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23 Things They Don’t Tell You About Capitalism
Why capitalism is not what you think it is.
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.
- Students of economics who are fed up with mainstream teaching
- Anyone who takes an interest in the financial crisis and why nobody saw it coming
- Anyone wondering why levels of inequality are so high
Ha-Joon Chang is one of the leading critics of free-market economics. He’s a professor at Cambridge University specializing in institutional and development economics and has published many widely discussed books about economic development such as Bad Samaritans and Kicking Away the Ladder.
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23 Things They Don’t Tell You About Capitalism
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- Contains 11 key ideas
Synopsis
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.
Key idea 1 of 11
Despite what free-market economists say, their subject is not an objective natural science.
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.
Key ideas in this title
- Despite what free-market economists say, their subject is not an objective natural science.
- Despite what free market economists believe, individuals cannot make completely rational economic choices.
- Human beings are not completely selfish; we often act out of altruistic concerns.
- The economy does not pay people what they deserve to earn.
- A strong manufacturing sector is more essential to economic growth than a strong service or tech economy.
- The financial crisis was caused by the deliberate build up of risk in the system.
- Despite economists’ fear of government economic planning it is already happening and it is performing well.
- Social welfare is vital for strong economic growth.
- We need to stop trying to fix developing countries with the wrong tools.
- It is not capitalism that is the problem, but the way we design it.
- Final summary