Everything you thought that you knew is wrong

PUBLISHED : Monday, 23 August, 2010, 12:00am
UPDATED : Monday, 23 August, 2010, 12:00am

Which invention has changed our world more, the washing machine or the internet?

In the era of Google, Facebook and Alibaba.com, the answer might seem obvious: the internet of course.

Ha-joon Chang doesn't agree. And the Cambridge University economist has a point.

To see why, consider what the internet has done for us. Its technology might seem revolutionary, but in a nutshell it has simply made communication faster.

Today, thanks to the internet, we can send a 30,000 word document to someone on the other side of the world in as little as ten seconds.

That's fast, but in truth it's not all that much faster than communication speeds before the internet. Sending that 30,000 word document by fax would have taken around 16 minutes, which means the internet has speeded things up by 100 times.

In that sense, the invention of the electric telegraph was a much bigger deal. Before the telegraph, it took at least two weeks to send a letter across the Atlantic. The introduction of undersea cables and Morse code cut that time to just 10 minutes - an improvement of 2,000 times compared to the internet's 100 times.

Now consider life before the washing machine. In my grandmother's time, washing day began before dawn as she stoked up the coal fire in the kitchen and put her largest pot, a formidable cauldron holding several buckets of water, on to boil.

When the water was finally hot enough it was decanted into the wash tub. Soap powder, bed linen and dirty clothes were added, and the whole agitated by hand using a three-pronged stick called a dolly. Especially soiled items were scrubbed on a washboard until clean.

The clothes were then rinsed repeatedly in clean water and the shirts starched. Everything was then run through the mangle to squeeze out as much moisture as possible, and the laundry pegged out on the line to dry.

How my gran's generation must have prayed for fine weather. If it began to rain everything would have to be brought back inside in a great hurry, and the damp clothing would be arrayed around the house in a vain attempt to dry it indoors. Ironing was equally laborious. The whole process took up an entire day, and often longer if the weather was wet.

Today the descendents of my gran's generation simply bung their dirty laundry in the washing machine before heading out for work.

And that is Chang's point. The invention of the washing machine and other labour-saving household devices - the vacuum cleaner, the gas cooker, central heating - changed the way we live entirely, freeing women from domestic servitude and allowing them to enter the wider workforce. The impact on economic output, the social status of women, politics, education and even birth rates has been revolutionary. In contrast there is surprisingly little evidence that the advent of the internet has even enhanced workplace efficiency. As the Nobel prize-winning economist Robert Solow put it: 'You can see the computer age everywhere but in the productivity statistics.'

That we vastly over-rate the importance of recent advances in information and communications technology is just one iconoclastic argument among many in Chang's latest book: 23 things they don't tell you about capitalism.

Best known for advocating protectionism for developing countries, Chang is a long time sceptic about the merits of free market neo-liberalism. But in his new book, due to be published next month, he goes one step further, seeking not just to turn economic orthodoxy on its head, but to demolish it entirely.

Contrary to received wisdom, he argues not only that governments have a remarkably good record of picking winners - just consider Posco, LG and Hyundai in Korea - but that big government actually encourages enterprise by providing reliable social safety nets.

Meanwhile, far from being desirable, foreign direct investment can actually be destructive, especially as most inward investment consists of acquisitions which are then managed for short term gain, with the acquirors cutting back on investment in order to reduce costs and maximise immediate profit.

And inflation, far from being the economic evil it has been painted, is often beneficial. It has only been demonised because it eats into the real return of financial assets, which tend to be held by a tiny minority of the population, albeit a minority with a disproportionate influence on policy-making.

Some of Chang's points are a little over-stretched, and many will spark violent disagreement. Nevertheless 23 things is an excellent book. In contrast to what most economists would like us to believe, it reminds us that economics is not a natural science with nice 'correct' answers. On the contrary it is a social study, and in social studies there are always different interpretations and multiple, equally valid, ways of looking at things, even washing machines.