a curious Yankee in Europe's court

blog about living in Europe, and Italy

Overspending’s not main cause of deficits: Ha-Joon Chang

Posted on the November 23rd, 2010

Cutting the deficit is the battle cry of many countries’ leaders these days. But, begging to differ, Cambridge University economist Ha-Joon Chang says this is a mistake that ignores the core problem causing the financial crisis.

Chang was speaking in a video interview published online yesterday for the Guardian (“In the worst case scenario these cuts might actually increase the deficit”  Nov 22, 2010).

Chang names a different culprit as the cause of deficits and offers ideas for recovery. Chang is the author of the recently published book “23 Things They Don’t Tell You About Capitalism” (see earlier post here).

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The many wrongs of Anglo-American style capitalism? Ha-Joon Chang

Posted on the September 30th, 2010

At the end of the Q&A session following his talk at the RSA earlier this month, Cambridge University economist Ha-Joon Chang summed up his overall perspective with this:

Two hundred years ago, people thought it was quite all right to buy and sell people, slave trade, you know. A hundred years ago, they put women in prison for asking to vote. Fifty years ago, all the founding fathers of developing nations were hunted by the French and British as terrorists. Twenty years ago, Mrs. Thatcher said that someone who thinks there will be a moderate black rule in Africa lives in cloud cuckoo land. But these things all have happened, no?

So that I follow the Italian Marxist Antonio Gramsci who said that we have to have pessimism of the intellect but optimism of the will. We have to make these changes, no? And the first step in that process is to know what is really going on.

Chang was appearing at RSA to talk about his soon-to-be-published book “23 Things They Don’t Tell You About Capitalism” (Jan 2011). This title, coupled with Chang’s quoting of renown communist thinker Gramsci might suggest that Chang is anti-capitalist. Aware of this, Chang pointedly dispelled the notion early in his RSA talk:

When I say these things some of you may think that I’m anti-capitalist. That would be, actually, wrong. To paraphrase Winston Churchill, I think that capitalism is the worst economic system, except for all the others. I mean, it has a lot of problems but it is, in my view, still the best economic system that humanity has invented.

But the problem is that over the past three decades we have lived under a very particular form of capitalism that is free market capitalism, which has served us very poorly. The point is that there are many different ways in which to run capitalism. I mean, it’s not just American style capitalism that is viable. I mean there are many different forms. The Japanese form, the Chinese form, the Swedish form, the French form, the German form.

But over the last 30 years, we have been told that there’s only one form of capitalism that works and that is Anglo-American style free market capitalism. Over the last three decades, this form of capitalism has produced very disappointing results…

What a breath of fresh air is Chang! To hear the full and informative talk at RSA, go here (32 min).

It came as a welcome boon to my own small blogging campaign to counter the idea propaganda that only economists and financial experts can understand economics to hear Chang say the following:

And in trying to explain these and other things, I do my best to dispel the widespread perception that economics is too complicated for non-economists. You know, I say often in my lectures, but also in the book, that 95 percent of economics is common sense deliberately made complicated, while even the remaining five percent can be explained in its essence, if not in all technical details, if you really try.

So through this book I want to equip my readers with fundamental economic reasoning and some basic but misunderstood facts about capitalism so that they can better exercise what I call active economic citizenship, and demand right courses of action from their policy makers, political representatives and business leaders…

My earlier campaign efforts in this regard are here and here. A recent article by Chang for the Guardian is here (“Getting capitalism right” Sept 16, 2010).

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