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15 November 2022

Ha-Joon Chang: “Talk of a ‘fiscal black hole’ is an insult to the concept”

The South Korean economist on the case against austerity and his new book Edible Economics.

By George Eaton

For 15 years, Ha-Joon Chang had wanted to write a book connecting two of his greatest loves: economics and food. But events kept intervening. The 2008 financial crisis prompted him to write the lucid 23 Things They Don’t Tell You About Capitalism, which became an international bestseller, and Economics: The User’s Guide (the NS’s John Gray described Chang as “the best critic” of neoliberalism). The South Korean academic, 59, whose books have sold more than two million copies and been translated into 45 languages, has now revived his original ambition through Edible Economics: A Hungry Economist Explains the World. Like others before him – such as John Maynard Keynes, JK Galbraith, Paul Krugman – Chang strives to appeal to a non-specialist audience. 

“Over time I’ve become more and more convinced that in a capitalist economy, democracy is meaningless without everyone knowing some economics because so many decisions are bound up with it,” Chang explained when we met in Sushi Samba, a JapaneseSouth American restaurant, in central London. 

As we ate, the subjects of Chang’s book materialised on our plates. Chang’s prawns feature in one chapter on why “developing countries need to use protectionism against superior foreign competition”; my beef gyozas recalled another chapter on why “free trade doesn’t mean freedom for all”. Spices told the story of how the corporation “made capitalism a great success but is now slowly strangling it”; chilli prompted a discussion of how “care work is neglected and undervalued, despite being at the foundation of our economy and society”. 

Not all responses to the book have been favourable. The Daily Mail branded Chang a “woke Cambridge don” after he dissected the full English breakfast, noting that bacon is Danish and hash browns are American. “All publicity is good publicity, except an obituary,” Chang quipped. After 32 years, he left his teaching post at Cambridge University this summer to become the research professor of economics at SOAS University of London (“they offered me a better job,” he explained succinctly). 

The inspiration for Edible Economics goes back to 1986, when Chang emigrated to the UK from Seoul at the age of 22. “The big trauma was the food,” he writes in the introduction. “Back in Korea, I had been warned [by books, that is] that British food was not the best. But I hadn’t realised how bad it actually was… Meat was over-cooked and under-seasoned. Vegetables were boiled long beyond the point of death to become textureless, and there was only salt around to make them edible.” 

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Though British cuisine has improved beyond recognition since then – partly thanks to successive waves of migration – its economic discourse has not. In his new book, Chang laments that “since the 1980s, economics has become the British food scene before the 1990s. One tradition – neoclassical economics – has become the only item on the menu.” 

The arrival of first Liz Truss and now Rishi Sunak in Downing Street has given new life to many of the myths that Chang has spent his career debunking. Talk of a £60bn “fiscal black hole” is, he said, “an insult to the concept of a black hole, which is an all-consuming entity that sucks in everything. The ‘hole’ is only the size that it is because Jeremy Hunt decided that the government is willing to cut public debt and balance the budget in the next five years.”

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[See also: The “fiscal black hole” is a dangerous myth to justify austerity

At the prospect of more austerity, the normally mild-mannered Chang became indignant. “Public services are already fraying at the seams, and in some areas collapsing, thanks to the last round of austerity. I don’t want to be melodramatic but are we really going to balance the budget at the cost of children starving and people dying in hospitals?” (Even if the government increases welfare benefits in line with inflation, the standard monthly payment will still be worth around £50 less in real terms than in 2010.) 

If austerity did not lead to a more just society, it also did not lead to a more prosperous economy. Since the 2007-08 crash, the UK economy has expanded at an average annual rate of just 0.9 per cent (compared with 2.7 per cent before the crisis). Of the G7 countries only Italy has fared worse. 

“The political and economic elite in this country are incapable of thinking for the long term,” Chang surmised. “The biggest problem is the lack of investment in infrastructure and productive capacity, research and development. In the past 25 years, Britain has invested 17 per cent of GDP, the figure is 21 per cent “Are we really going to balance the budget at the cost of children starving and people dying in hospitals?” in Germany and the US, 22 per cent in France, 23 per cent in Sweden, 26 per cent in Switzerland – and now the UK’s supply-side capacity is seriously dilapidated.” 

I asked if there was any country or model that he regarded as exemplar. “No one’s perfect, you have to learn different things from different countries. In terms of building productive capabilities, you should look at countries such as Germany, South Korea, even Taiwan, which has used various types of industrial policy.” 

Singapore is normally regarded as a byword for libertarian economics but Chang notes that 85 per cent of housing in the country is provided by the government. “One reason they have low taxes is because the state has a huge rental income, it’s the biggest landlord in the country”. 

Rather than defining himself as a Keynesian or a socialist, Chang identifies above all as a pluralist. “When people ask me which economists have most influenced me, I say Karl Marx on the left, Friedrich Hayek on the right and Herbert Simon, the father of behavioural economics, in the middle. All of these people have important things to say about the world, to pick one would seem to me incredibly parochial.” 

Chang was close to the former shadow chancellor John McDonnell (“a very smart guy”) when he was on Labour’s front bench, but he is not enthused by the party’s present leadership. “Keir Starmer is basically saying we’ll maintain the same model with a few modifications, fewer rough edges, maybe a bit more caring. He’s not proposing to reindustrialise Britain or seriously reform the financial system.” 

When Chang emigrated to the UK 36 years ago his Korean friends and parents were puzzled because it was “considered to be a country in decline”. Does he believe the same is true of Britain today? “Yes, but this is not the gentle decline of the 1970s and 1980s, the whole system is imploding. I don’t know if there will be a way out anytime soon because the country is too divided to forge a new model.” Unlike some – such as the former governor of the Bank of England Mark Carney – Chang does not blame Brexit for the UK’s malaise. “Brexit was a symptom, rather than a cause, people voted Leave because they’d had nearly a decade of economic stagnation and they wanted a way out,” he said. 

Chang needed to leave to deliver a lecture at the London School of Economics entitled: “Economics vs Science Fiction – what can each learn from the other?” But before he did, I pressed him on why he insists he remains an “optimist”. His answer combines the grand sweep of history and his own personal experience. “A lot of impossible things have happened. Two hundred years ago, people would have called you unrealistic if you advocated for the abolition of slavery in the US, a hundred years ago they would have called you naive if you supported the abolition of child labour. But these things came about”. 

He added: “When I was born in the early 1960s, South Korea was one of the poorest countries in the world and life expectancy was 53 years. I’m 59, I should be dead. Economic development has completely changed our life chances and possibilities. In the long run, things can dramatically change.”

[See also: What will be in Jeremy Hunt’s Autumn Statement?]

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This article appears in the 16 Nov 2022 issue of the New Statesman, The state we’re in