[Peace-discuss] Moral economics, for a change

[C. G. Estabrook]

  Free market has turned us into 'Matrix' drones
Ha-Joon Chang, the new kid on the economics block, is out to bust open a few myths
By Rachel Shields
Sunday, 29 August 2010

A leading economist has likened the nation's acceptance of free-market 
capitalism to that of the brainwashed characters in the film The Matrix, 
unwitting pawns in a fake reality. In a controversial new book, the Cambridge 
economist Ha-Joon Chang debunks received wisdom on everything from the 
importance of the internet to the idea that people in the United States enjoy 
the highest standard of living in the world; an iconoclastic attitude that has 
won him fans such as Bob Geldof and Noam Chomsky.

Dr Chang's 23 Things They Don't Tell You About Capitalism is one of a spate of 
tomes published in recent weeks that question the future of the current system, 
including Capitalism 4.0 by Anatole Kaletsky, and Ian Bremmer's The End of the 
Free Market. Economists are keen to tap into the market for popular books on 
seemingly impenetrable subjects – highlighted by the runaway success of 
Freakonomics, which has sold more than four million copies since it was 
published in 2005 and is about to be made into a film.

South-Korean born Dr Chang aims to disprove what he sees as economic myths, 
including the idea that people are paid what they are worth, that the "trickle 
down" effect of increasing wealth among the rich helps the poor, and that 
education makes countries more prosperous.

One of the modern idols Dr Chang seeks to bring down is the internet. He claims 
that we overestimate the importance of new technologies compared to older 
inventions – such as the washing machine – and criticises the way in which 
internet access has been seen as key to countries' development.

"If you had everything, then I'm in favour of it. But when children don't have 
safe drinking water and free school meals, is it really important?" he said. "We 
have a fascination with the new, and we have to be careful not to project our 
own vision on to other people's lives."

A leading development economist, Dr Chang was much lauded for his 2007 book Bad 
Samaritans, which looked at the negative effects of globalisation on developing 
countries. He is now bringing his focus closer to home, considering problems in 
the UK. "It is like The Matrix. There is a reality where things could and should 
be better," he said. "In order to wake people up to that alternative reality, 
you need to show them that it isn't impossible. I'm not necessarily saying that 
I have a solution, but we have to recognise that some of the things we accept as 
inevitable aren't."

But while Dr Chang may not have the answer, he is sure of the problem – arguing 
that free-market capitalism has left the global economy more unstable, and 
people with less job security and greater feelings of insecurity, than ever 
before. His conviction that, post-recession, we should be rebuilding our country 
in a "moral" way – by acknowledging the social consequences of economic choices 
such as benefit cuts and job losses – will strike a chord with many.

"Another myth that needs to be busted is the idea that we can discuss economics 
without any moral implications," he said. "What kind of economy we build changes 
us, so what we do in terms of monetary policy determines who we are."

Dr Chang also highlights the way in which economics impacts not just on our 
wages and living standards, but also on our characters. He said: "In 
conventional economic theory, it is thought that we are born as perfectly 
formed, rational, self-serving agents. But where you work and what kind of work 
you do are important in determining your character."

While Dr Chang may have many fans, his belief that the welfare state should be 
expanded has prompted criticism from some economists.

"It is a very unfashionable thing to say at the moment, but people have to 
realise that cuts have long-term implications on the fairness of the culture," 
he said.

Dr Chang, who moved to the UK in 1986 as a 23-year-old graduate student, argues 
that an emphasis on equality of opportunity is futile – likening life to a race 
which everyone starts at the same time, but where some have weights strapped to 
their legs – and that we should instead work towards greater equality of outcome.

"People have been drilled into thinking that there is equality of opportunity 
and whatever comes out at the end should be accepted. But the effects of not 
having equality of outcome are felt by the next generation. It is not simply 
that you don't have enough money; if your parents are from a certain background, 
you don't even aspire to another background. You can ameliorate some of these 
things through the school system, but not all of them."

http://www.independent.co.uk/news/business/news/free-market-has-turned-us-into-matrix-drones-2064799.html