Free trade does NOT make countries richer. There is no such thing as a free market. Companies should NOT be run in the interests of their owners. These are some of the controversial statements from Ha-Joon Chang, a Reader in Political Economy of Development at the University of Cambridge, and author of the new book: “23 Things They Don’t Tell You About Capitalism.”
Chang lays out some of those “23 Things” in his stimulating video interview with INET Executive Director Rob Johnson. Chang argues that no market is ever fully free – all markets are regulated in some fashion. The developed Western countries may preach that free trade makes all countries richer, but developing countries often benefit from protecting their markets – as the United States did with high tariffs from the 1830s all the way to World War II. And Chang argues that stockholders who can buy or sell their stocks on a whim are the LEAST of all stakeholders invested in the long-term health and productivity of companies.
Chang also talks about global imbalances. He says there are structural constraints that prevent a developing country like China from boosting consumption, which is why developed countries like Germany and Japan have to do the job of rebalancing.
About the economics education he says that we should start teaching knowledge about the real world rather than highly abstract models the relevance of which to the real world remains unclear.