Ha-Joon Chang

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“The Market Isn’t Logical, Any More Than Is Any Other Human Behavior”

June 6, 2014 in Books, Excerpts, Science/Tech | Permalink

From Zoe Williams’ brief review of Ha-Joon Chang’s Economics: The User’s Guide, the first title from the revived Pelican paperback line, a description of the underlying forces that drive financial considerations:

“I think his favourite section is ‘Let a Hundred Flowers Bloom’ – to judge, anyway, from his endearing pick’n’mix approach, in which he describes the nine key schools of thought, then makes up fresh labels, which you can use, if you wish, to describe yourself. The author’s references from culture proliferate: perhaps the best example is when he tries to explain, later, that the market isn’t logical, any more than is any other human behaviour, and that the things we can trade on the open market (carbon usage) and can’t (people, organs) come from beliefs, impulses and feelings that are deeper than money. ‘So politics is creating, shaping and reshaping markets before any transaction can begin. It is like the ‘Deeper Magic’ that had existed before the dawn of time, which is known to Aslan (the lion) but not to the White Witch in The Lion, the Witch and the Wardrobe.’“

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“It Is Not A Country’s Natural Resources But Its Capabilities To Generate More Productive Technologies That Determine Its Prosperity”

May 1, 2014 in Excerpts, Science/Tech | Permalink

Economist Ha-Joon Chang, who’s authored the first title of the new Pelican imprint, explains the importance of anchovies and guano and technology, in a Financial Times diary post. An excerpt:

“Despite its small size, the anchovy is arguably the most important fish in the world. It is eaten in large quantities everywhere and in so many different ways: raw (a delicacy in some parts of Korea); dried (in Korea and Japan); cured (around the Mediterranean); fried (all over Asia, including India, Indonesia, and Korea); as fermented sauce (not just in Korea, Vietnam, or Thailand but also in ancient Rome – garum); and even drunk (all over the world, through the Worcester sauce in a Bloody Mary). Impressive though the culinary role it has played in so many different cultures may be, the anchovy’s economic role used to be even greater – at least in Peru.

In the mid-19th century, Peru had an economic boom based on the export of guano, namely, desiccated seabird droppings, deposited over thousands of years by cormorants and boobies, whose main food source was the anchovies migrating along the Pacific coast of South America. Rich in nitrate and phosphorous, guano was a highly prized fertiliser. It was also a key ingredient in the manufacture of gunpowder. This was a time when Europe and North America needed both fertiliser and gunpowder in large quantities.

Unfortunately, the guano boom came to an abrupt end in the early 20th century, when German scientist Fritz Haber, inventor of poison gases used in the first world war, developed a method of isolating nitrogen from the air to make ammonia, using high-voltage electricity. With this invention, the mass production of artificial fertiliser became possible, deposing guano from its throne in the fertiliser kingdom. The price of guano fell and Peru’s export earnings plummeted, dealing a huge blow to the economy.

The Peruvian story shows that it is not a country’s natural resources but its capabilities to generate more productive technologies that determine its prosperity; your natural resources may become far less valuable if others invent synthetic substitutes. Such technological capabilities are almost always acquired through industrialisation, which is why few countries have remained rich in the long run without successful industrialisation.”

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“You Do Need People Crunching Numbers, But You Also Need People Going To Factories”

December 1, 2013 in Excerpts, Science/Tech | Permalink

In a Financial Times article by David Pilling, unorthodox Cambridge economist Ha-Joon Chang, something of a lone wolf in the dismal science, argues against his discipline’s prevailing ways of conducting business and also explains his contention that washing machines were more revolutionary than the Internet. Two excerpts.

1.

“‘The predominant view in the profession is that there’s one particular way of doing economics. It’s basically to set up some mathematical model, the more complicated the better,’ he says, advocating instead what he calls a multidisciplinary approach. ‘In a biology department, you have people doing all sorts of different things. So some do DNA analysis, others do anatomy, some people go and sit with gorillas in the forests of Burundi, and others do experiments with rats. But they are called biologists because biologists recognise that living organisms are complex things and you cannot understand them only at one level. So why can’t economists become like that? Yes, you do need people crunching numbers, but you also need people going to factories and doing surveys, you need people watching political changes to see what’s going on.'”

2.

“What’s all this about the washing machine and the internet?

‘I was not trying to dismiss the importance of the internet revolution but I think its importance has been exaggerated partly because people who write about these things are usually middle-aged men who have never used a washing machine,’ he replies. ‘It’s human nature to think that the changes you are living through are the most momentous, but you need to put these things into perspective. I brought up the washing machine to highlight the fact that even the humblest thing can have huge consequences. The washing machine, piped gas, running water and all these mundane household technologies enabled women to enter the labour market, which then meant that they had fewer children, had them later, invested more in each of them, especially female children. That changed their bargaining positions within the household and in wider society, giving women votes and endless changes. It has transformed the way we live.'”

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