August 8, 2014 5:55 pm

‘Economics: The User’s Guide’, by Ha-Joon Chang

Ha-Joon Chang’s guide to the principles of economics is also a manifesto

Ha-Joon Chang’s guerrilla war against free-market orthodoxy continues. For too long, argues the South Korean economist, the public has been discouraged from engaging with his subject – and, as a consequence, from participating in some of the most important debates of our age. Today, unless you are good at maths and science, he writes in Economics: The User’s Guide, you won’t be able to understand economic literature. It is time for the rest of us to get involved.

Reassuringly, according to Chang, all one needs to make sense of the global economy via his book is a secondary education. This is good news for me because I’m out of practice: it’s been 10 years since I studied economics at school. The first section is a page-turning history, the second a call to arms about how to apply economics in the real world using simple, everyday examples. It’s a brilliant, yet sometimes annoying, book. Key terms are in bold – hundreds and hundreds of them – and italic summaries appear every few paragraphs.

Appropriately for a book that taps into the old-fashioned spirit of self-improvement, Economics: The User’s Guide is published in the UK by the recently revived Pelican imprint, originally founded in the 1930s to bring intelligent non-fiction to a mass reading public.

Chang also happens to be one of the few contemporary economists eager to revive the old-fashioned spirit of political economy. He rails against how economics has shifted from “the study of political management of the economy” to become a discipline that, over the past few decades, has increasingly seen itself as a hard science.

 

Elsewhere, he outlines the predominant schools of economic thought, drawing all sorts of connections between them. To highlight this, he offers a number of “cocktails made up of two to four different schools”. Some of these cocktails, Chang writes, are “like a Bloody Mary with a lot of Tabasco sauce, given the disagreements present. Some others . . . may taste like a Planter’s Punch, with different flavours complementing each other.”

They also come with a health warning: “On no account drink one ingredient,” he writes, which is “liable to lead to tunnel vision, arrogance and possibly brain death”. Hyperbole aside, the message is a plea to his colleagues to get boozy and adopt a more pluralistic approach. It’s entertaining stuff.

Chang favours measures to reduce inequality but he’s far from being an anti-capitalist. He isn’t too explicit but argues that policy makers will increasingly have to recognise that both governments and markets are fallible, and work out a synthesis of the two.

As with his previous book, 23 Things They Don’t Tell You About Capitalism (2010), references to pop culture proliferate. The film Django Unchained is used to explain the concept of “adaptive preferences”, and the “mind-blowing” The Matrix to explain “false consciousness”.

Chang’s lightness of touch makes often dry subject matter very readable. He lambasts the overdevelopment of the financial sector, mocking complicated (broken, it turned out) models that somehow calculated that the “chances of what happened in 2008 actually happening were equivalent to winning the lottery twenty-one or twenty-two times in a row”. The 2008 crash is mentioned again and again, to prove Chang’s point that the experts don’t always know best.

Despite many high points, the book sometimes has an air of ticking off important subjects. And for all Chang’s insistence that his aim is “to show the reader how to think, not what to think, about the economy”, much of it reads like a manifesto. He frequently sticks the boot in and his language is loaded: free-market economists “wax lyrical” while “economic ‘facts’” appear encased in quotes.

Still, he does enough to arouse your interest without fully satisfying it, which is an entirely good thing.

Economics: The User’s Guide, by Ha-Joon Chang, Pelican, RRP£7.99, 528 pages/Bloomsbury, RRP$30, 384 pages

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