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52 pages 1 hour read

Ha-Joon Chang

23 Things they don't tell you about Capitalism

Nonfiction | Book | Adult | Published in 2010

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Thing 8Chapter Summaries & Analyses

Thing 8 Summary: “Capital Has a Nationality”

Free-market economists typically characterize transnational corporations as a boon to the economies of developing countries, suggesting that the governments of such countries are foolish to discourage foreign corporations from setting up operations within their borders.

While acknowledging that the world is increasingly globalized, Chang counters that transnational corporations typically benefit their home countries most. As an example, he considers US car company Chrysler, which was successively taken over by a German company, a US private equity firm, and an Italian company. In each case, the new owners appointed board members and executives from their own country, revealing a clear bias. Chang suggests that companies are particularly likely to situate research and development initiatives in the company’s home country or region. Whether these biases stem from a sense of patriotic pride or sheer convenience, they are widely observable.

The possibility of such biases does not mean that companies should avoid all foreign investment but rather that they should wisely and selectively restrict it, especially in developing countries. The key issue is how any particular type of foreign investment will “affect the future trajectory” of the economy (84).

Thing 8 Analysis

In this essay, which builds on the themes of Deconstructing Free-Market Economics Dogma and The Path Forward for Developing Countries, Chang makes several fine distinctions that reveal the nuance of his approach. While his argument may come across as somewhat tentative, lacking, for instance, concrete examples of harm that transnational corporations caused in developing countries, his point is not that he necessarily opposes such corporations. Instead, his point is simply that transnational corporations may not always be helpful. In this way, Chang shifts the burden of proof away from himself to those who wholeheartedly and unconcernedly support transnational corporations as a means of accelerating international development. Rather than falling into the easy tendency to condemn or exalt a given economic phenomenon, Chang recognizes the need to consider each situation on a case-by-case basis and consider the potential benefits to all parties in a broad and equable way.

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