What do unintended consequences tell us?

I am always fascinated by unintended consequences because they remind us not to take ourselves, our feelings, opinions too seriously because we are utterly incapable of fathoming the long-run meaning and implications of what we see, hear and experience today. They are a reminder to us that excessive exuberance or despair at current events are uncalled for. We simply do not know how they would play out. Sample these two from the book, ’23 things they don’t tell you about capitalism’ by Ha-Joon Chang.

First Example 

When Korea wanted to develop a steel industry, the potential donors faced arguably the worst business proposal in human history – a state-owned company, run by a politically appointed soldier, making a product that all received economic theories said was not suitable to the country. The Korean government managed to persuade the Japanese government to channel a large chunk of the reparation payments it was paying for its colonial rule (1910-45) into the steel-mill project and to provide the machines and the technical advice necessary for the mill. By the mid-1980s, it was considered one of the most cost-efficient producers of low-grade steel in the world. By the 1990s, it was one of the world’s leading steel companies.

In the 1950s, the US government aid agency USAID had called Korea a ‘bottomless pit’!

When Japan invaded and occupied Korea, it would have been impossible to imagine that it would, one day, pave the way for Korea to become a world-leader in steel-making!

Second example:

After WW I, Soviet economy was in dire straits. Lenin had kept farming in private hands. Trotsky was opposed to it. Preobhrzhensky argued for rapid industrialisation which required transfer of farming surplus to the State.

Initially, Stalin was not in favour but upon becoming a sole dictator Stalin took Preobrazhensky’s ideas and implemented it. Of course, agricultural output collapsed. In the famine of 1932-33, millions perished.

The irony is that, without Stalin adopting Preobrazhensky’s strategy, the Soviet Union would not have been able to build the industrial base at such a speed that it was able to repel the Nazi invasion on the Eastern front in the Second World War. Without Nazi defeat on the Eastern front, Western Europe would not have been able to beat the Nazis. Thus, ironically, Western Europeans owe their freedom today to an ultra-left-wing Soviet economist called Preobrazhensky.

Policies recommended by a ultra-left wing Soviet economist and implemented by a dictator whose policies have led to the deaths of millions saved millions of lives in Western Europe and paved the way for a prosperous Western Europe since 1945!

One thought on “What do unintended consequences tell us?

  1. It is said that there are thousand causes for thousand effects..not 1:1 as we are conditioned to think …
    Truth is from moment to moment …. This kind of ‘ logical’ linking ….chaining one event after another with our thought process …..
    we can never know what would have happened had the sequence of events of the past not happened in the way it has happened…
    we can create different chains from the same inputs …in between link some other actual events in the same era , link them with ‘our logic’ .. which could lead to some other ‘conclusions’
    and wonder again and question ourselves again !

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