23 Things they don’t tell you about Capitalism
from Ha-Joon Chang
I have just published a new book, ’23 things they don’t tell you about capitalism’ (release date 2 Sep). It is for the moment published only in the UK and associated markets (Australia, South Africa, etc.) by Allen Lane (which is the hardback non-fiction emblem of Penguin). The US edition will come out in early January from Bloomsbury USA. The book is targeted at the general reader. Here is the table of contents.
23 Things they don’t tell you about Capitalism
Thing One. There is really no such thing as a free market.
Thing Two. Companies should not be run in the interest of their owners.
Thing Three. Most people in rich countries get paid more than they should.
Thing Four. The washing machine has changed the world more than the internet.
Thing Five. Assume the worst about people, and you get the worst.
Thing Six. Greater macroeconomic stability has not made the world economy more stable.
Thing Seven. Free-market policies rarely make poor countries richer.
Thing Eight. Capital has a nationality.
Thing Nine. We do not live in a post-industrial age.
Thing Ten. The US does not have the highest living standard in the world.
Thing Eleven. Africa is not destined for under-development.
Thing Twelve. Government can pick winners.
Thing Thirteen. Making rich people richer doesn’t make the rest of us richer.
Thing Fourteen. US managers are over-priced.
Thing Fifteen. People in poor countries are more entrepreneurial than people in rich countries.
Thing Sixteen. We are not smart enough to leave things to the market.
Thing Seventeen. More education in itself is not going to make a country richer.
Thing Eighteen. What is good for the General Motors is not necessarily good for the United States.
Thing Nineteen. Despite the fall of Communism, we are still living in planned economies.
Thing Twenty. Equality of opportunities is unequal.
Thing Twenty-one. Big government makes people more, not less, open to changes.
Thing Twenty-two. Financial markets need to become less, not more, efficient.
Thing Twenty-three. Good economic policy does not require good economists.
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Real-World Economics Review Blog 
The same things can be said of socialism, especially Thing Twenty-thre: Good economic policy does not require good economists.
Danny L. McDaniel
Lafayette, Indiana
All 23 items are correct. But that list can be substantially expanded. For instance, the two previous book of Professor Chang contained great insights on free trade.
Vladimir A. Masch
Warren, New Jersey.
1 – Are there any absolutes? Useless point. Liberia probably comes close.
2 – Says who? The author? A socialist/communist? I’m not saying I disagree, but this is opinion and not at all fact.
3 – Again, according to who?
4 – I really don’t think there is a point even arguing this one. Internet is the new electricity, it’s effects in it’s short existence have been profound in creating new technology, mass communication, spreading information(this is gigantic), research, education, etc. Every year the effects the internet has increase substantially, I can’t imagine the impact it will have on the world in 10 years. What a ridiculous point.
5 – Ok. I assumed that my car, which had nothing in it, would not get broken into at a Church I park at. I still leave nothing in it but it’s been broken into three times, THREE TIMES, with nothing taken. Assume the best in people and prepare to be disappointed. Be realistic and you’ll be fine.
6 – Don’t really know anything about this one but I’m not liking this trend…
7 – Oh yeah? The wealthiest nations in the world gained their wealth largely through capitalistic economies. Wealth is built on the backs of the poor; no nation, none, have built the capital and infrastructure necessary to have a strong economy(yes even western European socialist utopias) without first relying on some sort of capitalistic system. I guess that’s not exactly free market, but it seems that nations which promote protectionism stagnate.
8 – Sure?
9 – Semantic games are useless
10 – So what? We have a damn good living standard. Nobody starves, even if our medical system isn’t perfect, everyone has a right to emergency care(I am strongly for a public option, but that’s for another thread), everyone has a right to a basic education, we have amazing access to all kinds of goods, the internet is everywhere, the vast majority of the nation has cell phone coverage, and we are relatively safe from crime. So we’re not the best, big fucking deal.
