Tablescape by Maison Margaux
Masoud Golsorkhi Why did you choose food as a hook for your latest book?
Ha-Joon Chang I want as many people as possible to be interested in and to learn about economics. Without every citizen having some knowledge of economics, democracy is meaningless in a capitalist society. So many things are driven by economic logic; so many decisions are made on the basis of economic theory. If you don’t know the basic economic theories, you really don’t know what you’re voting for or against – you’re voting for, “This looks like a guy who I could have a beer with”, or “I don’t like the look of that woman”. It is my duty and the duty of all economists to make economics accessible to all citizens, because only then can we have a meaningful democracy. This was the trigger on my part to draw in as many people as possible into economic discussions.
MG Why do you think there’s reluctance to question economics? People are happy to research how to cure cancer, or Covid-19, themselves, but they don’t seem to want to look for answers to economic problems on their own.
HJC The reason why people are much less willing to question economic orthodoxy than orthodoxies in sciences or medicine is because neoclassical economics, in modern times, has become the ruling ideology, the equivalent of Catholic theology in medieval Europe: an ideology that tells people that things are what they are because they have to be. You think there’s too much inequality, because without huge rewards investors and inventors are not going to get out of their bed to do their work. You think that the environment is being destroyed, but somehow the market will come in and rescue it. All these ideas about what is possible, what is feasible, what is necessary, are defined by economics these days. Without realising, people have been… brainwashing is too strong a word here, but taught to think in a certain way that doesn’t challenge the underlying social order, the distribution of income, wealth and power. So, while people are willing to drink bleach to cure Covid, they’re not willing to contemplate re-nationalising the railways or raising corporation taxes. That is the consequence of economics becoming part of the power structure – it has become naturalised. You don’t ask why the sky is blue; you don’t ask why if you drop things, they will fall to the ground.
MG That starts at universities; of course, so many politicians and top civil servants in the UK studied PPE [Philosophy, Politics and Economics]. I guess they are all taught the orthodoxy? Is the curriculum being diversified? Are there any signs of hope?
HJC The teaching of economics has changed since the financial crisis, but not enough; that’s the short answer. The long answer is, after the financial crisis there was a huge student movement in the UK and all across the world to demand a fundamental change in the teaching of economics. Until then, the students were told that the free market works, that government intervention is bad, the financial market will find an equilibrium, and that there cannot be a financial crisis. Suddenly, there’s this crisis and the professors had nothing to say. The students organised themselves into this movement called Rethinking Economics to demand changes in university curricula. Unfortunately, little change has been made. The University of Cambridge, where I used to teach, introduced a new course on the history and philosophy of economics, teaching students how different schools of economics have evolved, how they have different methodologies and philosophies around the world. These are things that were taught in most universities until the 1960s and 1970s but eliminated in the 1980s and 1990s. Unfortunately, academics are the last people to change. In politics, people demand new strategies. There’s a financial crisis, there’s the cost-of-living crisis, and the government is forced to do something about it, as with Covid when the government paid 80% of the wages for people who would have been unemployed if it had been left to the market. Business people also have to react to a changing reality. Academics’ identities are in ideas, and they don’t want to be told to change what they think or change what they teach their students. There has been great resistance.
Ha-Joon Chang, 23 Things They Don’t Tell YouAbout Capitalism, Penguin, 2011. The book has sold over 1,500,000 copies across 39 countries
MG The progressive economic policies that were proposed during the 2017 and 2019 election cycles were often discussed with reference to the spectre of the 1970s. A wage-price spiral and massive inflation, rubbish not being collected and the dead left unburied… Why do you think the 1970s still hold the public’s imagination?
HJC When you talk about progressive economic policies, people often come back with the bad old 1970s – low growth, high inflation, which will catalyse stagflation and social conflict. That is an important myth that has been created by the right-wing media and free-market economists. Let’s look at the objective statistics: the world economy did very well in the 1950s to the early 1970s. The world economy grew at 3.1% in per capita terms between 1955 and 1970. Between 1970 and 1980, growth rate fell to 1.9%. So, compared to the previous period, it was a significant fall. Yet since the 1980s, when we introduced all these free-market reforms known as neoliberal policies, the economic growth rate of the world has been only 1.5%. Even in the bad old 1970s, the world economy was growing faster than in the last four decades of neoliberalism. Yes, the 1970s had high inflation, but in other respects that economy was much more stable. During the 1970s, there were hardly any financial crises, whereas you run out of fingers if you count only the major financial crises since the 1980s – the Chilean crisis, the Scandinavian financial crisis, the savings-and-loan crisis in the US, all in the late 1980s. The Mexican peso crisis happened in 1994, the Asian financial crisis in the late 1990s, Russia, Brazil, up to 2008 and the global financial crisis. The economy might have been somewhat unstable in terms of inflation in the 1970s but in other respects, it’s not clear whether that decade was so bad. On top of that, you have raging inequality these days in most countries, whereas in the 1970s most societies hadn’t. Even in those days, inequality was very high in Latin America, Africa and parts of Asia, but in Europe, North America and other advanced industrial economies, inequality was very low in the 1970s. There was social conflict, strikes and so on, but do we not have conflicts today? We’ve got strikes going on, people electing ridiculous populist leaders in all sorts of countries, a lot of violence. Yes, there were the dead left unburied, but how about the millions and millions of people who died of Covid-19 simply because the government wasn’t channelling enough resources into healthcare?
MG One crucial step in depoliticising economic policy or elevating economics above politics in the UK was Gordon Brown giving the Bank of England the authority to set interest rates, essentially giving economic advisors control over politics instead of politics having control over economics.
HJC I advocate a lot of government intervention, although I’m not in favour of central planning or anything like that. People say, Yeah, but can you trust the politicians, when they are interested only in the prospect of their re-election? Wouldn’t it be better to leave things to more objective technocrats like the central bankers and the independent regulators of electricity, water or whatever? Of course, in advocating government intervention I’m not assuming that the government is the modern equivalent of Plato’s philosopher king. The government is made up of people with their own interests – politicians seeking re-election, government bureaucrats wanting to expand the budgets and manpower they control, never mind the consequences for the national economy – all these lobbying groups that influence and even bribe politicians and other policymakers. You have to take account of reality.
Park Chung-hee was an army general who served as the leader of South Korea from 1961 until his assassination in 1979, first as dictator then as president.
MG Many of the examples you raise are of nation states that are at different stages of development, protectionist one minute, then pro-market when they have an advantage, which works for them. In an almost fully globalised economy – if that’s not a contentious thing to say – is it even possible for a small South American or African nation to set its destiny outside this perspective and make a break for it?
HJC I advocate a naturalistic, independent path of development, if you will, for even the poorest developing countries. If you look at economic history, all of today’s rich countries have in one way or another and at one time or another suspended the logic of the global market, whether through trade protectionism, regu-lating foreign investment or restricting the inflows of financial capital. All of them have done these things to create a space within which their young, less competitive producers can accumulate productive capabilities and raise productivity until they can compete on equal terms with global leaders. Britain did that in the 18th century against the superior Dutch, and Belgian producers did the same in the 19th century. The Americans, the Germans and the Swedes did that against superior British producers and in the 20th century, France, Finland, Korea, Japan, Taiwan all engaged in what is called the “infant industry programme”, to pursue a nationalistic development path against the influence of the global competition. Today, there is indeed a lot of concern that this path has been closed. There was a brief period between the end of the Second World War and the 1970s when the rich countries built a global economy system that was more permissive of this kind of nationalistic development path, but since the 1980s, they have used their financial powers through the World Bank and the International Monetary Fund to control what developing countries can do. In 1995, they brought in the World Trade Organization to put more restrictions on what kinds of policies countries can use in terms of international trade and international investment. We need to put things into a long-term perspective, though. Yes, it is more difficult today, compared to the 1960s, but compared to the period before that it’s a lot easier. Before there was colonialism, imperialism, countries that were either occupied by a stronger country or subject to what is known as unequal treaties, which basically deprives you of your autonomy in many policy areas, so you couldn’t set your own tariffs, try foreign nationals in your courts; you had to make concessions by selling mining rights and all kinds of things. Compared to that, things are a lot easier today. Sometimes I joke that the World Trade Organization has become the best friend of lazy government officials in developing countries, because when your minister tells you to do something, all you have to say to him is, “This is banned by the WTO,” and the