20 Oct Chang on Changing Economic Dialogue

We can try to change the system, or we can try to change human psychology and behavior. For my money, attempting to change the system by substituting one vision for another is a better way to change the dialogue.

Ha-Joon Chang is a Cambridge economics professor, Guardian columnist and influential critic of capitalism, on a mission to change the dialogue on economics from a”god-given” puritanical framework that rewards status-quo wealth to a social system that can be improved, for the benefit of nearly everyone. His recent critique of the positive spin on austerity in The Guardian captured my attention:

“The country is in desperate need of a counter narrative that shifts the terms of debate. A government budget should be understood not just in terms of bookkeeping but also of demand management, national cohesion and productivity growth. Jobs and wages should not be seen simply as a matter of people being “worth” (or not) what they get, but of better utilising human potential and of providing decent and dignified livelihoods. Ways have to be found to generate economic growth based on rising productivity rather than the continuous blowing of asset bubbles.” – Ha-Joon Chang

Dr. Chang’s best known publications are Economics: A User’s Guide, Bad Samaritans: The Myth of Free Trade and 23 Things They Don’t Tell You about Capitalism (downloadable). In the latter pamphlet, Dr. Chang puts a lot of energy into empowering his readers, by separating myth from fact, deconstructing high level economic debates for the layperson, and encouraging readers to take control of the narrative of economics. (He offers  seven ways to read 23 Things and become active.) The first two chapters take on the two facilitating myths of capitalism: that the market is free (ch. 1) and that shareholder value is the holy grail of capitalism (ch. 2).

While I find Dr. Chang’s writing encouraging and at times humorous (see Film), I believe the lack of a replacement holy grail in his theoretical perspective is a weakness rather than a strength. This is a controversial point, one in which he probably would  not concur given his emphasis on rationality and criticism of the religious elements in our economic belief structure.

Nevertheless, at the end of the day, an economic system is a system of beliefs that leads people to commit precious resources to an uncertain future goal. Without these beliefs, there is no trust; and without trust, no sacrifice. We can try to change the system, or we can try to change human psychology and behavior. For my money, changing the system by substituting one vision for another, more equitable vision, is more attainable.