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Book Review: 23 Things They Don’t Tell You About Capitalism by Ha-Joon Chang

23 Things They Don’t Tell You About Capitalism by Ha-Joon Chang
My rating: 5 of 5 stars

Capitalism! The American Dream! Except that what we believe about capitalism, and how it actually works, are two different things. We’ve been told that the essence of preserving the economy involves making things better for the wealthy, so that they will make bigger companies and hire more people for more jobs, and thus the crumbs of their good fortune will “trickle down” to the rest of us. Except that it’s not true; wealthy people won’t part with their wealth unless regulations force them to.

We are told that the American Dream rewards the hard-working and the worthy, and that anyone can succeed if they try hard enough. Except that it’s not true; people in poorer countries are more entrepreneurial than people in wealthier countries, and good infrastructure is the key to building the wealth of nations.

We are told that you must pay good CEOs and Directors of large corporations top dollar so that you will get the best. Except that it’s not true; Board Directors often make decisions that are best for them in the short term, and really bad for the company itself in the long term (fancy that!) And by the way, you’re probably wrong about how much they’re getting paid. Most people think it should be about 10 times what the average worker in their companies get paid, and they think it’s actually more like 30 times. But they’re wrong; it’s really more like 300-400 times as much!

We are told that what’s good for the shareholders of a company is good for the company overall. Except that it’s not true; shareholders want to buy low and sell high, and quickly, and that means that often decisions are made in companies to cut corners, cheat, and patch instead of fix, until the whole structure collapses. Like with pretty much every automobile company you’ve ever heard of, and several large airlines.

We are told that the free market economy is the best way to handle things, because market forces will ultimately balance everything out. Except that it’s not true; there is actually no such thing as a “free market economy;” governments and corporations fix the conditions of the market all the time. So could we; and so we have in some ways, which is why “fossey jaw” is a thing of the past.

We are told that education is essential to the future wealth of a nation. Except that this isn’t true either; there’s almost no correlation. What drives the wealth of nations is actually manufacturing.

Don’t believe me? That’s okay; Ha-Joon Chang is a Cambridge trained economist who has won prizes for his work, and he’ll tell you better than I can, with figures to back it up. And he’ll explain it in a way that even an arts major like me can clearly understand.

I can’t say enough good things about this book! If you, like me, see the rot at the core of our economic system but you lack the words to tell people why it’s rotten, this is the book for you. If you don’t understand economics and you want to learn without taking a course, this is the book for you. If you think that capitalism is the best thing since sliced bread, and you think lefties are wingnuts who don’t understand how the world really works, this is still the book for you because you can acid-test your theories against an educated dissenting opinion. I wish that my Prime Minister would read it because I think he would run things a little differently if he did.

Over the next couple of months I’ll be writing an extended series focused around the theories presented in this book on Gods & Radicals if you want to know more.

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6 Comments »

  1. having written my dissertation on economic history, it all makes sense to me. americans are repeated told capitalism made america rich. in this the capitalists define everything back to the roman empire as capitalism. roman society was a military agrarian slave society. that may be where capitalism is going but it’s not the classical definition of capitalism. from the renaisance to around 1750-1800 economists call things mercantilism because the economic activity is not based on long term investment or large amounts of fixed CAPITAL. what distinguishes capitalism is the large amounts of fixed capital. that’s relatively modern. post industrial revolution, although there were a few ventures before that, that were capital intensive, such as the canadian fur trade.(see harold adams innis”the fur trade in canada”)

    what america had was the best piece of unexploited real estate in the world. they got it by military force, and it has few desserts mountains or jungles that would challenge pre modern trade and settlement, and a moderate climate. canada did well, but in the first wave of settlers canada had only a forty per cent success rate. in other words sixty per cent were defeated by the climate and either left or died. america had a success rate about eighty per cent. the american settler successes were aided, maybe even caused by a government that allowed the small free holder to have some rights. this wasn’t true in latin america, but latin america also had a lot worse geographical obstacles.

    in fact i would argue that american capitalism is destroying this wealth producing enviornment right now. the control of capital has supperceded the productive economy.

    Liked by 1 person

    • What a great comment! Yes, this is exactly Chang’s point. America’s bread basket is why you’ve done so well, which led to vast manufacturing resources, which is what economies are (still) based on. You’re exactly right about Canada’s climate being the point around which we have struggled, which is why the War of 1812 was so important. Even today, 90% of us live within 100 km of the 49th Parallel.

      Chang doesn’t have a lot to say about Canada, but he’s got quite a bit to say about the early, highly regulated, industries of the United States, and how these are why America has done so well to date. But since deregulation and a turn to investment and information-based economy, it’s already on the decline. I think most Americans sense that and this is part of the reason why the backlash of the right wing has been so strong. Canada has descended down the same path too, especially since the Harper government’s regime. I think Chang’s book offers some great insights about what went wrong, and why; and yes, it’s all about how “the control of capital has superseded the productive economy,” exactly as you say. Thanks so much for this!

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