23 Things They Don’t Tell You About Capitalism. Ha-Joon Chang (Allen Lane)
Three things Ha-Joon Chang doesn’t tell you about capitalism. As a form of society it’s only a few hundred years old. It won’t last forever. And it will be replaced when a majority of the world’s people stop supporting it and organise a better alternative.
The author makes no bones about supporting capitalism: “This book is not an anti-capitalist manifesto…my criticism is of a particular version of capitalism that has dominated the world in the last three decades, that is, free-market capitalism…there are ways in which capitalism should, and can, be made better.”
It takes two pages to list the headings of the 23 ‘things’, in no particular order. Four are on the market: no such thing as a free market; free-market policies rarely make poor countries rich; we are not smart enough to leave things to the market and financial markets need to become less efficient. Three are on economics: greater macroeconomic stability has not made the world economy more stable; we are living in planned economies and good economic policy does not require good economists. Three are on the US: it does not have the highest living standard in the world; its managers are overpriced and what is good for GM is not necessarily good for the US. The 13 remaining ‘things’ can be filed under miscellaneous’.
Ha-Joon Chang knows a thing or two about Marx and Marxism. He understands that Marx “argued that the fundamental problem with capitalism was the contradiction between the social nature of the production process and the private nature of ownership of the means of production”. Unfortunately he equates Marxism with central planning, which he says led to the unravelling of ‘communism’ in the late 1980s.
In his concluding chapter the author offers eight mostly disputable points:
1. “The profit motive is still the most powerful and effective fuel to power our economy and we should exploit it to the full.” No – the profit motive applies to and benefits only the tiny capitalist class at the expense of exploiting workers. 2. We should build our new economic system on the recognition that human rationality is severely limited.” No – this is too pessimistic an assessment of human rationality. 3. “We should build a system that brings out the best, rather than the worse, in people.” Yes – capitalism certainly doesn’t. 4. “We should stop believing that people are always paid what they ‘deserve’.” Yes – socialists never started believing that. 5. “We need to take ‘making things’ more seriously.” Yes – a system based on making things is better than one based on making money for the minority. 6. “We need to strike a better balance between finance and ‘real’ activities.” No – we need to get rid of finance as an impediment to real activities. 7. “Government needs to become bigger and more active.” No – government of persons needs to give way to administration of things. 8. “The world economic system needs to ‘unfairly’ favour developing countries.” Yes – but not in the way the author means it. The world socialist system may at first need to favour populations which have the greatest deprivations.