minister isn’t going to run to the library, go through 750 pages of WTO agreement and tell you you’re wrong. There’s a lot of excessive pessimism and passivity among developing-country officials, and there are many things that you can actually do. I’ve written quite a few academic articles and policy reports on this subject; most countries are not even doing half of what is allowed in the WTO regime. Also, structure doesn’t determine everything. We humans have agency. We imagine different things, think about alternatives, build different coalitions, and come up with different ways of doing things. The best example I can give is my native country, South Korea, which a lot of people think only developed because it was some kind of client state of the United States in the Cold War. There’s some truth in that, but in the 1950s, we had this president, who was a member of a minor branch of the former royal family. He went to Princeton as an undergraduate student in the late 19th century when most Koreans hadn’t even heard of Princeton, and he married this aristocratic Austrian lady; she was our own Marie Antoinette. The story has it that when his agriculture minister told him, “Sir, we have a serious rice shortage in the country, we have to do something,” he apparently blurted out, “That’s the problem with the Koreans – all they want to eat is rice. Why don’t they eat beef? Why don’t they eat wheat?” The agriculture minister didn’t have the guts to tell him, we weren’t producing those things. So, he was a very tough, anti-Japanese fighter, but that was all he cared about. He was not interested in the living conditions of ordinary people, so there was really no development policy. Come the 1960s, we had a military coup by a group of army officers who were strongly influenced by communist ideas and many of them had been communists when they were younger. Once they took power, they had to declare their anti-communism to the skies, in order to be accepted by the Americans. They were nasty people, but they did care about the living conditions of ordinary people. Their leader, our famous dictator General Park, wrote in one of his autobiographies, “As a young officer, I was travelling on a train. In front of me was sitting this beautiful young high-schoolgirl reading a book about French poetry. Her hands were like jade, so beautiful, so refined. I hated those hands. Those were the hands of people who read French poetry while the rest of the population was starving to death.” When you have that kind of attitude, you’re going to do something to fix the economic structure. He copied the policies of Japan in the 1930s and America in the 19th century, and protected infant industry and regulated foreign investment. Now, in between these two presidents, the global conditions were the same. The so-called Bretton Woods system was in place; the Americans were more permissive of nationalistic development policy than they are now. South Korea had the same Cold War politics, but two radically different results because there was difference in the agency not just of the president, but also the ruling elite in the two different periods. You cannot ignore the structure of a small, poor, developing country in Africa or South America. What you can do is far, far less than what, say, China can do or even what Brazil can do, but even without those conditions, what you do does make a difference. It’s very important to recognise the importance of agency because when it comes to developing countries, people overemphasise the power of structure. It is important, sometimes overwhelmingly, but it doesn’t determine everything.
MG How do you rate the chances of the newly elected left-wing governments in South America, nicknamed the “New Pink Tide”? I don’t know if you saw the story in the Economist two days ago, characterising the new Chilean constitution as being only good to use as toilet paper.
HJC I’m afraid I haven’t read that magazine in 25 years. Latin American countries experienced this period of politics between the late 1990s and early 2010s – depending on the country – called the “Pink Tide” when countries like Brazil, Venezuela, Ecuador, Argentina, Uruguay, and, importantly, Bolivia elected left-wing governments, some more left-wing than others. These governments have done quite a lot to reduce inequality in those countries. Latin American countries have very, very high inequality so even after the reduction, it was still high by international standards, but by their own historical standards, it was quite a big reduction. Many of them, if not all, grew much faster than in the previous period and that kind of politics spread across the region. Unfortunately, with the end of the global commodity boom in about 2013 or 2014, which had been driven by the super-growth of China, many of these economies got into trouble and many of these governments at the time were booted out of office. Countries like Brazil, which was a manufacturing powerhouse until the 1980s, had become dependent on primary commodities: beef, soya, iron ore. The economies were doing well, but were vulnerable. Interestingly, the wave is now coming back in an even broader way. Left-wing governments have come to power even in countries that were traditionally not part of the “Pink Tide” – Mexico, Peru and recently Colombia, which just elected its first ever left-wing president. Most importantly, in 2022, Chile – the patient zero of neoliberalism, where neoliberal policies were first implemented after the military coup by General Pinochet in 1973, before even Margaret Thatcher and Ronald Reagan – elected a 36-year-old former student activist called Gabriel Boric, who declared that if Chile was the birthplace of neoliberalism it can also become its graveyard. Of course, that rhetoric may not always live up to itself, but you are seeing another leftward turn in a continent that had been at the centre of liberal reform in the developing world. What it’s showing is that if you have a democracy, eventually you’ll have to listen to people. With high inequality, a sluggish economy, high unemployment, high poverty, people are finally saying they want a different arrangement. If someone had said even five or ten years ago that there would be a leftist president in Colombia, people would have laughed at you.
In June 2022, the Economist published an op-ed entitled Voters should reject Chile’s new draft constitution, decrying it as a left-wing wish list.
