Jonas's Reviews > 23 Things They Don't Tell You About Capitalism

23 Things They Don't Tell You About Capitalism by Ha-Joon Chang
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Jun 11, 12

bookshelves: nonfiction
Read in November, 2011

"23 Things" (for short) purports to be a rebuttal of commonly held views about the free market, capitalism and the science and profession of economics. Chang's position is pro government action and intervention (left wing, if you will), and he seeks to back it up with evidence and arguments.

I find it rather disappointing. It often addresses straw men and commonly held misconceptions about how economists think (rather than how economists actually think), and often fails to present opposing arguments fairly.

For instance, in Thing 1, "There is no such thing as a free market", Chang writes "Every market has some rules and boundaries that restrict freedom of choice". No shit, Sherlock? One rule which pro-market types are very much in favour of is (some form of) property rights. I think he either doesn't know the true position he's opposing or is choosing to not present it fairly. I don't know which of those explanations tars him the worst.

Later in Thing 1, Chang talks about child labour laws: "If you believe that the right of children not to have to work is more important than the right of factory owners to be able to hire whoever they find most profitable, you will not see a ban on child labour as an infringement on the freedom of the labour market".

Oh boy, where to start? First off, I personally find the phrase "the freedom of the labour market" grating---markets aren't a thing, in that they don't have agency. What's in question is the freedom of persons. (The phrase "only individuals act" might spring to mind, especially if you pronounce it "in-dee-vee-doo-als".) But I'll presume that the underlying definition of "freedom of markets" is "freedom of persons" and I'm just fussy about terminology.

Next, "the right of factory owners to be able to hire [...]". This makes the act of entering into an employment contract unilateral when it is really bilateral: it's not a contract unless you're allowed to not sign it.

Penultimately, "the right of children not to have to work" is just flat out mischaracterizing the situation: being forced to work, being allowed to work and being prohibited from working are three different things. Child labour laws in general are those which move children from being allowed to work (not forced to work) to(wards) being prohibited from working.

You might argue that if their alternative is to go unemployed and starve to death, they don't have any real alternatives and they're forced by necessity into the contract. If so, how does prohibiting them from entering into the contract help them? By the very assumptions, it starves them to death.

What makes children not have to work is wealth---being able to afford not to without starving---which cannot be regulated into existence out of the thin air. If child labour laws help children, why not prohibit all labour? Wouldn't that help everybody?

In Thing 4, he claims that the labour-saving nature of the washing machine has had greater impact than the internet. I'm not completely sure how those two effects are commensurate, but that in turn means I don't have any measure which proves the author wrong. What do find objectionable is that while he acknowledges some of the qualitative impacts of the internet, Chang emphasizes the change in point-to-point text transfer speeds as the One True Measure of the impact of the internet. Even *if* we limit ourselves to one-to-one communication, which I think is a serious mistake (would you be writing reviews on Goodreads if only one other person could read it?), other measures such as latency and price are surely relevant too. Also, given that the internet piggybacks on computers one-to-one communication enables many-to-many communication (e.g. by each of us communicating one-to-one with Goodreads) in ways that are mindbogglingly cheaper than with faxes (what the internet replaces, according to Chang).

Last point from me: in Thing 20, "Equal opportunity may not be fair", Chang makes the point that when children of poor parents can't concentrate in school because they're hungry, that's not equal opportunities. While true, the unfairness is the absence of equal opportunities, in direct contradiction of the chapter heading. My mind got boggled.

Chang goes on to write: "Fair competition can only be achieved when the child is given enough food---at home through family income support and at school through a free school meals programme." If I grant Chang the first part, that fair competition can only be achieved when children have enough food*, it doesn't necessarily follow that his way of doing it is the right way. Parents who can afford food for their kids might be neglectful and not provide it, and free school food might be insufficiently nutritious and sating that it helps the child concentrate. Home-made lunches, lunches bought and paid for at school or lunches bought elsewhere (in the---gasp!---market) are alternatives which Chang doesn't compare to his suggestion.

If I wanted to spend the time (I don't), I could find many more examples where Chang is slanting his presentation. In addition to arguments like the ones I quoted, he provides some statistics to back up some of his claims. I haven't checked those. However, they're all about extrapolating regressions, which I have some suspicion about if there's not also a solid theoretic underpinning leading you in the same direction. See also The Pretence of Knowledge.

While I would love to study and understand a coherent and evidence-backed theory that's less pro-market than my current position, I haven't found it yet. In particular, I haven't found it in 23 Things.
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Comments (showing 1-9 of 9) (9 new)

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Enzo Altamiranda Great review. What is your background?


