23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

Book review in The Observer for one of the best books I've read in the past year....errr 5 years...

"Economists are not some innocent technicians who did a decent job within the narrow confines of their expertise until they were collectively wrong-footed by a once-in-a-century disaster that no one could have predicted." Far from being an inward-looking, hermetic discipline, economics has been a hugely powerful – and profitable – enterprise, shaping the policies of governments and companies throughout much of the world. The results have been little short of disastrous. As Chang puts it: "Economics, as it has been practised in the last three decades, has been positively harmful for most people."

In his 2008 book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, Chang – an economist himself, a specialist in the political economy of development – mocked one of the central orthodoxies of his profession: the belief that global free trade raises living standards everywhere. 23 Things They Don't Tell You About Capitalism assaults economic orthodoxy on a much larger front. Dip into this witty, iconoclastic and uncommonly commonsensical guide to the follies of economics, and, among many other things, you will learn that free market policies rarely make poor countries richer; global companies without national roots belong in the realm of myth; the US does not have the highest living standards in the world; the washing machine changed the world more than the internet; more education does not of itself make countries richer; financial markets need to become less, not more efficient; and – perhaps most shocking to Chang's colleagues – good economic policy does not require good economists. Each of Chang's 23 propositions may seem counterintuitive, even contrarian. But every one of them has a basis in fact and logic, and taken together they present a new view of capitalism.

Chang may be our best critic of capitalism, but he is far from being any kind of anti-capitalist. He recognises the failings of centrally planned economies, and rightly describes capitalism as "the worst economic system except for all the others". At the same time he is confident that capitalism can be reformed to prevent crises like the one we have just experienced recurring. Making markets more transparent is not enough. "If we are really serious about preventing another crisis like the 2008 meltdown," Chang writes, "we should simply ban complex financial instruments, unless they can be unambiguously shown to benefit society in the long run." He is aware that he risks sounding extreme, but argues that the ban he proposes is no different from those that have been enforced on other dangerous products. "This is what we do all the time with other products – drugs, cars, electrical products and many others."