Korean economist Ha-Joon Chang is a brilliant, best-selling critic of neoliberal orthodoxy. But Chang stops far short of taking the necessary next step: questioning the capitalist system itself.
Ha-Joon Chang is a rarity in the contemporary world: an economics professor who is highly critical of the neoliberal free-market orthodoxy, advocates progressive social change, writes and speaks accessibly, and is very, very popular.
Chang’s books have sold millions of copies, and he is a regular contributor to mainstream media outlets. According to Chang himself, his aim is not simply to challenge free-market orthodoxy, but also to support, through his work, the kind of “active economic citizenship” that will demand “the right courses of action from those in decision-making positions.”
While socialists can learn a lot from Ha-Joon Chang’s work, we also need to read it critically and identify some of the gaps in his thinking. Chang’s self-professed aspiration is to promote an alternative form of capitalism, but our goal should be to develop an alternative to capitalism.
The commodity supercycle of the 2000s and 2010s gave rise to a rich debate in the academic literature about the possibility for resource-rich countries to muster the primary commodity price bonanza for development. As in past debates on the rise of Asia as the ‘world’s factory’, industrial policy was once again at the forefront of discussion.
On the one hand, orthodox scholars insisted that the use of market distortions to channel resources towards industrialisation would be a risky gamble with little guarantee of success. Instead, as the Asian ‘tigers’ and China before them, developing countries would do well to make good use of the market to identify their comparative advantages. In this view, industrial policy continues to be inefficient and wasteful, especially as it creates plenty of opportunities for corruption rather than development. On the other hand, heterodox researchers argued that state intervention was crucial to divert resource rents to specific nascent industries that would never be able to withstand international competition without sustained support. As both the Asian ‘tigers’ and China more recently used robust industrial policy to develop globally competitive industries, developing countries should also use targeted policy intervention to ‘upgrade’ to higher value-added manufacturing for export.
Still, one question that eludes both orthodox and heterodox literature concerns why, for decades, multinational corporations would consistently invest in manufacturing in resource-rich countries such as, for instance, Argentina, Brazil, and Egypt. This has been the case despite the small scale and high costs of production in these markets (making them inefficient, per orthodox scholars), whose output is mostly sold domestically rather than exported (pace heterodox scholars).
In a recently published open access article in Competition & Change, I applied Argentinian scholar Juan Iñigo Carrera’s original elaboration on Marx to the under-researched case study of the car industry in Uzbekistan to answer precisely this question. I found this same orthodox-heterodox binary to dominate the literature on ‘transition’ from the command to the market economy in Uzbekistan, too. Orthodox researchers averred that state-owned auto company UzAvtoSanoat failed to develop due to inefficiency and corruption, in particular due to the distortions of the government’s industrial policy. Heterodox scholars instead found industrial policy to be the very reason behind the creation of a successful export-oriented car industry, in particular during the commodity supercycle when part of total output was exported mostly to Russia. Neither, however, could explain why Korean Daewoo Motor Company (DMC) and American General Motors (GM) entered into a joint-venture with UzAvtoSanoat, despite the small domestic scale (hence high costs) of automobile production in the country, which is mostly purchased domestically.
It is widely believed that Marx did not systematically consider the role of colonialism within the process of capital accumulation. According to David Harvey, Marx concentrated on a self-closed national economy in his main work. Although he did mention colonialism in Part 8 of Capital Volume 1 on the so-called primitive accumulation, this would only belong to a pre-history of capital, not to its everyday development. Based on a similar assumption, some postcolonial scholars criticise Marx for being Eurocentric, even a complicit supporter of Western imperialism, who ignored the agency of non-Western people.
If we read some passages from the Manifesto we could think that they are right. How can we explain otherwise Marx and Engels praising the role of the bourgeoisie drawing even the most barbarian nations into civilisation or the view that the liberation of colonised peoples depended on the victory of the revolution in Europe?
Before I start, let me make a short premise. In my first book I read Marx’s Capital in the light of his writings and articles on Ireland, China, India, Russia, and the American Civil War. At the time I believed that Marx only published a significant, but still limited amount of writings on the colonial question, those available in the Collected Works and in collections like Marx & Colonialism. But then in 2007 I worked at the Berlin-Brandenburg Academy of Sciences and Humanities, contributing to the complete edition of Marx’s and Engels’s writings. I thus “discovered” some of Marx’s 20,000 print page long notebooks (just to give you an idea, the printed notebooks alone would look like a new Collected Works). These writings show that Marx was interested in colonialism all his life, including when he wrote the Manifesto.
What came out of my reading? Let me start with the question of Marx’s field of analysis in Capital Volume 1. To analyse capital reproduction ‘in its integrity, free from all disturbing subsidiary circumstances’, Marx treats the world of commerce as one nation (1976: 727) and presupposes the full worldwide imposition of the capitalist mode of production. Does this mean that Marx analysed a “self-enclosed national economy” as Harvey and others believe? In my view, this abstraction means exactly the opposite. Marx’s positing a coincidence between the national and global levels is a premise for conceptualising the world market, which includes both internal and foreign markets of all nations participating in it. This abstraction makes it possible to include expansionism into the analysis of capital accumulation. In this framework, a country’s economic system is not confined within its national borders but consists of all production branches where capital is freely transferable, including the colonies and dependent economies.
