Author Talks: A food-loving economist crafts a recipe for humane capitalism

In this edition of Author Talks, McKinsey Global Publishing’s Raju Narisetti chats with Ha-Joon Chang, an institutional economist and professor at SOAS University of London, about his new book, Edible Economics: A Hungry Economist Explains the World (PublicAffairs, January 2023). Chang believes that democracy is meaningless in a capitalist economy if not everyone understands basic economics, so he’s using stories about food from around the world to make economic theory more consumable. An edited version of the conversation follows.

Why did you write this book?

My two greatest passions are food and economics, and I thought that this book was a natural pairing of two things that I dearly love. For one reason or another, I never got to write this book until couple of years ago.

However, I’m glad that I wrote it when I wrote it because I made a quick calculation and realized that since 2006, I must have had over 16,000 meals. Since then, I got to visit 20 or so new countries, so my food experiences were vastly expanded. Of course, economics also matured in that time. Great food often involves fermentation, maturity, and slow cooking, so I think that the book has become better for it.

How do you use food to explain economics?

I open every chapter with some story about the food item after which the chapter is titled. It could be about the history of that particular food item; it could be about the relationship between that food item and myself; it could be some important historical event that revolved around that food item. I transform the food stories into economic stories.

I almost bribe my reader to get interested in economics. Almost everyone is interested in food, but many people find that economics are too dry, difficult, and technical. So I’m trying to lure my readers into the book by telling them interesting stories about food and then making that transition into economic arguments.

To put it very bluntly, I believe that, in a capitalist economy, unless everyone understands some economics, democracy is meaningless because so many of our decisions are bound up in economic equations. It’s not just jobs and pensions and mortgages that are determined by economic factors. These days, culture, education, and healthcare are also determined by economic factors.

To put it very bluntly, I believe that, in a capitalist economy, unless everyone understands some economics, democracy is meaningless because so many of our decisions are bound up in economic equations.

Economics are everywhere, so if you don’t understand economics, you actually don’t know what you’re voting for. If you remember back in 2000, when George W. Bush was elected US president, a lot of people apparently said that he looked like a guy they could have a beer with. That’s not a way to elect someone to the most powerful political office in the world. We need to learn economics not just to defend our society but also to shape our society according to our deeper values.

My book is trying to make a plea to everyone that they should take an interest in economics. It doesn’t matter if they find some of the arguments a bit tricky or unimportant. I think that people need to know the basics of economics in order to have a meaningful democracy.

What is the relationship between freedom and capitalism?

In the 19th century, cotton and tobacco, which were mostly grown on plantations that held slaves, were the main exports of the United States. It was not an industrialized country; it was an agrarian economy. These two agriculture products alone provided up to 65 percent of US export earnings. Two-thirds of the exports were produced by slaves. Given this prevalence of unfree labor, first in the form of slavery and then in the form of indentured labor, it is quite ironic that freedom has become the central concept in the defense of capitalism by free-market economists.

The problem is that the notion of freedom that free-market economists use is too narrow and biased. First of all, the freedom they talk about is only economic freedom, not political freedom, social freedom, or cultural freedom. They believe that these other freedoms should take a back seat when they clash with economic freedom.

Free-market economists have defined economic freedom very narrowly because, for them, the most important economic freedom is the freedom of the property owners to use their property as they see fit. If other economic freedoms—like the freedom of workers to strike—clash with the freedom of the property owners, they believe priority should be given to the property owners.

I don’t believe that there’s just one kind of capitalism. There are many different kinds, and we can make institutional changes to make capitalism more humane.

The relationship between capitalism and freedom has been conflicted and sometimes even contradictory. That’s very different from the story of ongoing freedom that free-market economists say capitalism brings to us.

We need to balance different types of freedom in order to have a balanced society. We need to balance different economic freedoms not just for property owners but for consumers and workers. Different economic actors have to have their freedom defended. Moreover, we need to build institutions to protect other freedoms. We need to have human-right laws.

Only when we balance these different types of freedoms will we have a more balanced society or more humane form of capitalism. I don’t believe that there’s just one kind of capitalism. There are many different kinds, and we can make institutional changes to make capitalism more humane.

Why do you recommend a government-led industrial policy within free markets?

I have devoted my entire academic career to the study of industrial policy. When I first started doing research on this as a graduate student in the late 1980s, industrial policy for many people was a four letter word—it was something that you didn’t mention in polite company. Today, a lot of countries that used to denounce industrial policy are now very keen to do it. The US is the best example, with the Green New Deal and reindustrialization momentum.

The very core of the industrial-policy argument is this idea of “infant industry,” which is the argument that the governments of economically backward nations need to nurture and protect their young producers against competition from superior producers from abroad—in the same way that we protect and nurture children before we push them into the adult labor market. This idea was invented by the first Department of the Treasury secretary of the United States of America, Alexander Hamilton. There was a whole group of people arguing that the United States needed to use industrial policy to catch up with Britain and other European countries.

After the United States did it, country after country used industrial policy to develop their economies. Sweden and Germany and, later, France, Finland, Korea, Japan, and Taiwan all used very active industrial policies in order to develop their economies. But when they became rich, they suddenly started preaching free trade and free market to the countries that were trying to climb the ladder.

A lot of countries are being more honest and admitting that the government has always played an important role in industrial development, so they’re now thinking they might as well do it in a more systematic way.

There has been a lot more industrial policy than people realize. To put it more bluntly, the Silicon Valley would not have existed without US government funding for initial technologies like the computer, the internet, and GPS. All of these were funded by the Pentagon. Semiconductor research was initially funded by the US Navy.

To think of a recent example, the development of the COVID-19 vaccine was hugely funded by governments. Exact estimates differ, but according to some estimates, up to 80 percent of funding came from the government and other public sources. So there has been a lot more industrial policy around than we realize.

What people are now doing is saying that these policies are needed, especially with the big shifts that are coming to the global economy. A lot of countries are being more honest and admitting that the government has always played an important role in industrial development, so they’re now thinking they might as well do it in a more systematic way.

The young generation of economists, in the long run, will change how economics are done. It’s going to be a long process. You cannot tear down the intellectual edifice that has been dominant over the last four decades—free-market economics—overnight.

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