23 Things They Don’t Tell You About Capitalism, by Ha-Joon Chang

Ha-Joon Chang is a Korean economist with a knack for explaining the blind spots of his discipline. In his latest book, he rounds up a series of common but mistaken assumptions about the way the world works, and knocks them down one at a time. It’s written in an accessible and often entertaining tone, drawing on imaginative examples to explain economic concepts in layman’s terms, and it’s well worth picking up.

The book begins with the assertion that “there is no such thing as a free market”, which I’ve already written about here. Further chapters are equally provocative: ‘Companies should not be run in the interests of their owners’, ‘The washing machine has changed the world more than the internet has’. Some of these are talking points, the latter included. Others are vital for understanding how countries develop or why markets fail. Those who have read his previous books, Bad Samaritans in particular, will be familiar with his defence of government owned businesses and his debunking of trickle-down economics. I particularly enjoyed his explanation of strategic protectionism using the presidents on US bills, all of whom would be considered free market heretics today.

Despite the criticisms and the title of the book, Chang is adamant that “being critical of free-market ideology is not the same as being against capitalism”, and rightly so. It is free market extremism that caused the financial crisis, the safeguards that would have prevented it foolishly dismissed as red tape and anti-business meddling. There is a balance to be struck, using markets or the self-interest motivation as tools, moderated by controls and careful planning, and with a deliberate bias in favour of the poor.

Of the 23 ‘things’ here, my personal favourite is the chapter entitled ‘People in poor countries are more entrepreneurial than people in rich countries’. It’s counter-intuitive only if you’ve never been to a developing country and seen the street sellers, shoe-shine boys, rickshaw drivers, and all the other creative professions that crowd the pavements. Chang mentions the professional queuers who will sell you a place in the line at the American Embassy, and suggests that human ingenuity is in plentiful supply.

It’s not just anecdotal either. An OECD study found that in developing countries, 30-50% of people are self-employed, compared to 12% in richer countries. The key is not entrepreneurs themselves that are lacking in poor countries, but the structures to tap their potential and turn it into something bigger.

23 Things They Don’t Tell You About Capitalism is a wonderful exercise in sacred-cow slaying, with a wit and warmth rarely found in the field of economics. It’s full of challenging ideas and leftfield explanations, and is great for dipping in and out of. In fact, Chang recommends just that, with a page outlining ‘7 ways to read this book’ at the start. There’s just one thing missing for me. I’d like to see Chang take his iconoclasm one step further, and address the growth imperative.