“Those who have fought to make the world better are the ones that inspire me.”
Author, Economist and Senior Academic at the University of Cambridge, Ha-Joon Change was born in Seoul, South Korea 1963. Having moved to the UK and graduated from the faculty of Economics and Poltics at Cambridge, where he now teaches, Professor Chang is one of the world’s most distinguished hererodox economists in development economics.
In the 2013 Prospect Magazine, Chang was ranked as one of the top 20 World Thinkers. Receiving two international awards in recognition, his book ‘Kicking Away the Ladder’ won the Myrdal Prize for best monograph by the European Associate for Evolutionary Political Economy. Having worked as a consultant to the World Bank, the Asian Development Bank and the European Investment Bank. Chang has also met with President Rafael Correa, President of Ecuador, being a part of his cabinet to give economic recommendations on sustainable investment in education, research and knowledge.
We are excited to be sharing with you an insight into his own opinions on global issues, his reasons for choosing his career path and what keeps him interested in the World of Economics…
What is it about Economics that keeps you particularly motivated to research and keep teaching?
I became interested in economics because I had grown up in South Korea during the height of its ‘economic miracle’, between the mid-1960s and the mid-1980s. This was the time when the Korean economy was growing at 8%, 10%, and sometimes even 12% per year, producing huge changes all around me. Many of these changes were positive – higher material standards of living, significant improvements in health and education, weakening of traditional (often conservative) values. However, there were also a lot of negative changes – repression of workers, spread of urban slums, and increasing social conflicts. So, I wanted to understand both the positive and the negative changes that were happening around me and economics seemed to be the obvious subject to help me do that.
Even today, it is my desire to understand – and hopefully improve – the real world around me that keeps me going. Even though I don’t have any problem with other researchers doing ‘esoteric’ theoretical research (which I myself sometimes do), I am mainly driven by the desire to analyse real-world problems and come up with practical policy solutions to them.
Economics is everywhere, but its understanding varies widely. Growing up in Seoul to graduating and teaching in the UK, what would you say is the fundamental difference between the two countries when it comes to the World of Economics?
When I decided that I want to do my graduate studies in the UK, it was because I thought the UK economics departments offered a more ‘pluralist’ intellectual environment than what I could find in Korea or the US (the other obvious destination) at the time.
When I was attending my university in Seoul in the early 1980s, we were mostly taught Neoclassical economics and some Neoclassical rendition of Keynesian economics. Marxist economics was officially banned and we had only glimpses of other economic schools, like the Schumpeterian school and the German historical school through a couple of old professors. Most UK universities seemed to offer much broader curriculum.
When I actually arrived in Cambridge as a graduate student in 1986, not only was I given broader, more pluralist teaching than I had had in Korea, but I was also encouraged (or even forced) take a far more critical approach to economics than I was used to. In Korea at the time (as it is sadly the case in the UK too these days), we were told to absorb our textbooks and lectures uncritically, but my teachers in Cambridge – Robert Rowthorn, Ajit Singh, John Sender, Gabriel Palma, and Peter Nolan were particularly influential – taught us economics mainly through debates between different schools, thus implying that it is not always black-and-white. They also encouraged us to be critical of intellectual authorities, pushing us to question even the most widely accepted theories and the most famous economists.
What exactly inspires you?
Two hundred years ago, if you advocated the abolition of slavery in the US, the kindest description you would have got is ‘unrealistic’. One hundred years ago, the UK, the US, and many other countries put women in prison for asking for vote. Sixty, seventy years ago, many of the founding fathers (and mothers) of post-colonial societies were being hunted down as terrorists by the British, the French, the Belgians, the Japanese, and so on. Only three decades ago, Margaret Thatcher is supposed to have said that anyone who thinks there will be a black majority rule in South Africa is living in a cloud cuckoo land. But all of these things, which once had looked impossible, have come true because people fought to achieve them.
I am of course only an academic and a writer, so the fight I am fighting is nothing even remotely comparable to all those who risked their lives in the fight for the abolition of slavery, male-only voting system, colonialism, apartheid, and so on. However, those people and many others who have fought to make the world better are the ones that inspire me.
From your point of view, what is the biggest challenge facing the world today?