Jonas Enzo wrote: "Great review. What is your background?"

Thanks :)

I'm self-taught. Mostly from econtalk.org (all episodes) and mises.org (a substantial fraction of the audio; some video), but I also read a textbook on introductory microeconomics.

If you're looking to get into economics, I can definitely recommend econtalk.org---I find the host, Russ Roberts, to be a great communicator, and he does a good job at being polite and fair to the guests he disagrees with (he's a classical liberal). There might also be quite some insight in a microeconomics textbook, if you don't choke on the math.

(I'm studying computer science and minoring in math as my day job.)


message 3: by Ugh (new) - rated it 4 stars

Ugh Thanks for an enjoyable and thought-provoking review. However, I think that while your points about child labour may be true, they don't affect the wider point that there is currently no truly free market. I wasn't sure on reading this 'thing' myself whether any free marketeers acutally say that there are any truly free markets, but rather that there *should* be, but I still found the 'point' interesting.

I thought your points about the internet were very well made.

Regarding thing 20 though, I think a better title would have been 'Equal opportunity *alone* may not be fair', but I think once you realise that it's fine. Also, I'm not sure how your alternatives to free school meals could be afforded by those in poverty?


Jonas Ugh wrote: "Thanks for an enjoyable and thought-provoking review. [...] your points about the internet were very well made."
Thanks for the praise; I'm happy to hear that I have stimulated some thought. That makes it more than worth the effort :-)

'Equal opportunity alone may not be fair'
Actually, I think the accurate description is "Equal opportunity is inextricably linked to equal outcomes" (for the preceding generation).

Whether one agrees is a different matter, but any investigation should note that most free market types argue that under a mixed/regulated economy the distribution of wealth is shifted around slower than under free markets. They may be wrong, but one ought to understand and refute their arguments.

One should also take account of my following point:

[child labour, OK, but still:] there is currently no truly free market
In which case Chang's observations about the current social system don't say anything about how truly free markets behave---in other words, Chang undermines his own efforts from the word go.

If you watch "How to Reach the Left", a talk by Roderick T. Long available at www.youtube.com/watch?v=t4hjO1ak4_M, he'll go into some more depth about what "free markets" are and aren't, and how people talk about it, but here's the short version:

In 2012 there have only been rough approximations to truly free markets, and it varies from place to place how free the markets are. The markets in the US in particular are not as free as people like to think and talk about. In particular, US conservatives like to talk about free markets but they rarely actually put them in practice. This skews public perception of what "free markets" actually means.


Jonas Oops, I forgot one point:
Ugh wrote: "Also, I'm not sure how your alternatives to free school meals could be afforded by those in poverty?"

My point was that Chang was overstating his case by not even looking at any of the alternatives; not that he was overstating his case because "here's this alternative which is better: [...]".

Anyways, one feature of truly free markets is that there's no central bank which inflates all the value out of people's money. Inflation happens to steal from people on fixed incomes---notably the working poor---the most, so under free markets the poor would be wealthier. Without agricultural subsidies, food would also be cheaper, and without taxicab medallions made incredibly expensive due to authoritarian intervention, there would be more money-making opportunities open to the poor.

This doesn't definitively prove anything, but I think it suggests that it's not unreasonable to believe that the poor likely wouldn't do worse under freer markets.

Also, thanks for a good challenge---I enjoy thinking about these things :-)


Erwin The book isn't an investigation of free market capitalism. The examples are chosen to be thought provoking and persuasive.

Ideology driven policy bankrupted the Soviet Union, and if you think a current account deficit is meaningful, then you should concede that it will bankrupt the US too.

Outcome is important, and outcomes in Asia for the last 40 years have been vastly superior to outcomes in the west.

"It doesn't matter whether it's a black cat or a white cat, if it catches a mouse it's a good cat". -Deng Xiaoping


Muhammad al-Khwarizmi There is a truly "free market" currency called Bitcoin, or as I like to call it, Buttcoin. It has been highly volatile and crashed majorly twice in the few short years of its existence. I would not be surprised if it crashes again in the coming months.

I'm all in favor of trying anarcho-capitalist and similar ideas and letting them fail on their own terms, so no one deigns to advocate them again. It is for reason that I look forward to the implementation of seasteading.


Pritesh Desai The author praised Norway often in this book. Isn't Norway rich because of oil deposits? I'm from India and I remember things today are much better than they were 15 years ago. Opening up the Indian economy helped.


Carole His position is more centrist than left-wing - he clearly favours a mixed economy over a centrally-run economy.


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