John Maynard Keynes: Economic Possibilities for our Grandchildren

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Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek by Rutger Bregman

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autonomous vehicles, banking crisis, Bartolomé de las Casas, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, happiness index / gross national happiness, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, income inequality, invention of gunpowder, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, labour market flexibility, labour mobility, low skilled workers, means of production, megacity, meta analysis, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Peter Thiel, post-industrial society, precariat, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, telemarketer, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen: Great Stagnation, universal basic income, wage slave, War on Poverty, We wanted flying cars, instead we got 140 characters, wikimedia commons, women in the workforce, working poor, World Values Survey

Antoin Murphy, “Money in an Economy Without Banks – the Case of Ireland,” The Manchester School (March 1978), pp. 44-45. 9. Donal Buckley, “How six-month bank strike rocked the nation,” Independent (December 29, 1999). 10. Umair Haque, op. cit. 11. Roger Bootle, “Why the economy needs to stress creation over distribution,” The Telegraph (October 17, 2009). 12. John Maynard Keynes, “Economic Possibilities for our Grandchildren,” in: John Maynard Keynes, Essays in Persuasion (New York, 1963), pp. 358-373. 13. Alfred Kleinknecht, Ro Naastepad, and Servaas Storm, “Overdaad schaadt: meer management, minder productiviteitsgroei,” ESB (September 8, 2006). 14. See: Tony Schwartz and Christine Poratz, “Why You Hate Work,” The New York Times (May 30, 2014). http://www.nytimes.com/2014/06/01/opinion/sunday/why-you-hate-work.html?

BERTRAND RUSSELL (1872–1970) 2 A 15-Hour Workweek Had you asked the greatest economist of the 20th century what the biggest challenge of the 21st would be, he wouldn’t have had to think twice. Leisure. In the summer of 1930, just as the Great Depression was gathering momentum, the British economist John Maynard Keynes gave a curious lecture in Madrid. He had already bounced some novel ideas off a few of his students at Cambridge and decided to reveal them publicly in a brief talk titled “Economic Possibilities for our Grandchildren.”1 In other words, for us. At the time of his visit, Madrid was a mess. Unemployment was spiraling out of control, fascism was gaining ground, and the Soviet Union was actively recruiting supporters. A few years later, a devastating civil war would break out. How, then, could leisure be the biggest challenge?

A second chance in the second decade’ (June 2014). http://apps.who.int/iris/bitstream/10665/112750/1/WHO_FWC_MCA_14.05_eng.pdf?ua=1 29. Wilkinson and Pickett, p. 36. This specifically concerns young adults in North America, but the same trend is visible in other developed countries. 30. Quoted in: Ashlee Vance, “This Tech Bubble Is Different,” Bloomberg Businessweek (April 14, 2011). http://www.businessweek.com/magazine/content/11_17/b4225060960537.htm 31. John Maynard Keynes, “Economic Possibilities for our Grandchildren” (1930), Essays in Persuasion. http://www.econ.yale.edu/smith/econ116a/keynes1.pdf 32. Russell Jacoby, Picture Imperfect: Utopian Thought for an Anti-Utopian Age (2005). Also see my last (Dutch) book, De geschiedenis van de vooruitgang (2013), in which I discuss Jacoby’s distinction between the two forms of utopian thought. 33. George Kateb, quoted in: Lyman Tower Sargent, Utopianism.


pages: 279 words: 87,910

How Much Is Enough?: Money and the Good Life by Robert Skidelsky, Edward Skidelsky

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banking crisis, Bertrand Russell: In Praise of Idleness, Bonfire of the Vanities, call centre, David Ricardo: comparative advantage, death of newspapers, financial innovation, Francis Fukuyama: the end of history, full employment, happiness index / gross national happiness, income inequality, income per capita, informal economy, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, lump of labour, market clearing, market fundamentalism, profit motive, purchasing power parity, Ralph Waldo Emerson, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, union organizing, University of East Anglia, wage slave, World Values Survey

Quoted in Robert Skidelsky, John Maynard Keynes: The Economist as Saviour 1920–1937 (London: Macmillan, 1992), pp. 72, 235. 2. For the essay as a whole see John Maynard Keynes, Essays in Persuasion, The Collected Writings of John Maynard Keynes, vol. 9 (Cambridge: Cambridge University Press, 1978), pp. 321–32. It is reprinted from Keynes’s 1931 Essays in Persuasion. For the earlier outings, see Skidelsky, Keynes: The Economist as Saviour, p. 634, n. 53. 3. G. E. Moore, Principia Ethica (Cambridge: Cambridge University Press, 1903), pp. 188–9. 4. A. W. Plumptre, quoted in Skidelsky, Keynes: The Economist as Saviour, p. 237. 5. For a discussion of growth rates in the USA, Europe and the rest of the world, see Fabrizio Zilibotti, “Economic Possibilities for our Grandchildren 75 Years After: A Global Perspective,” in Lorenzo Pecchi and Gustavo Piga (eds.)

Questions of distribution, which lie at the center of modern discussions of justice, while vitally important, are only so to us in the context of the requirements of the good life. Imagine a world in which most people worked only fifteen hours a week. They would be paid as much as, or even more than, they now are, because the fruits of their labor would be distributed more evenly across society. Leisure would occupy far more of their waking hours than work. It was exactly this prospect that the economist John Maynard Keynes conjured up in a little essay published in 1930 called “Economic Possibilities for our Grandchildren.” Its thesis was very simple. As technological progress made possible an increase in the output of goods per hour worked, people would have to work less and less to satisfy their needs, until in the end they would have to work hardly at all. Then, Keynes wrote, “for the first time since his creation man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”

ALSO BY ROBERT SKIDELSKY Keynes: The Return of the Master (2009) John Maynard Keynes 1883–1946: Economist, Philosopher, Statesman (2004) John Maynard Keynes: Fighting for Britain, 1937–1946 (2000) 2002 Arthur Ross Book Award Gold Medal 2001 Lionel Gelber Prize The World After Communism: A Polemic for our Times (1995) Interests and Obsessions: Historical Essays (1993) John Maynard Keynes: The Economist as Saviour, 1920–1937 (1992) John Maynard Keynes: Hopes Betrayed, 1883–1920 (1983) Oswald Mosley (1975) English Progressive Schools (1969) