The writer is a ‘development economist’, in the jargon of the economics profession (on which, incidentally, he is very interesting in this book) and he does write from the perspective of the developing economy.Which is no bad thing, when he is so brilliantly and analytically critical of the way in which developed economies have been managed in recent decades.
The format of the book is pretty much as set out in the title – a series of chapters, each addressing an aspect of how capitalism works. His style is light and easy to read, full of the self deprecating humour that seems common to so many great expositors of complex subjects.
His basic argument is that the world economy is far too much influenced by the lazily accepted tenets of free market economics. He adduces plenty of evidence in support of this, showing that the application of this orthodoxy has actually diminished economic growth in those countries that have either embraced it willingly or had it forced upon them by agents of the ‘Washington Consensus’ such as the IMF.
He convincingly challenges some of the assumptions that underpin our faith in free market economics: that putting the interests of shareholders first leads to sustainable business; that the internet changes everything; that more education leads to economic growth; that governments cannot pick winners.
He also makes the excellent point that free market theories never, in wealthy countries, extend to immigration policy. If you allowed free immigration, lots of brilliant people from poorer countries would come to rich ones and undercut the native labour force, even in highly paid jobs. This would drive down costs and make businesses more competitive on grounds of cost, with no loss of quality. The free market would be working. But immigration control is a form of protectionism that is rarely questioned, even by the most ardent free market advocate. For good policy reasons, sure; but it knocks on the head any idea that policy interference with free markets is inherently bad.
Finally, he points out that the most successful economies in the world are not run by economists. Comfort for all of us who are puzzled by the intellectual deference accorded to the ‘dismal science’.
This is a punchy, topical book, written in bite-sized chunks by a top class intellectual. Brilliant.