Washing machines clean up the net

The humble washing machine liberated women from household work - a bigger impact on society than the internet. Photo / Supplied

A leading economist has compared the West's acceptance of free-market capitalism to that of the brainwashed characters in the film The Matrix, unwitting pawns in a fake reality.

In a new book, Cambridge economist Dr Ha-Joon Chang debunks received wisdom on everything from the importance of the internet to the idea that people in the United States enjoy the highest standard of living in the world. It is an iconoclastic attitude that has won him fans such as Bob Geldof and Noam Chomsky.

Chang's 23 Things They Don't Tell You About Capitalism is one of a spate of new books that question the future of the current system.

South-Korean born Chang aims to disprove what he sees as economic myths, including the idea that people are paid what they are worth.

One of the modern idols South-Korean born Chang seeks to bring down is the internet. He claims that we overestimate the importance of new technology compared to older inventions - such as the washing machine - and criticises the way internet access has been seen as essential to countries' development.

"When children don't have safe drinking water and free school meals, is it really important?" he says.

Is it true that the washing machine has changed the world more than the internet?

When we assess the effect of technological changes, we tend to downplay things that happened a while ago. Of course, the internet is great. But when you look at its impact on the economy, it's mainly in the area of leisure.

For most people, the internet's effect is more about keeping in touch with friends and looking up things here and there. Economists have found very little evidence that since the internet revolution productivity has grown.

And the washing machine was more transformative?

By liberating women from household work and helping to abolish professions such as domestic service, the washing machine and other household goods revolutionised the structure of society. As women have become active in the labour market they have acquired a different status at home - they can credibly threaten their partners that if they don't treat them well they will leave them and make an independent living. And this had huge economic consequences.

Other factors have contributed to the liberation of women - feminism, the pill and so on.

Yes, but feminism couldn't have been implemented unless there was this technological basis for a society in which women worked. It's not just the washing machine, it's piped water, electricity, irons and so on.

Do we tend to overestimate the importance of communications revolutions?

We overestimate the internet and ignore its downsides. There's now so much information out there that you don't have time to digest it.

In the book, I talk about the American economist Herbert Simon, who argued that our problem now is that we have limited decision-making capability rather than too little information. And in terms of productivity, the internet has its drawbacks - it makes it a lot easier to bunk off work.

But what about the sheer speed at which it allows us to do things?

That is exaggerated, too. Before the invention of the telegraph in the late 19th century, it took two to three weeks to carry a message across the Atlantic. The telegraph reduced it to 20 or 30 minutes - an increase of 2000-3000 times. The internet has reduced the time of sending, say, three or four pages of text from 30 seconds with a fax machine down to maybe two seconds - a reduction by a factor of 15.

Does it matter that we overestimate the internet's importance?

Where it does matter is that a lot of people have come to accept a policy action or business decision on the grounds that this is something driven by technological changes rather than by active human decisions. So anyone who is against total globalisation is a modern luddite. This idea that the internet is driving globalisation has enabled business leaders and politicians to get away with decisions made for their own self-interest.

Do we misunderstand the nature of capitalism, as the title of your book implies?

I am an advocate of capitalism. To paraphrase Winston Churchill, I think it's the worst economic system, except for all the others. So I want capitalism to work. But the version of capitalism that we have practised in the past two or three decades is a very extreme free-market version which, contrary to the claims of many economists, is not the only or best way to run things. In the book, I show that countries that have run capitalism differently have done much better.

- Observer