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

H. Simon, ‘Organizations and markets’, Journal of Economic Perspectives , 1991, vol. 5, no. 2, p. 27.

On how the Confucian culture was not a cause of East Asian economic development, see ‘Lazy Japanese and thieving Germans’, ch. 9 in my book Bad Samaritans (Random House, London, 2007, and Bloomsbury USA, New York, 2008).

M. Jäntti et al., ‘American exceptionalism in a new light: a comparison of intergenerational earnings mobility in the Nordic countries, the United Kingdom and the United States’, The Warwick Economic Research Paper Series, Department of Economics, University of Warwick, October 2005.

OECD is the Organization for Economic Cooperation and Development. It is the club of the rich countries, with several members describing whom as ‘rich’ may be debatable, such as Portugal, Korea, Czech Republic, Hungary, Slovak Republic, Poland, Mexico and Turkey (in descending order of per capita income). Of these, Portugal and Korea are the richest, with around $18,000 per capita income (in 2006), and Turkey the poorest, with per capita income of $5,400 (in 2006). The next poorest OECD member after Portugal and Korea is Greece, which has a per capita income over $24,000. In 2003 (the latest year for which the OECD has the data), public social spending accounted for 5.7 per cent of GDP in Korea. The highest was Sweden, with 31.3 per cent. The OECD average was 20.7 per cent. See OECD Factbook 2008: Economic, Environmental and Social Statistics .

In 2003 (the latest year for which the OECD has the data), public social spending accounted for 16.2 per cent of GDP in the US, compared to the OECD average of 20.7 per cent and the EU15 average of 23.9 per cent. Among the OECD member states, only Korea (5.7 per cent) and Mexico (6.8 per cent) – two countries that are usually not considered fully developed – had a lower ratio. Ibid.

R. Portes and F. Baldursson, The Internationalisation of Iceland’s Financial Sector (Iceland Chamber of Commerce, Reykjavik, 2007), p. 6.

G. Duménil and D. Lévy, ‘Costs and benefits of neoliberalism: A class analysis’, in G. Epstein (ed.), Financialisation and the World Economy (Edward Elgar, Cheltenham, 2005).

J. Crotty, ‘If financial market competition is so intense, why are financial firm profits so high? – Reflections on the current “golden age” of finance’, Working Paper, no. 134, PERI (Political Economy Research Institute), University of Massachusetts, Amherst, April 2007.

The information for GE is from R. Blackburn, ‘Finance and the fourth dimension’, New Left Review , May/June 2006, p. 44. J. Froud et al., Financialisation and Strategy: Narrative and Numbers (Routledge, London, 2006), estimates that the ratio could be as high as 50 per cent. The Ford number comes from the Froud et al. study and the GM number from the Blackburn study.

J. G. Palma, ‘The revenge of the market on the rentiers – Why neoliberal reports of the end of history turned out to be premature’, Cambridge Journal of Economics , 2009, vol. 33, no. 4.

Your per capita income will double in ten years, if you are a ‘miracle’ economy growing at 7 per cent. If you are a ‘golden age’ economy growing at 3.5 per cent per year per capita, it will take around twenty years to double your per capita income. In those twenty years, per capita income of the miracle economy will have quadrupled. In contrast, it will take around seventy years for an ‘industrial revolution’ economy, growing at 1 per cent in per capita terms, to double its per capita income.

The letter can be downloaded from the website, http://media.ft.com/cms/3e3b6ca8-7a08-11de-b86f-00144feabdc0.pdf.