Author: Ha-Joon Chang
Title: 23 Things They Don’t Tell You About Capitalism
Publication Info: Bloomsbury Press (2011)
I received this book as an advanced reading copy through the Library Thing Early Reviewers program. Like the title says, it goes through 23 aspects of capitalism that are myths, misrepresentations, or simply bald-faced lies. Now this book is not anti-capitalism, but the author does seek to debunk the ideology of free-market capitalism (itself misnamed) that over the past three decades has gained an almost religious reverence in political and economic circles. Some of the most interesting tidbits include:
- The economic and technological revolution of the internet has been vastly overstated. We do not live in a post-industrial age and the washing machine has changed the world more than the internet has.
- There is no such thing as a free market as there is some level of regulation in all markets.
- Running a company for shareholder interest is inefficient for the company and bad for the national economy.
- If we assume the worst about people we will get the worst out of them (this applies to the frequently repeated belief that the economy is based on individual self-interest and denials that people are moral agents).
- Many successful endeavors have been initiated by the government or through public-private partnerships.
- Regulation works not because the government knows better but because it deliberately restricts our choices within the scope of humanity’s bounded rationality.
- Bigger government allows people to take more risks by re-tooling their work skills knowing there is a safety net if they fail.
Chang’s writing style can be dry – although there are flashes of good humor – and he gets repetitive since the 23 things overlap often. I found it an interesting overview of economics and capitalism and makes a lot of good points about what’s wrong with the prevailing opinion. Of course, I may be predisposed to agree with Chang’s thesis, but I also feel I learned a number of things I never understood before.
“The higher purchasing power of US citizens (compared to the citizens of other rich countries) is owed in large part to the poverty and insecurity of many of their fellow citizens, especially in the service industries. The Americans also work considerably longer than their counterparts in competitor nations. Per hour worked, US incomes is lower than that of several European countries, even in purchasing power terms. It is debatable that that can be described as having a higher living standard.” – p. 111
“Simply making the rich richer does not make the rest of us richer. If giving more to the rich is going to benefit the rest of society, the rich have to be made to deliver higher investment and thus higher growth through policy measures (e.g., tax cuts for the rich individuals and corporations, conditional on investment), and then share the fruits of such growth through a mechanism such as the welfare state.” – p. 147
“When the managerial classes in the US and, to a lesser extent Britain, possess such economic, political and ideological power that they can manipulate the market and pass on the negative consequences of their actions to other people, it is an illusion to think that executive pay is something whose optimal levels and structures are going to be, and should be, determined by the market.” – p. 156
“Unless we deliberately restrict our choices by creating restrictive rules, thereby simplifying the environment that we have to deal with, our bounded rationality cannot cope with the complexity of the world. It is not because the government necessarily knows better that we need regulation. It is in the humble recognition of our limited mental capability that we do.” – p. 177
Recommended books: The Great Unraveling by Paul Krugman, Free Lunch by David Cay Johnston, The Big Short by Michael Lewis