11 – Does that imply that Africa will become as developed as the West? It might happen when their people learn to actually lead their nations instead of robbing their people…
12 – Very true, so what?
13 – Very true as well, I wish more people would recognize that.
14 – Don’t know what that means…
15 – Maybe more entrepreneurial then in more socialist countries, I doubt more so than the US or Singapore. Wealth has little to do with it, an individualistic culture that promotes entrepreneurialism has everything to do with it.
16 – Completely no. Like a lot of these points, using absolutes is silly. Nobody thinks laissez faire is a good idea, but the other end of the spectrum is just as bad.
17 – Monetarily? No, but questioning that an educated population leads to more innovation, creativity, and options is madness. It’s not going to bring wealth by itself, but it sure is an important factor in the matter.
18 – Again with the language… “not necessarily” what does that mean? If it’s good for GM to become a monopoly obviously that’s not going to be good for the US and it’s people however there are a lot of things that are in everyone’s best interests as well.
19 – Ok… Governments can promote things, I think to claim that they’re at the wheel is pretty out there though.
20 – Yet again with ambiguous(and improper) language…
21 – Don’t really know the psychology, I’d imagine it’s a bit more complicated though.
22 – Is that to say more efficient = more unstable/risky?
23 – Sure.
I honestly don’t see anything profound here. I could write a book about my opinions and write it out like facts as well, just because it’s in published does not make it any more valid. I also think it’s worth mentioning that communism completely failed everywhere it took root. I personally am for socialism, but, like I said above, to build a socialist economy a nation must already have a lot of capital wealth to sustain such a system.
Mikhail, this is amazing, you basically decided your entire range of opinions and counter arguments based on the chapter titles. This is even more fun since many of your criticisms are “this is ambiguous” and so on. Of course they are ambiguous. They are headings followed by a ton of text. You might as well have issue with the title of the book:
“Why are there 23 things wrong with capitalism? Why this absolute number?”
That made as much sense as your arguments. The book is over 300 pages long, explains the arguments behind each proposition and even uses the titles as a rhetorical device, sometimes claiming that while capitalism is bad, it is better than anything else on offer. Your points on absolutes make no sense since anyone who has read the book (or knows Chang’s work in general) knows he is for and against certain types of monetary policies and some free market doctrines among others things
At least read the book before making judgements and coming to your current conclusions.
Ali, thank you sooo much!
I was reading his post, and i thought to myself: ahh ffs not again! But because of you, i dont have to respond anymore to this kind of crap. So thank you for responding.
Mikhail: >”leave nothing in it but it’s been broken into three times, THREE TIMES, with nothing taken”
I agree with Ali’s crticism of your post but this reminded me of a time in 1980s New York when many people had “NO RADIO” signs in their car windows to prevent breakins. At least one of those cars did get burgled, nothing was taken but something was left. It was a note saying “GET A RADIO!”
Didn’t Karl Marx say the same things? He never owned a business or held a real job for that matter.
how nuanced!
“the same things”, great! Thats a good idea for a new kind of intelectual discourse! generalize peoples opinions and then a snappy one liner, devoid of context or meaning!
Dear Danny,
I do have to admit that I’m a bit confused: I just read some newspaper articles on the foreclosuredisaster in the USA. The problem seems to be larger than we expected:
– left wing Karl Marx
– as well as right wing Friedrich Hayek
would both say exactly the same thing about this crisis: “Capitalism needs rules to function”. Hayek would call this ‘the rule of law’, Marx would call this ‘bourgeouis property rights’ Neither of them would understand that any capitalist government would, inspired by neo classical economics, sell out to badly run banks. Please read James Galbraith (on this blog) on this. Some people credit Keynes with ‘saving capitalism from itself’. At this moment, capitalism seems to be in need of somebody who saves it from neo classical economists who ‘assume’ that markets always work well.
