Economics and food – lessons in capitalism

Edible economics: a hungry economist explains the world, by Ha-Joon Chang, hardback, 192 pages, ISBN 978-0241534649, Allen Lane, 2022, £20. eBook and Kindle editions available. Paperback edition due June 2023.

How many books on economics that you have read are laugh-out-loud funny? This splendidly eccentric book is one such.

Ha-Joon Chang writes about food items from acorns and anchovies to rye and strawberries, discussing their biological qualities and lineages, their geographical origins and spread, their economic and social histories, their political symbolism, and his own personal relationships with them. He describes the many different ways they can be cooked and served.

Variety

He compares this variety to the many different theories of economics and recommends that, as with food, “You don’t need other people to tell you how to learn, critically reflect upon, and use economics. You are all perfectly capable of figuring it out for yourself.” A refreshingly democratic approach.

He skewers many myths about history, for example that Britain and then the US came to dominate the world’s economy because of their free trade, free market policies. In truth their economic success was due to their most aggressive use of protectionism in order to develop their national industries. Once developed, these industries could out-compete any less-developed industries in a free trade arrangement.

He highlights the “myopia of the private sector”; its lack of long term vision prevents large-scale investments in new technologies. Historically it has required strong government action to provide initial investment. Prime examples are the development of information technology and of biotechnology, “which were initially almost exclusively funded by the US government…”

Damaging

But an associated myth has been arguably even more damaging – the myth of “post-industrialism”. In fact the ability to produce manufactured goods competitively remains the most important factor determining a country’s living standards.

The development of many high productivity services that are supposed to replace manufacturing – such as finance, transport and business services (management consulting, engineering, design and so on) – relies on the manufacturing sector, where they find their main customers.

‘Only manufacturing enables sustainably high living standards.’

Only manufacturing industry enables a country’s people to have sustainably high living standards. Not finance, not services. Manufacturing industry is by far the main source of innovation, of producing better goods.

Even in Britain and the USA, where manufacturing accounts for only around a tenth of economic output, the manufacturing sector conducts over 60 per cent of research and development. In more manufacturing-oriented economies like Germany and South Korea, the figure is over 80 per cent.

Destroying

The belief that we now live in a post-industrial age has been particularly harmful for Britain and the USA. Since the 1980s successive British governments have pushed the idea that destroying manufacturing industry is the way forward. That’s supposedly a positive sign of a transition from an industrial economy to a post-industrial economy. And too few workers have fought to retain their industrial strengths.

Part of the reactionary hostility to industry is hostility to its products, its wonderful technological advances, whether to indispensable, life-saving anti-Covid vaccines or to genetically improved organisms.

Not utilised

For example, Vitamin A deficiency is estimated worldwide to cause every year up to 2 million deaths, half a million cases of blindness, and millions of cases of xerophthalmia, the debilitating eye-disease. There is an answer, but it’s not been fully utilised.

Golden Rice is a genetically engineered rice variety that produces a key precursor chemical of vitamin A. It could save millions of people from death and crippling diseases. But Golden Rice is, after two decades, still waiting for a major roll-out, due to romantic, reactionary “back to nature” hostility to genetically improved organisms.

Chang reveals how the patent system, once a powerful spur to scientific and technological innovation, has become a major obstacle to it. “The problem of interlocking patents has recently become far worse, as more and more minute pieces of knowledge, down to the gene level, have become patented, as we see in the case of Golden Rice (over seventy patents contained in a grain of rice!). Now you need an advance army of lawyers to clear the patent thicket, if scientists are going to make a major technological progress.” He concludes unsurprisingly that the patent system must be reformed.

Obstacle

Similarly limited liability, in Chang's view one of the most important financial instruments that capitalism has ever invented, has been transformed. In an age of deregulated finance and impatient shareholders this has become an obstacle to, rather than a vehicle for, economic progress. He says, “we need to reform the institution of limited liability – and those surrounding it, like financial regulation and mechanisms of stakeholder influence.”

Again and again, Chang makes the same point – what was a positive aspect of capitalism has turned into its opposite. But he never explains why this has happened. Nor does he explain why the sensible remedies he proposes have not already been carried out in what he correctly calls “the age of financialisation”.

Domination

There is, always, just one explanation. One development – capitalism’s inevitable development to the stage of finance capital’s domination – has transformed its achievements into blocks to progress. And finance capitalism opposes all the reforms that Chang proposes.

And further finance capital is, as he shows, now destroying the very seeds of growth. It now prevents all progress. As long as we allow it to reign over us, we cannot advance.