23 Things they don't tell you about Capitalism

The 2010 nonfiction book 23 Things They Don’t Tell You About Capitalism by economist Ha-Joon Chang comprises 23 essays that challenge the principles and beliefs of neoliberal economics, which favor unrestricted free-market economies. Written for a general audience in the aftermath of the 2008 financial crisis, the book makes the case for an expanded governmental role in the global economy but does not advocate abandoning capitalism.

This guide refers to the 2010 Penguin Books edition.

Summary

In the Introduction, Chang outlines his purpose, which is to critique some of the most prevalent beliefs about free-market capitalism, an ideology that opposes government intervention in the economy. In each of the 23 essays, or “Things,” that follow, Chang addresses a distinct tenet of free-market economics, summarizes the prevailing viewpoint, and then challenges that viewpoint.

In the first few essays, Chang examines some of the fundamental views of free-market economists by illustrating, first, that no market is fully “free” in any meaningful sense because all are bound by limitations. He then discusses the adverse effects of allowing free-floating shareholders, whose commitment to a company is often tenuous at best, to make important decisions because such shareholders tend to prioritize short-term profits over long-term viability. Next, Chang dispels the notion that free markets automatically reward everyone fairly, citing the pay discrepancy between similar workers in different countries as an example. Moving on to economic history, Chang posits that the development of household appliances was more transformative than that of the internet because those appliances reduced domestic demands and thus allowed women to more easily join the workforce. In his fifth essay, Chang questions free-market economists’ foundational assumption that people are motivated primarily by self-interest, showing how other values impact behavior as well.

The next few essays tackle additional topics that free-market economists frequently address. In one essay, Chang questions whether moderate inflation is really the enemy that free-market economists claim it is, showing that anti-inflation policies often have unintentional consequences. In another essay, Chang contradicts the belief that free trade and other free-market policies benefit developing countries, arguing instead that protectionism can help fledgling industries not yet ready to compete on the world stage. In the context of international development, even transnational corporations deserve scrutiny, as Chang demonstrates in another essay. Likewise, Chang rejects the myth of a postindustrial society, holding that countries should not try to replace manufacturing sectors with knowledge- and service-based industries.

Continuing his examination of development economics, Chang questions whether the US really enjoys the highest standard of living in the world, as free-market economists are fond of saying. Next, the author demonstrates that African countries are not necessarily doomed to poor economic performance, nor does their slow progress result from a lack of entrepreneurial spirit or even education, as some suggest. Rather, their lackluster performance in recent decades is largely the result of the free-market reforms that international institutions foist on them.

Next, Chang considers the government’s role. He insists that government can have a viable role in shaping successful economies, citing Korea’s state-sponsored steel mills in the 1970s. In addition, Chang pushes back against the notion that tax cuts for the rich trickle down to the other classes. Conversely, he presents ways in which the private sector falls short, such as excessive executive pay, which damages the competitiveness of US companies over time. Similarly, Chang questions the assumption that what’s good for business is good for the country, citing the history of General Motors as a case study. Overall, he suggests, even the most intelligent, capable people struggle to understand the economy, so leaving everything up to the market is a significant and unnecessary risk.

In the final essays and the Conclusion, Chang hints at a new way forward that combines the best of government and private enterprise. He indicates that despite the failure of communism, various types of public and private economic planning are viable and valuable, and asserts that a well-designed welfare state can be a boon to the economy, helping people take advantage of available opportunities and encouraging the willingness to change careers instead of clinging to outmoded industries. Regarding financial markets, Chang warns that regulations are necessary to prevent another financial crisis like that of 2008. He concludes by suggesting that crafting worthwhile economic policies need not be difficult if the world learns from the past and looks past the dogma of free-market capitalism.