MG Historically when markets were reformed due to moral or economic imperative, for example in the case of the abolition of slavery, the slave owners were fully compensated – but not the slaves. Currently, we have an excessive condensation of capital under the control of ever smaller groups of people, which is destructive for capitalism itself. How do you best flush accumulated capital through the system?
HJC We have to start with the recognition that companies make money with a lot of privileges provided by society. If there wasn’t limited liability, these people wouldn’t have been able to do massive IPOs and attract a lot of investors. It’s a social arrangement, limited liability was something that you could get only with special permission from the king or the government until the mid- to late 19th century, depending on the country. A lot of people are against it, because they said, Well, if people don’t have skin in the game, they are going to be lax, they are going to take excessive risk. Adam Smith was for this very reason against limited liability. I’m in favour of limited liability, but it’s not a natural thing; it’s the kind of thing that society has created in order to encourage large-scale investment. If that society decides that some people have got excessive advantage from this or any other arrangement, like patent protection, society has the right to take it back. You also have to recognise that, as you said, in the case of compensating the slave owners but not the slaves, many, many people have already been exploited by the monopolies of platform capital. Why are we not thinking about giving them compensation, and instead worried that Mark Zuckerberg and Jeff Bezos will earn two billion less than what they could have done? Why are we only worried about those people? In the end, we’re in this position because they were not as regulated as they could have been. By being lightly regulated, they were given permission to make a lot more money than they could have under another arrangement. I don’t see anything wrong with taking money away from these people. Of course, you’ll have to assess it properly and decide on some clear principles. I’m not in favour of arbitrary confiscation, and in some cases, you might want to compensate them for taking their shares or nationalising. These are things that you need to decide on the basis of careful research and discussions. You’re going to get all kinds of simplistic positions and say we have to take everything away from them, or we should fully compensate. But the very value of their assets are determined by social arrangements. It’s not something that God or nature has given them. So, society has the right to change that.
MG Has your interest in food made you a better economist?
HJC I think so. First of all, food makes you realise that there is no absolute truth. It makes you naturally pluralist. I love all kinds of different foods here – Italian, Korean, Mexican, Japanese, Turkish, Russian, you name it – and you cannot say that the Korean food is the best because they are all so different. Economics is a bit like that. There are many different schools of economics – I talked about the nine biggest ones in my previous book, Economics: The User’s Guide – but depending on how you subdivide some of the bigger schools, there could easily be 20 different schools of economics based on very different intellectual traditions, political viewpoints, ethical positions, understanding of how the economy works, what aspect of the economy they focus on. Is it the market, the government, the workers? They give you such different flavours. It would be foolish to talk about one kind of economics that is the best, because economics is not a science, like physics or chemistry. It’s a system of thought and logic based on some pretty fundamental assumptions about human nature, political values, ethical principles, which cannot be scientifically determined. Being interested in food also makes you more historically aware, and more aware of the dark side of capitalism. In the standard economic or journalistic understanding of the history of capitalism that you see in the Economist or the Wall Street Journal, the world was a largely happy place with people crossing the oceans to get new things and importing different things into different parts of the world. When you learn a bit about the history of food, which is contained in the book, you learn that the banana was central to the slave economy; the banana was the root cause of the phenomena called the banana republic, banana-producing economies around the Caribbean Basin totally dominated by American fruit companies backed by the military power of the United States. From these histories you also learn how so many things that we think are natural are actually results of colonialism and imperialism. When did Kenya and Sri Lanka produce tea? Tea was monopolised by China and only because the British brought these things to its colonies did these countries become main tea producers. Cacao is a South American crop, but the biggest cocoa producers are Côte d’Ivoire, Ghana and Indonesia because the French, the British and the Dutch brought this crop to their colonies. Most people don’t think about this; they think capitalism has been run as a global marketplace: you go there, you buy a bag of peas, you buy that little bit of spice, and so on. It wasn’t like that. Thinking about the origins of food and how different items are shifted around the globe according to the logic of global capitalism makes you realise that this kind of fantasy version of global capitalism where everyone was happy and everyone were equal trading partners is such a myth. And once you begin to see that then you begin to see the power structure behind the global economy and then you begin to understand that you cannot understand economics without understanding politics. Food gives depth to your understanding of capitalism, but above all, I love food. Eating different things, cooking different things is such a joy.
MG The French president Jacques Chirac once quipped at Tony Blair: “You can’t trust people who can’t cook.” ◉
