In 23 Things They Don’t Tell You About Capitalism Ha-Joon Chang destroys the biggest myths of our current economic approach. He explains how, despite what most economists believe, there are many things wrong with free market capitalism. As well as explaining the problems, Chang also offers possible solutions which could help us build a better, fairer world.
You will probably remember the huge financial crisis which swept the globe in 2008. You may also recall that in the months that followed, economists were – bankers aside – the most mistrusted professionals in the world. Yet this backlash was far from unfair to economists – it was a perfectly reasonable response to their arrogant attitude in previous years. Quite simply, economists had grown far too big for their boots.
One sign of economists’ overconfidence was their belief that only they could fully understand the complexities of economic theory. This led them to dismiss any criticism of their beliefs as too simplistic.
Yet this was, and is, simply not the case. Instead of being too complex for outsiders, 95 percent of economics is simple common sense.
You can think of it in this way. When you go to a restaurant you know what standards of hygiene you desire even though you are not a qualified epidemiologist. And it’s the same for economics; the basic principles of the subject can be appreciated by anyone. After all, you don’t need to be president of a central bank to know that a country shouldn't gamble all its money on risky investments.
This arrogance also led mainstream economic teaching to discount any alternative theories.
For the last few decades, one particular economic theory has dominated: neo-classical free market theory. This belief assumes that every individual in society acts as a rational, selfish agent, who only makes an economic decision by calculating how much it will benefit them. The economic profession came to regard this theory almost as a natural science. This led them to focus too much on a normative theory rather than on its application in the real world.
But rather than being an objective science like physics, economics is a social science. This means that there are many potential alternative theories – each just as provable as the free market approach.
In the following blinks we will discover the central faults in free market economic theory.