In the short to medium run, the biggest challenge that the world is facing today is the heightened (and in many countries increasing) inequality, which has mainly been caused by the neo-liberal economic policies of the last few decades.
High inequality holds the economy back – by depressing demand and, more importantly, by reducing social mobility, thus failing to fully utilise the talents that a society has in possession. High inequality, especially if it is rapidly increasing, makes society more conflict-ridden and intolerant. In many countries, it is tearing societies apart.
In the longer run, the biggest challenge to the world is of course climate change. Unless we change our energy system and consumption pattern significantly and quickly enough, we may ‘run out of the planet’, so to speak. Catastrophic climate change will make all other socio-economic problems – fiscal austerity, job insecurity, high inequality, strains on the welfare state – look like a picnic.
Of course, one important plank in our strategy to deal with climate change should be to put more restraints on the untrammelled pursuit of short-term profits by the neo-liberal economic system, which has encouraged excessive material consumption and the neglect of long-term damages to the environment.
Your book ‘23 things they don’t tell you about Capitalism’, gives a very refreshing and understandable approach to the running of Economies. Professor Noam Chomsky quotes, ‘The basic principle of modern state capitalism is that costs and risks are socialized to the extent possible, while profit is privatized.’ Can you comment on this, in terms of those who tend to gain the most and least welfare from such a system?
Professor Chomsky is absolutely right, but things are actually worse than what he says. The first part of the principle (that is, the socialisation of costs and risks) is applied only to the rich, while the second part of the principle (privatisation of profit) is inherently applicable mostly to the rich (as the poor earn little, if any, profit).
The principle of socialisation of risk for the rich has been most dramatically shown by the 2008 global financial crisis. Following the crisis, banks have been bailed out by taxpayers’ money to the tune of tens of trillions of dollars but few top bankers who had caused (or at least had condoned the practices that caused) the crisis have been punished for their wrong-doings and their dereliction of duty.
Even before the crisis, for the rich, the last few decades have been a game of ‘head I win, tail you lose’. Especially in the US, top managers, sign on pay packages that give them tens, and often hundreds, of millions of dollars for failing – and many times more for doing a decent job. Corporations have been subsidised on a massive scale with few conditions – sometimes directly but often indirectly through government procurement programmes with inflated price tags (especially in defence) or through free technologies produced by government-funded research programmes.
In contrast, poor people have been increasingly subject to market forces and bearing more and more risk than before. Jobs have become far more insecure, thanks to continuous de-regulation of the labour market and sometimes even to laws weakening the trade union. This trend has reached a new level with the emergence of the so-called ‘gig economy’, in which workers are bogusly hired as ‘self-employed’ (without the control over their work that the truly self-employed people have) and deprived of even the most basic rights (e.g., sick leave, paid holiday). In the area of consumption, increasing privatisation and deregulation of industries supplying essential services, on which the poor are relatively more reliant upon (like water, electricity, public transport, postal services, basic health care, and basic education), have meant that the poor have been seen a disproportionate increase in the exposure of their consumption (and not just jobs) to the risks inherent in the logic of the market.
If you had one message to give to all young and aspiring economists, what would it be?
I would say: “Never accept anything at face value”.
If they are not going to end up as technocratic ‘worker bees’ who execute orders given to them by their employers or, worse, unthinkingly defend the economic status quo, economists need to question the prevailing economic theories. I am not saying that you should abandon all theories but that you should check what the underlying assumptions of the theory in question are, whether those assumptions are ethically acceptable and descriptively realistic, and whether those assumptions hold in the cases to which you are applying the theory.
You should also question the numbers that you are dealing with. Even for more ‘straightforward’ numbers, like GDP, you need to know that there are a lot of problems: for example, GDP includes incomes from socially undesirable activities (e.g., polluting activities), excludes household work and care work (mostly done by women), and so on. When it comes to all those ‘indexes’ (of freedom, corruption, governance, ethnic homogeneity, and what not), you don’t even know exactly what went into them and how the ideological biases that are inherent in them (e.g., the very notion of things like freedom and ethnicity) need to be taken into account.
To find out more about Ha-Joon Chang and his work check out his website hajoonchang.net for more information on his publications, influences and interests.
Take a look at his Wikipedia page too, at Ha-Joon Chang.