In his mid-term budget speech, Zimbabwe’s Finance and Economic Development Minister, Hon. Prof. Mthuli Ncube identified rising inflation and currency depreciation as the major challenges requiring “the support of all stakeholders and citizens”. Zimbabwe is failing to ward off persistent inflation. According to Ncube’s mid-term budget report, headline inflation increased from 60.7% in January to 191.6% in June 2022.
In this post, I will argue that whilst price and the exchange rate have some importance, preoccupation with them can constrain economic development. I start off by giving a brief background of inflation in Zimbabwe as well as inflation targeting policies, before arguing that sheepishly pursuing currency and price stability equates to commodity fetishism. I then look at the real beneficiaries of price and currency stabilisation policies. Finally, I attempt to demystify value and price in Zimbabwe’s context.
Cambridge Journal of Economics Special Issue / Deadline for submitting papers via CJE refereeing process: 30th April 2022.
2023 marks the fortieth year since the passing of Joan Robinson and her one-hundred-and-twentieth anniversary. This special issue of the Cambridge Journal of Economics aims at presenting a collection of papers that reflect the extraordinary breadth of Robinson’s career and examine what insights these might offer the economics profession and policy makers to address our seemingly most intractable problems of inadequate demand, rising margins with falling competition, and widespread and seemingly intransigent inequality and its consequences. For Robinson the purpose of our discipline is in understanding the real world to enable all global citizens to enjoy life to the full. It is therefore fitting that we follow her lead and demand that we ask of ourselves whether we have done enough to address her challenges to economic theory.
Despite making her international reputation in the Marshallian tradition of economics, she came to regard her generalisation of John Maynard Keynes’s theories and their integration with Kaleckian and Marxian insights as her more substantial contribution, along with a vigorous defence of rigorous evidence-based thought over inductive mathematical modelling. Among an impressive body of work, three books by Robinson mark key moments in the evolution of her ideas: The Economics of Imperfect Competition (1933), An Essay on Marxian Economics (1942), and The Accumulation of Capital (1956) (Marcuzzo, 2003).
In 1933, she made her international reputation with brilliant work within the orthodoxy on imperfect competition, offering an internal critique of the marginalist theory of distribution. Only a decade later, her reflections on reading Karl Marx persuaded Robinson to question the Marshallian methodology, in particular its polite theory of income distribution which became so incongruous during and after the depression (Marcuzzo, 2003).1 Finally, in 1956, she had the courage to follow the logic of her argument to examine the whole neoclassical theory of income distribution and its predominant method, facing the might of the now dominant American economics profession in the [in]famous capital controversy. She had to accept the pyrrhic victory of her interlocutors accepting she was right, yet the profession moving on regardless.
This interview was originally published in German in the special issue on financialisation and development policies of the journal Peripherie, September 2021, No. 162/163. Frauke Banse and Anil Shah (both based at Kassel University) spoke with political economist Ilias Alami (Maastricht University) about some of his recent work on the relationship between geopolitics, financial flows for development and emerging forms of ‘state capitalism,’ as well as related new imperialist formations. The interview was conducted via email in May 2021.
The interview covers a series of International Political Economy topics. Ilias first locates the emergence of the Wall Street Consensus in the long and turbulent histories of the relation between finance and development as well as in secular capitalist transformations. He then outlines some of the conceptual tools he’s developed in his work in order to make sense of the contemporary interconnections of money and finance and the reproduction of imperialism and race/coloniality. Next, he situates these interconnections within broader scholarly debates about financialisation and highlights the similarities and differences between ongoing sovereign debt crises in the global South and the so-called 1980s ‘Third World debt crisis.’ Finally, Ilias discusses the recent emergence of new forms of ‘state capitalism’ and their complex relation to the extension and deepening of market-based finance.
In the classical works of dependency theory, such as the Dialectics of Dependency (Marini 2011 ); Socialism orFascism (Dos Santos 2018 ); Dependency and Development in Latin America (Cardoso and Faletto 1979) and Latin American Dependent Capitalism (Bambirra 2012 ), race and gender are absent. This absence is at odds with both the evident reality of racial and patriarchal oppression in Latin America and the concomitant rise of feminist and anti-colonial literature in the social sciences. In fact, in the exciting intellectual and political environment of the 1960s and 1970s, it would not be difficult to imagine productive dialogues between Ruy Mauro Marini and Margaret Benston, and Vânia Bambirra and Amilcar Cabral. Sadly, these dialogues never took place. Instead, the first generation of dependency scholarship privileged debates with white, male scholars engaged in modernisation sociology, structuralist economics and Marxist orthodoxy. With the sole exception of Vânia Bambirra’s forgotten writings about peripheral women’s liberation, gender and race remain to this day ignored by the dependency tradition.
Although the absence of race and gender does indeed represent a major blind spot in the work of dependency writers, the most seminal concepts coined by some of the early dependency writers such as Ruy Mauro Marini and Vânia Bambirra have ‘intersectional’ (Crenshaw 1989; 1991) potential. By that, I mean that they can be understood as referring to more than simply class-based dynamics of domination. Let us consider two examples: Marini’s concept of the ‘super-exploitation’ of labour and Bambirra’s definition of Latin American ruling classes as ‘dominated–dominant’.