economics cartoon

Ha-Joon Chang is an economic pluralist who is unlikely to receive a Nobel Prize because he spends too much time being unorthodox.

He’s particularly famous for two books:

  • Bad Samaritans – which is a smackdown of the IMF and the World Bank for the policies that they forced developing countries to adopt in exchange for loan packages – policies which basically guaranteed that they’ll stay developing from now until forever.
  • 23 Things They Don’t Tell You About Capitalism – which I found annoying to read because each section made constant reference to other sections like “As I said in Thing 3” and “refer to Thing 7 and Thing 16”; mainly because I certainly didn’t memorise things as I went along – and even reading it as an ebook didn’t help because all I did was jump around hyperlinks getting generally frustrated by all the jumping.

Nevertheless, I’ve read both of them (took me a while), and they spawned at least three posts that I’m quite proud of:

  1. The Bus Driver Conundrum – being a post about why bus drivers in Sweden earn more than bus drivers in India.
  2. Cultural Stereotypes and Economic Theory – the myth of certain economies being culturally doomed.
  3. Thank God for Bribery and Corruption? – how corruption is not a cause of economic retardation, but a result.

It’s also left me with some fairly conflicted beliefs, such as:

  1. If you want freedom of capital flows, then you also need to have freedom of labour movement. Don’t want exchange control? Then scrap immigration*.
    *A thoroughly right-wing point of view.
  2. State intervention is sometimes necessary. And it’s not always a bad thing. The classic example: Singapore*.
    *A view that came straight down the centre.
  3. Free trade is not good for developing countries, because it forces them to maximise their current trade advantages. By doing so, they forfeit the ability to change their long-term trade position. So they end up focusing on agriculture and basic industry, and rarely developing beyond that*.
    *And now we’re in left-wing territory.

Anyway, where I was going with this: he has a new book out called “Economics: The User’s Guide”.

Here’s the cover:


Here’s a more exciting cover:


Here’s the cool thing*: it actually is a user’s guide. As in: I felt guided, and I learned things. As opposed to stuff like “An Idiot’s Guide to…”, which doesn’t leave you any less idiotic by the end.
*As cool as you can get with something this nerdalicious.

I have two favourite parts:

  • His brief history of capitalism, which opens with this line from Alan Bennett’s “The History Boys”:

How do I define history? It’s just one fucking thing after another.


  • His section on the different economic schools, which includes a dreadful Lord of the Rings’ pun*, a hugely hypocritical quote from Mao Zedong**, and a cocktail menu designed for the more adventurous of economic tastes.
    *involving “One Ring To Rule Them All”.
    **“Let a hundred flowers bloom, let a hundred schools of thought contend”. From Mao?! Presumably, we’re missing the next part: “And when they’re done, I have this lawn mower here, and let’s see how they feel about it.”

And the economic schools are interesting, because they’re almost like religions. That, or they’re like opinions on how to parent children, as written by people that haven’t had children, but it’s biblical, or something. My plan is to write a bit about each in the coming weeks.

Fortunately, Mr Chang gives a one sentence summary for each school, so I’ll give you that here, alongside some parenting advice:

The Classical School 

HJC: “The market keeps all producers alert through competition, so leave it alone.”

This is the type of parent that believes everything will fall into place on its own, so allows the child to touch the hot plate.

The Neoclassical School

HJC: Individuals know what they are doing, so leave them alone – except when markets malfunction.

This parent also allows the child to do what it wants, including touch the hot plate. But, at least, they’ll supply bandages and painkillers when the burning takes place.

The Marxist School

HJC: Capitalism is a powerful vehicle for economic progress, but it will collapse, as private property ownership becomes an obstacle to further progress.

This parent believes that sparing the rod is spoiling the child.

The Developmentalist Tradition

HJC: Backward economies can’t develop if they leave things entirely to the market.

Despite remaining low-key, this is the type of parent that just makes the best of things. They make mistakes, and are sometimes too involved.

The Austrian School

HJC: No one knows enough, so leave everyone alone.

This parent realises that they can know nothing (because it’s all unknowable), and they can predict nothing (because it’s all unpredictable), and what if allowing the child to touch the hot plate means that they learn a valuable life lesson which might make them happier in the end? So rather let the Universe do what it does, man. Leave that child alone.

The Schumpeterian School

HJC: Capitalism is a powerful vehicle of economic progress, but it will atrophy as firms become larger and bureaucratic.

This type of parent believes that, if you allow the child to do what it wants, then as it gets older: it’ll stop going outside and instead will play on its playstation, eventually becoming fat, lazy and indiscriminate in its toilet habits.

The Keynesian School

HJC: What is good for individuals may not be good for the whole economy.

For this parent, it’s all about the family. And if the child has to stop what it’s doing for the sake of the family, then that’s what it must do.

The Institutionalist School

HJC: Individuals are products of their society, even though they may change its rules.

This parent believes that appropriate parenting means reforming the school board, and running the Sunday School – because that’s what makes children into fine young people. Or whatever.

The Behaviouralist School

HJC: We are not smart enough, so we need to deliberately constrain our own freedom of choice through rules.

Children are stupid. And unwise. And you are stupid to think otherwise. So give them rules to keep them safe, healthy and (relatively) happy.

The key point?

No single parenting style is appropriate all of the time.