not necessarily good for the United States
- Despite the fall of communism, we are still living in planned economies
- Equality of opportunity may not be fair
- Big government makes people more open to change
- Financial markets need to become less, not more, efficient
- Good economic policy does not require good economists
How is it written?
Each “Thing” starts with an explanation of what we are told it is and then what it actually is. This is followed by numerous sections with anecdotes, statistics and Ha-Joon’s analysis of why there have been failures and successes.
Each thing is relatively independent of the other and can be read in such a manner. In addition, the book has listed out 7 different ways of reading this book depending on your intent. These ways range from understanding capitalism to why some people are richer than others.
What did I like?
“23 Things” is an eye-opener. There are many assumptions I have made, given I have been indoctrinated through my education and media about the efficacy of capitalism. Ha-Joon’s evisceration of these assumptions made me question what I thought I knew.
This is a book on macroeconomics and while the author has kept his explanations simple, there are places where some knowledge of advanced economic theory would be useful. Ha-Joon has done a great job of explaining these topics as well.
He is truly global in his outlook and it is refreshing to see a non-WEIRD (Western Educated Industrial Rich Democratic) perspective of the world. I liked the organization of the book along with the multiple recommended ways to read it too.
What did I not like?
“23 Things” can get a bit statistics heavy in certain sections. In some places, I was not sure if it was his opinion seeping through or if it was backed by research. But such instances are rare.
I liked the book. While the reasoning in some chapters is dubious, the fact that the assumption is being questioned makes it worthwhile.
My takeaway from this book is that the IMF and the western world have been forcing a lot of faulty policies on the weaker developing nations for last few decades. These policies are also affecting the weaker economic classes even in the western nations. These nations have gone through their own protectionist, non-free market cycles in their past which are partially responsible for their economics strength (in addition to colonialism). These very nations are now forcing the rest of the world to not do as they did, but to do as they are told. The reader can judge whether this is due to maliciousness or incompetence.
I strongly recommend reading this book, especially if you are someone who has been bought thinking that capitalism will solve the world’s ills. I would suggest “A Little History of Economics” as an optional read before this (review).
Originally published at Digital Amrit.