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

Summary:

23 Things They Don’t Tell You about Capitalism by Ha-Joon Chang is a series of 23 “misconceptions” about capitalism which the author explains through historical and country-specific examples. Specifically, before each of the 23 parts of the book, Chang gives the supposed “common sense” view about that specific feature of capitalism so that the reader can contrast that with Chang’s alternative view.

In this way, the book is divided into 23 criticisms about capitalism and the consequential “truths” about how this economic system really works. Most of the criticism, as the author makes it clear throughout his book, is not against capitalism in general, but the kind of free market, low regulation, finance-oriented capitalism which has been the most prominent since the 1980s. He points out that, as an economist, he is not contrary to capitalism as a whole, but that this is an economic system that needs to be improved.

Since free market is the main enemy in the opinion of the author, it is no wonder that his first criticism and part of the book is as follows: “There is no such a thing as a free market.” He proceeds his endeavor against capitalism by condemning executive payments, giving his view on how companies should be run, deindustrialization, lack of planning, the hyper importance of education, and how all of these actions have led to global economic instability, crises, poverty, and inequality.

Finally, the author concludes the book with a set of eight items in a “to do list” of how to tackle problems with capitalism (mostly involving free trade and weak regulations) in order to improve the world economy which, by the time the book was finished, was still suffering quite acutely from the 2008 financial crisis.

 

Analysis of the book: 

As the author states in the beginning of the book, he is not against capitalism as a whole, but he is very critical of one of its most extreme versions: free trade, low regulation capitalism. So, although his book points to several problems with capitalism during its 23 “misconceptions,” most of them ended up being related to the misdeeds of free trade or the negative consequences of capitalism that lacks good regulation, which are basically the main recipe of neo-liberalism[1].

Moreover, it is these themes of free trade and lack of proper regulation where the writer really excels. With an easy to read book that is rich in practical examples (for people who are not economists) and clear articulation, he is able to convince the reader that a lot of the things that the mainstream media, governments, and academic circles have been cheering about neo-liberal policies in the last 30 years, have brought negative consequences to the world economy[2]. One example of his ability to compare different alternatives in a way that is easily understood by any reader is, at the beginning of each of the 23 parts, the author gives the mainstream point of view about that issue before presenting his own, differing view. Likely, readers can easily relate to the mainstream view as they have personally heard the exact same rhetoric in economy books and magazines. As such, it is clever of the writer to facilitate the comparison between what the reader has likely heard and what the author believes the truth to be.

Furthermore, the author is very successful in pointing out how extreme free trade, deregulation, “trickle-down economics,” and the financialization of economies (which are all neo-liberal policies) in the rich world have caused havoc. He covers these topics in one form or another in most of the 23 “misconceptions” about capitalism. He also highlights the connection between the theories of information society and post-industrial societies, which are nothing more than a neoliberal concept trying to be disseminated by the political elites[3]. However, he is not so convincing in some of the other “misconceptions” such as that education does not lead to development and that we do not live in a post-industrial age in the rich world.

Regarding education, it was hard to agree with the author when he states that there is little evidence linking education and national prosperity[4]. Although he points out that education is very important to the formation of informed and “good” citizens, he believes that the severe focus on education employed by some countries is not justifiable. He tries to use specific examples of certain countries in particular periods of time. However, there is almost a consensus from both sides of the aisle that in the age of internet and information technology, the more education one has, the more chances he or she will have to get out of poverty and reach prosperity[5].

As a side note, it is important to emphasize that it is rare to find an author today that criticizes capitalism and at the same time condemns socialism and communism. Chang does it with efficiency when explaining the shortcomings of a central planned economy in the old Soviet Union and the lack of incentive to do a better job when there is no meritocracy (such as in pure socialism). Furthermore, he points out the dangers of having too much or futile regulation in the economy and how this can stifle business environment. Ultimately, the author concludes that a balanced approach somewhere between the two is more appropriate.

Finally, it is also critical to highlight that this book was written just after the huge financial crisis of 2008 and thus it was really important to help inform the public about what actions and changes in the capitalist system of the last 30 years had made such a crisis possible. Moreover, with the final part of the book and its call to action, Chang gives eight steps that we, as a society, should take in order to fix the problems with capitalism (without replacing it) in order to avoid future crises and improve everyone’s prosperity. Overall, this is what I believe is important in a book that is critical about something: that it not only tells the reader what is broken, but also how to fix it!

[1] Turner, Rachel S. 2007. “The ‘Rebirth Of Liberalism’: The Origins Of Neo-Liberal Ideology”. Journal Of Political Ideologies 12 (1): 67-83. doi:10.1080/13569310601095614, 80.

[2] Davies, William and Linsey McGoey. 2012. “Rationalities Of Ignorance: On Financial Crisis And The Ambivalence Of Neo-Liberal Epistemology”. Economy And Society 41 (1): 64-83. doi:10.1080/03085147.2011.637331, 67.

[3] Ampuja, Marko and Juha Koivisto. 2014. “From “Post-Industrial” To “Network Society” And Beyond: The Political Conjunctures And Current Crisis Of Information Society Theory”. Department Of Social Research, University Of Helsinki, Finland, 449-450.

[4] Stewart, Debra W. 2010. ““Important, If True”: Graduate Education Will Drive America’s Future Prosperity”. Change: The Magazine Of Higher Learning 42 (1): 36-44. doi:10.1080/00091380903449110, 37.

[5] Stewart, Debra W. 2010. ““Important, If True”: Graduate Education Will Drive America’s Future Prosperity”. Change: The Magazine Of Higher Learning 42 (1): 36-44. doi:10.1080/00091380903449110, 37.

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