What Ha-Joon Chang Doesn’t Tell You About Free-Market Economists

Photo by Daniel H. Tong on Unsplash

It doesn’t happen very often that books on economics become international bestsellers. Those that do often border on psychology (think Nudge and Thinking, Fast and Slow) or are bought mainly for signalling purposes (think Piketty — but check your premises!). Although exact figures are hard to come by, Ha-Joon Chang, a Cambridge development economist, can credibly claim to have joined this elusive club with his provocatively titled “23 Things They Don’t Tell You About Capitalism”. In what at first sounds like a bizarre conspiracy theory woven together by an all-too-imaginative mind, the author takes a stab at unraveling the ideology that fuels our economic system, or more precisely the assumption behind it, carefully concealed from the public eye. As Chang has it, many a disaster (such as the 2008 financial crisis) could have been averted had it not been for the prevailing neoliberal orthodoxy. Hardly an original thesis, one would think.

Why bother, then? I’m not a free-market economist (in fact, I’m not an economist at all), but I’ve spent many years alongside people to whom this description would apply. Whether or not their position is correct is debatable, but in order to even begin such a debate, it would be helpful indeed to know what their position is. And, alas, Chang adds his fair share of rather creative characterizations to the story. Which means that, while some of his arguments are indeed spot-on, he mostly oscillates between criticism that is interesting but besides the point and incredibly cheap shots. (Can you really tell the difference between a 2% and a 4% interest rate?, he asks at some point. I mean, sure, 35 years down the road, your savings will be only half of what they could have been, but why bother?) Nonetheless, I would expect many readers to take Chang’s claims at face value, and this is my modest contribution to isolate his most jarring shortcomings.

To his credit, Chang’s alternative to free-market capitalism isn’t some crazy utopian collectivization scheme, nor a proposal for anti-consumerist degrowth, but presents a potentially viable alternative to the free play of market forces. Paraphrasing Winston Churchill, he calls capitalism “the worst economic system, apart from all others that have been tried” and argues for a heavily regulated version thereof…