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The Economic Impact of Cleaner Clothes

If your 2012 out-with-the-old-and-in-with-the-new makeover is still in progress, consider doing a bit of housecleaning in the Worn Out Convictions Department as well. According to Cambridge University Economist Ha-Joon Chang, a lot of accepted wisdom about the way the world works – economically speaking – is desperately in need of updating. Does anyone still think that free markets are free? Chang’s new book 23 Things They Don’t Tell You About Capitalism explains why they aren’t now, and never have been.

There have always been rules. Take the Cotton Factories Regulation Act passed by British Parliament in 1819. It established child labor laws that banned employment of children under age nine, thereby limiting the freedom of factory owners to hire whomever they wanted. “Today,” writes Chang, “even the most ardent free-market proponents in Britain or other rich countries would not think of bringing child labour back as part of the market liberalization package that they so want.” Newt Gingrich notwithstanding as evidence to the contrary, Chang’s point is that we “so totally accept the regulations that are propping up” in free markets that we don’t really notice them anymore. So when we say that the market should be free, what we really mean is that it should be free except for all of the regulations that we take as a normal part of the free market system.

It is similarly true with many of the remaining 22 things no one ever told us. Take the Internet, for example. We accept it on faith that it has fundamentally changed the way the world works. When it comes to change, though, “we tend to regard the most recent ones as the most revolutionary.” In fact, appliances like the washing machine have done far more to bring about significant changes in human life. Labor saving appliances like the washing machine reduced the amount of time needed for household chores and helped make it possible for women to enter the workforce. The ability to clean clothes in exponentially less time also meant there were fewer domestic jobs – like being a maid – causing working women to look elsewhere for employment. Admit it, ladies. It’s hard to deny the significance of that particular change.

While tidier garments may not seem as exciting as the ability to IM a co-worker about the Chicken Putanesca and Iced Chai Latte you just ordered at Pita Jungle, Chang points out that exaggerations about the extent of technological transformations – like the Internet – have impact on real-policy making. A conviction that ideas outweighed manufacturing, for example, led many countries (including this one) to “neglect their manufacturing sector, with adverse consequences for their economies.”

All of a nation’s economic choices are inherently political, according to Chang, and as individual citizens we shouldn’t ignore that. It’s not, in this case, that politicians deliberately manipulate information. It’s that they are as naïve as the rest of us. When it comes to assumptions, we tend to swallow them whole rather than pause for critical reflection. So we accept, despite evidence to the contrary, that making rich people richer will make us better off, too, or that higher pay makes better managers, and that the United States has the highest living standard in the world. Didn’t anyone tell you?

Chang claims he is no enemy to capitalism. He notes, in fact, that “it is still the best economic system humanity has invented” and being “critical of free-market ideology is not the same as being against capitalism.” His aim, instead, is to show ways in which capitalism “should, and can, be made better.” Rather than being “slaves to the market,” Chang points the way to making the market more humane. In case no one has mentioned it, that’s a change we could really use. FBN

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