The author Ha-Joon Chang is not anti-capitalist as the title might imply, but feels that we have been misled by free market capitalism. I was given this book and took it as a bit of a challenge as my son had brought it home after reading on his flight over from London, England. The challenge part was that I had to finish it before his flight back.
Ha-Joon makes many many points and in a short blog I cannot do justice to them (I probably couldn't do much better in a long post).
Although you have to twist your thinking in a number of ways it is not difficult to understand. I have always felt that the rules are made by those in power and that the masses (including myself) are easily or at least sufficiently won over to accepting their viewpoint of free market capitalists. Ha-Joon points out with many examples of how the thinking has been distorted. Born relatively rich (in the West) we tend to be very self-righteous that we deserve to be in power.
The free market people in power say the market is supreme and corrects itself. In the most extreme beliefs, regulations are always harmful, government should be minimized, poor people are poor because of their own inadequacies. Their views on collective organizing is that it is really a dirty word--"socialism". "Government", to quote Ronald Reagan "is not the solution, it is the problem". History is re-written to prove their viewpoint.
There is no such thing as a free market, or maybe I should say we don't actually have one. Originally a free market was conceived as one where a company was totally liable for their debts, meaning the owners had to pay all the bills even if that meant they would pay out more than they had invested. The invention of the limited liability (as you see with many companies adding Ltd. to their official company name) unleashed capitalists from the fear of unlimited debt. Quite rightly investors were interested to minimize their risk and society as a whole benefited. The free market believers usually overlook this fact and resent that workers want to minimize their risks.
The truth is all countries reached their current level of success with practices that would not be approved by the free marketers, including their own countries. The United States, amongst many other nations strongly practiced protectionism to give their own industries a fighting chance to establish themselves.
It is assumed that poor nations need to learn the new free market rules if they are to succeed. Ha-Joon points that in fact poor nations are actually much more innovative than richer nations. They have to be to cope. He gives the example of some people selling space in a long line. One experience that I recall was on a trip to Cuba taking a tour bus to visit Havana we were confronted with a deaf mute whose mastery of English I am not sure of. Actually met him on two different trips and at first found him very annoying, but eventually understood he was filling a need that a lot of us had. We couldn't figure out where our bus was parked. He had recorded all the bus numbers and knew where they were parked. He depended on us appreciating his service which not everyone did.
One of the basic tenets of free market thinkers is that the market is rational, but actually that is not true. The more complex our society the more difficult it is to be rational. In truth most people at some stage trust what they are told. The system breaks down when trust breaks down. No single person understands all the options.
Efficiency is easily abused. For instance money can be transferred in seconds from one project to another across continents. This has encouraged investors to seek short term payoffs and avoid those long term projects requiring patience. It has been assumed by most of us that shareholders have the strongest stake in a company, but actually they are not as committed as workers and suppliers who cannot switch their efforts so easily.
Financing is a dominant force in the world. It can speed growth, but also create crisis. It tends to short term planning as opposed to long term planning. The author concludes (amongst other things) that we need to end our love affair with free market capitalism and to recognize that human rationality is severely limited in a very complex world.
Like to get a fuller view of Ha-Joon's thinking? Visit his website, http://www.hajoonchang.net/
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