Danny L. McDaniel: >”Didn’t Karl Marx say the same things? He never owned a business ”
What’s the relevance of that, please ? Not owning a business doesn’t disqualify you from participating in politics and economics – in fact, you’re forced to participate in the latter. Owning a business should give you no privileges whatsoever in a democracy.
>”or held a real job for that matter.”
Define a real job, please. Hint: Marx wrote journalism and books – products.
I’m trying hard not to be rude.
Many of the neocons and neolibs have now admitted defeat in the sense that they now say great crises of capitalism are unavoidable. But they’re still prepared to defend their dysfunctional, failed capitalism by crying, like Thatcher, “There is no alternative” – no al ternative, of course, for them who wish to keep their unequally distributed wealth and power, and are prepared to back it by Pinochetist insurrection if necessary.
Ha-Joon Chang:
It’s been reported recently that 70% of financial market trading volume is now due to HFT computers. Doesn’t this indicate that with a modest and realistic increase in computer power, that could become 100% ? If so, instead of being real trading, it could just as easily be simulated, providing input to a centrally planned economic apparatus which would not require any highly-paid and risk-manic bankers or hedgies and who could then be redeployed as labourers or hospital orderlies. Such an economy should perform at least as well as the present neolin-neocon one. With another increase in computing power, it could be simulated into the future and thus forecast its own crises, which might enable crisis avoidance – or even 5-year plans which work.
On a related matter, you book shares a Heffers’ display with Quiggin, J “Zombie Economics”. Any opinions on that book ?
I have to second Ali’s amazement at Mikhail. I mean the chapter titles were meant one to provoke one into reading the chapters, but apparently the ideas were so provocative that Mikhail just had to unleash on them right then and there! Or else he really thought this blog was just some dude spouting ideas off the top of his head?
(to Mikhail) Oh heavens this is when you know you have a good book, people start bashing you before they even read it.
Here’s something I realized. I don’t have all the answers to the world, and neither does anyone else, including Bernanke or Obama.
We are all humans with a tendency to be biased, easily influenced by others and in fact understand much less about the world than we think.
So thank you Ha-Joon Chang. I read a little bit of your book yesterday, and I realized, my knowledge about the world is woefully incomplete. I encourage anyone who thinks they “know” everything there is to know, to actually do a little bit of research, before spouting off crap that’s in their head.
I read the first chapter. Alas, it is very wrong-minded. “Because markets will always have non-zero regulation, markets will never be free?” That’s absurd. We can compare the *amount* of regulation between markets and decide whether more regulated or more free markets create greater consumer surplus.
Compare, if you will, the market for schooling to the market for food. Both are very very important to the human condition. Everybody has a horror story about schooling, just as everybody has a horror story about some restaurant. But the key is that because the market for food is a free market, people don’t patronize the bad restaurants and they go out of business. Just try not patronizing your government school! You still have to pay for it. How can markets work when you have no discretion to buy or not buy something?
I like to say instead that government regulation of markets works out really well for governments, and customer regulation of markets works out really well for customers, but that neither market can be free of regulation. In this case I agree with Ha-Joon, but only because it’s midnight and his clock is stopped at 12.
Russ,
how do you define ‘consumer surplus’?
The neo-classical definition of this is fatally flawed as it assumes that it’s all about purchasing things,like a house or a car or a washing machine, and not about using them. Once their bought, purchasing costs are often ‘sunk costs’ and these kind of items enter into the household economy which is, to an extent, isolated from the monetary market economy. A neo-classical ‘consumer surplus’ is non-existent in this world (assuming that the neo-classical idea of perfect rationality and perfect knowledge of the present and future state of the world is utter nonsense).
Do you have a better definition?
P.S. – you might want to read Friedrich Hayek, an undisputed ‘Austrain’, who again and again stressed the importance of the Rule of Law and well designed rules and laws to regulate markets. And the nonsense of the idea of the neo-classical consumer: often, we do not know why we do what we do.