Ha-Joon Chang - 23 Things They Don't Tell You about Capitalism

Daniel Etounga-Manguelle, a Cameroonian engineer and writer, notes: ‘The African, anchored in his ancestral culture, is so convinced that the past can only repeat itself that he worries only superficially about the future. However, without a dynamic perception of the future, there is no planning, no foresight, no scenario building; in other words, no policy to affect the course of events’ (p. 69). And then he goes on to say that ‘African societies are like a football team in which, as a result of personal rivalries and a lack of team spirit, one player will not pass the ball to another out of fear that the latter might score a goal’ (p. 75). D. Etounga-Manguelle, ‘Does Africa need a cultural adjustment program?’ in L. Harrison and S. Huntington (eds.), Culture Matters – How Values Shape Human Progress (Basic Books, New York, 2000).

According to Weber, in 1863, around a quarter of France’s population did not speak French. In the same year, 11 per cent of schoolchildren aged seven to thirteen spoke no French at all, while another 37 per cent spoke or understood it but could not write it. E. Weber, Peasants into Frenchmen – The Modernisation of Rural France, 1870-1914 (Stanford University Press, Stanford, 1976), p. 67.

See H-J. Chang, ‘Under-explored treasure troves of development lessons – lessons from the histories of small rich European countries (SRECs)’ in M. Kremer, P. van Lieshoust and R. Went (eds.), Doing Good or Doing Better – Development Policies in a Globalising World (Amsterdam University Press, Amsterdam, 2009), and H-J. Chang, ‘Economic history of the developed world: Lessons for Africa’, a lecture delivered in the Eminent Speakers Programme of the African Development Bank, 26 February 2009 (can be downloaded from:

http://www.econ.cam.ac.uk/faculty/chang/pubs/ChangAfDBlecturetext.pdf

See H-J. Chang, ‘How important were the “initial conditions” for economic development – East Asia vs. Sub-Saharan Africa’ (ch. 4) in H-J. Chang, The East Asian Development Experience: The Miracle, the Crisis, and the Future (Zed Press, London, 2006).

For comparison of the quality of institutions in today’s rich countries when they were at similar levels of development with those found in today’s developing countries, see H-J. Chang, Kicking Away the Ladder (Anthem Press, London, 2002), ch. 3.

For a user-friendly explanation and criticism of the theory of comparative advantage, see ‘My six-year-old son should get a job’, ch. 3 of my Bad Samaritans (Random House, London, 2007, and Bloomsbury USA, New York, 2008).

Further details can be found from my earlier books, Kicking Away the Ladder (Anthem Press, London, 2002) and Bad Samaritans .

The sixteen countries where inequality increased are, in descending order of income inequality as of 2000, the US, South Korea, the UK, Israel, Spain, Italy, the Netherlands, Japan, Australia, Canada, Sweden, Norway, Belgium, Finland, Luxemburg and Austria. The four countries where income inequality fell were Germany, Switzerland, France and Denmark.

L. Mishel, J. Bernstein and H. Shierholz, The State of Working America, 2008/9 (Economic Policy Institute, Washington, DC, 2009), p. 26, table 3.

According to the OECD (Organization for Economic Development and Cooperation), before taxes and transfers, the US, as of mid 2000s, had a Gini coefficient (the measure of income inequality, with 0 as absolute equality and 1 as absolute inequality) of 0.46. The figures were 0.51 for Germany, 0.49 for Belgium, 0.44 for Japan, 0.43 for Sweden and 0.42 for the Netherlands.

L. Mishel, J. Bernstein and H. Shierholz, The State of Working America, 2008/9 (Economic Policy Institute, Washington, DC, 2009), table 3.2.

Ibid., table 3.1.

‘Should Congress put a cap on executive pay?’, New York Times , 3 January 2009.

Mishel et al., op. cit., table 3.A2. The thirteen countries are Australia, Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, New Zealand, Spain, Sweden, Switzerland and the UK.

Ibid., table 3.A2.

L. A. Bebchuk and J. M. Fried, ‘Executive compensation as an agency problem’, Journal of Economic Perspectives , 2003, vol. 17, no. 3, p. 81.

OECD, ‘Is informal normal? – Towards more and better jobs in developing countries’, 2009.

D. Roodman and J. Morduch, ‘The impact of microcredit on the poor in Bangladesh: Revisiting the evidence’, 2009, working paper, no. 174, Center for Global Development, Washington, DC.

M. Bateman, Why Doesn’t Microfinance Work? (Zed Books, London, 2010).

Mansion House speech, 19 June 2009.

For a very engaging and user-friendly presentation of the researches on the irrational side of human nature, see P. Ubel, Free Market Madness: Why Human Nature is at Odds with Economics – and Why it Matters (Harvard Business School Press, Boston, 2009).

J. Samoff, ‘Education for all in Africa: Still a distant dream’ in R. Arnove and C. Torres (eds.), Comparative Education – The Dialectic of the Global and the Local (Rowman and Littlefield Publishers Inc., Lanham, Maryland, 2007), p. 361, table 16.3.

L. Pritchett, ‘Where has all the education gone?’, The World Bank Economic Review , 2001, vol. 13, no. 3.

A. Wolf, Does Education Matter? (Penguin Books, London, 2002), p. 42.

In the eighth grade, the US overtook Lithuania, but was still behind Russia and Hungary; fourth-grader score for Hungary and eighth-grader scores for Latvia and Kazakhstan are not available.

The other European countries were, in order of their rankings in the test, Germany, Denmark, Italy, Austria, Sweden, Scotland and Norway. See the website of the National Center for Educational Statistics of the US Department of Education Institute of Education Sciences, http://nces.ed.gov/timss/table07_1.asp.

The other rich countries were, in order of their rankings in the test, Japan, England, the US, Australia, Sweden, Scotland and Italy. See the above website.

The most influential works in this school of thought were Harry Braverman’s Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century (Monthly Review Press, New York, 1974) and Stephen Marglin’s ‘What do bosses do?’, published in two parts in The Review of Radical Political Economy in 1974 and 1975.

Wolf, op. cit. , p. 264.

On the issue of sorting and many other insightful observations on the role of education in economic development, see Wolf, op. cit.

R. Blackburn, ‘Finance and the fourth dimension’, New Left Review , May/June 2006, p. 44.

The share of federal government in total R&D spending in the US was 53.6 per cent in 1953, 56.8 per cent in 1955, 64.6 per cent in 1960, 64.9 per cent in 1965, 57.1 per cent in 1970, 51.7 per cent in 1975, 47.2 per cent in 1980, 47.9 per cent in 1985 and 47.3 per cent in 1989 (estimated). See D. Mowery and N. Rosenberg, ‘The U.S. National Innovation System’ in R. Nelson (ed.), National Innovation Systems (Oxford University Press, New York and Oxford, 1993), p. 41, table 2.3.