23 Things They Don't Tell You About Capitalism
Heterodox economist's case against free-market assumptions
Summary
Chang, a Cambridge development economist, presents twenty-three arguments against propositions he identifies as free market orthodoxy. Each chapter states the conventional claim, then presents his counter-argument and evidence.
The substantive positions include: there is no such thing as a free market, since every market rests on rules about what may be traded and by whom, and disputes about regulation are disputes about which rules rather than about how many; companies should not be run in the interest of their owners, because shareholders are the stakeholders least committed to the firm's long-run existence and can exit costlessly; the washing machine changed the world more than the internet, because it removed household labour and enabled women's entry into the workforce; people in poor countries are more entrepreneurial than people in rich ones, and the difference in outcomes comes from institutions and technology rather than individual quality; free market policies rarely make poor countries rich, and almost every developed economy industrialised behind protection; and greater macroeconomic stability has not made the world economy more stable, because financial deregulation increased volatility elsewhere.
Chang writes accessibly and each chapter stands alone. His development economics is serious work and the historical argument that developed countries industrialised behind protection is well supported.
The book is polemical and the twenty-three framing sometimes forces an argument to fit. Several chapters attack a version of free market economics that few economists hold, and the counter-evidence is selected. It is worth reading as a corrective to confident market-liberal assumptions rather than as a balanced treatment.
Key takeaways 7
- There is no such thing as a free market, since every market rests on rules about what may be traded and by whom, and regulation disputes are about which rules rather than how many.
- Shareholders are the stakeholders least committed to a firm's long-run existence because they can exit costlessly, which makes them poor principals for its governance.
- Almost every developed economy industrialised behind protection and subsidy, and now recommends policies to poor countries that it did not follow itself.
- People in poor countries are more entrepreneurial by any behavioural measure, and the difference in national outcomes comes from institutions and technology.
- The washing machine and household appliances changed economic life more than the internet, by removing labour that constrained half the population's participation.
- Macroeconomic stabilisation of inflation did not make the world economy more stable, because financial deregulation moved the volatility elsewhere.
- Education spending does not by itself produce economic growth, since the link between individual schooling and national productivity is far weaker than assumed.
Who should read it
Readers who want a corrective to market-liberal assumptions from a development economist, read as polemic rather than as balanced analysis.
Who recommended it 1 · 1 direct
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