Ha-Joon Chang on inequality and capabilities

ha-joon-chang

“We can accept the outcome of a competitive process as fair only when the participants have equality in basic capabilities; the fact that no one is allowed to have a head start does not make the race fair if some contestants only have one leg.”

Ha-Joon Chang (2010)

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3 thoughts on “Ha-Joon Chang on inequality and capabilities

  1. Ha-Joon Chan is one of my favourite authors, offering countless valuable and valid ideas/facts about widespread preconceptions on capitalism that are nourished by one-sided and false yet popular economics.

    In making the above pronouncement, he is certainly having a true and important aspect in mind; but the quote is overspecified; there is ample room for disagreement as to what “basic capabilities” ought to count as a precondition for a level playing field or should or can be forced into existence through policy intervention.

    I am lazy. Should I be forced to become industrious, so as to be of average laziness, rather than being a disadvantaged outlier of extreme laziness – being a victim of society, as I might claim, since my parents conditioned to become lazy? Or should I be left to use this trait as a competitive edge (lazy+intelligent = efficient) or in any other way? How does one objectify “basic capabilities” and their moral status?

    Also, man is productive because he constantly differentiates himself against others. Man is a natural producer of inequality.

    This is what those quick at demanding fabricated equality should keep in mind; while those rashly denying damaging inequality should open up to Ha-Joons Chan’s point.

    General access to education seems to be a good example of what Chan has in mind. Also, tying wages to productivity may be a useful macro-economic application of constructive concern for the dangers of inordinate inequality (equality need not be a categorical demand but one of degree).

    The greens in Germany demand that anyone should have the right to engage in paid sex, and those who can’t afford it should be subsidised.

    • Thanks once again for your thoughts. I agree with much of what you say. I sometimes like to put out short quotes without any additional commentary, in the hope that it will stimulate some debate. As I was posting it, I realized that it leaves the way open for debate on the definition of ‘capabilities’. Chang has written extensively on industrial policy in developing countries, as I am sure you know, and the way such policies can enhance capabilities from the industry down to the firm or individual level. Education is evidently vital, but without the demand for more skilled workers supplied by such a policy, a country might simply experience a brain drain, leaving for opportunities elsewhere. So industrialisation and faster growth, which can be helped along by a successful industrial policy, are also vital.

      These things are difficult to get right, and I disagree with those who argue for simply a good ‘climate’ for business, especially to encourage FDI. The latter can help development, but only if technological and organisational capabilities are transferred to local firms and workers. Otherwise, the benefits of FDI may be very narrowly distributed, and could accrue largely to the firm rather than the regional economy more widely.

      • In your comment on “Inequality and prosperity” you write:

        “I don’t think that state-led development necessarily leads to rising inequality.”

        I think, you are right.

        Mind you, I suppose development, even desirable development cannot possibly be a matter of entirely unencumbered progress — in fact, injustice and inequality are likely to be part of it — but the extent and nature of such aberrations matter.

        And in your above comment, you write:

        “I disagree with those who argue for simply a good ‘climate’ for business, especially to encourage FDI.”

        I think, you are right.

        I believe, the role of the state is pivotal and cannot be wished or conjured away however much libertarians may wish for it. The state will always be part of the picture.

        It may well be possible to achieve benign effects from state-led growth, and reduce not so desirable ones — by judicious political control of the state, ideally though the political system of civil society (presupposing a democratic culture) or through responsible (rather authoritarian) political leadership.

        But these outcomes are not at all automatic. Much can go wrong, and severely so.

        However, a purely “free market” solution is no alternative – it is not feasible, to begin with, and contradicts the essence of freedom (which requires the possibility of mass political participation).

        Counterweights against dictatorial rule are of the essence to ensure that state-led growth is not likely to become — in the longer term — another form of giving inordinate advantage to certain (minority) groups at the expense of the broad (working) population.

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