One thing becomes clear over lunch with iconoclastic South Korean economist Ha-Joon Chang at London's oldest Indian restaurant: Only the hottest spices of Kerala can match the ferocity of Chang's denunciations of the ruling economic orthodoxy.
Known as the myth-buster (debunker) for his devastating critiques of neoliberal single thought, Chang proposed to Regent Street's Veeraswamy to chat about his new book: Edible Economics. A hungry economist explains the world (Debate). From appetizer to dessert, he is horrified by the neoliberal ideas that have dominated Western university faculties and finance ministries for half a century. “A single group of economists, all neoclassical, still controls the way we see the world. It is worse, if possible, than when I came to Cambridge from Korea in the eighties ”, he comments at the beginning of a meal that will last almost three hours.
This is not surprising, he continues. Because before 2008, “those same economists insisted that a systemic crisis was not possible. When the most serious financial crisis in a hundred years occurred, they didn't apologize. If that had happened in another discipline – engineering, pharmacology, for example – a few would have gone to jail. Or at least, lost their Nobel prizes.
It is perhaps no coincidence that in China, a skillfully managed economy where 900 million people have been lifted out of poverty in the last 30 years, "those who make the important decisions are not economists, but engineers," he adds.
As in his witty latest essay, which uses anecdotes about food dishes from shrimp scampi to chili con carne to analyze the world economy, Chang champions an eclectic charter in economics, to "adapt theory to material, political and geopolitical realities”.
“I don't belong to any school; I consider myself a pluralist ”, he affirms as he chooses various dishes from the multicultural Indian cuisine: lamb biryani, duck vindaloo, paneer with cottage cheese. To add to the variety, he orders an assortment of condiments, the aromatic chutneys and pickles, so strong they fall on the tongue like Chang's counterattack to conservative gurus. “The staying power of neoliberal thought is truly astounding given the magnitude of the crisis it provoked,” he insists.
Born in Seoul (South Korea) almost 60 years ago and author of the book 23 Things They Don't Tell You About Capitalism (Empúries), which sold more than two million copies, Chang comes from the only part of the world that does not he fell into the neoclassical trap.
“In the 1990s, the World Bank and the defenders of neoliberalism insisted that the success of the Asian economies was due to neoliberal measures, such as trade liberalization, tax cuts, less regulation, etc.... This and an alleged Confucian work ethic. Everything is a myth, ”he says.
“I spent the first decade of my academic career proving that, in reality, the success of the Asian tigers is due to the rejection of the neoliberal model. They adopted protectionist measures, industrial policies, public banks, ”he highlights. "They protected certain industries in their infancy and made a strategic and not unconditional integration into the world economy." The result: more growth, more equity, more long-term investment, and fewer financial crises.
When it comes to the Asian work ethic, cultural stereotypes are not to be trusted, he maintains. “In the past, Westerners visiting East Asia used to dismiss my ancestors as lazy,” he explains. Beatrice Webb, founder of the London School of Economics in 1895, portrayed the average Asian as "wild, lazy, dirty and surly."
The great myth of the neoliberal era, Chang maintains, is the thesis that industry does not matter, a mantra repeated from the business schools of the Olympic Barcelona to the Thatcherian think tanks of London. “History makes it quite clear that high and sustainable living standards can only be achieved through industrialization.” East Asia, led by China, is the most striking example.
Now the model of the Asian tigers is going through a more difficult moment. Under a government that "does whatever Washington tells it," South Korea, for example, is beginning to suffer from the plague of inequality, just like in the West. “As you may have seen in cultural products like The Squid Game or Parasites, the atmosphere in Seoul already resembles that of the West,” says Chang. The same thing happens in China.
But there are still significant differences in the area of corporate governance. In China and the Asian tigers, a significant part of the profits continues to be reinvested. Instead, the average western company distributes 70% to 90% in dividends or the purchase of its own shares. This serves so that shareholders and executives remunerated with stock options can make profits profitable. It's easy money for floating shareholders – many of them private equity funds – who have no interest in the long-term future of the companies in which they invest. "The average shareholder in the UK only holds their shares for one year before investing in something else." Those speculative shareholders always push for dividends instead of reinvesting.
Pausing in the interview to comment on the explosive flavors of the spices – cardamom, fennel, cloves, cinnamon, coriander – allows further digging into this crucial issue of corporate governance and hints at why Chang proposed eating at the Veeraswamy.
“The Indian spice trade in the 17th century gave rise to the limited liability company, to companies like the East India Company, which was very important for the future of capitalism because it protected the personal assets of the shareholder in the event of bankruptcy” . East India had to finance the search for products from the Orient, so the innovation of the limited company was essential. No longer afraid of losing all their wealth, investors funneled trillions of pounds into imperialist expansion and investments – steam, railways, electricity – that fueled the most dynamic phase of capitalism and the British Empire in the 19th century and in the United States. in the 20th century.
But after decades of neoliberalism, this old "vehicle of economic progress" has already become an obstacle, Chang says. In a phase of financial deregulation, short-termism and capitalist greed, the limited liability company has become a casino chip, she notes.
"It is urgent to change the control system of companies by incorporating workers, customers and suppliers to the shareholders and business councils, while creating incentives so that the shares are not sold shortly after buying them," Chang concludes while savor the rich spices of the Veeraswamy.
