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ECONOMICS. THE USER’S GUIDE – HA JOON CHANG

Are you scared of economics? Many people are. So they opt out of it. However, Cambridge economist Ha-Joon Chang holds that ‘95% of economics is common sense, made to look difficult, with the use of jargons and mathematics’. This way, it becomes the domain of experts. Considering how influential economic arguments are in the political debate, this disengagement with economics puts many areas of politics beyond the reach of the electorate. Ha-Joon Chang believes that ‘the economy is too important, to leave it to the experts’. He has written a very accessible, light and witty book to introduce ‘normal’ people to economics.

The book has two parts. The first one introduces the theoretical background. A brief history of capitalism mentions many facts that are usually cut out of our history books. It shows for example how reliant the Industrialisation of Western Europe was on the exploitation of colonies and the scars caused by that process. He also points out how essential the role of the state was for the Industrial Revolution. But most importantly, Chang introduces the reader in this section to the nine most important Schools of Economic Thought. Now, if you are a former economics student (like myself), most likely you’ve never heard about eight of them. Academic economics and the public perception of economics are entirely dominated by the Neoclassical School. It has its value but also severe limitations. Chang encourages a cross-fertilisation of different schools and to have a keen eye for the use and drawbacks of different theories.

Secondly, Chang does something that rarely happens in the academy: he provides an overview about what is actually happening in the economy; covering everything from the labour market to inequality, from the role of the state to the finance sector. Again and again he reminds us that economics is no natural science where there is only one answer. Economics is a political argument and an awful lot depends on original assumptions and value judgements. The financial crisis has shown us what happens when flawed economic theories are accepted by politicians and the wider public without critical screening. Chang wants us to be active economic citizens. In his words: ‘Economics is far more accessible than many economists would have you believe. Once you have some basic understanding of how the economy works, monitoring what’s going on becomes a lot less demanding in terms of your time and attention’. Dig in!

Robert SSF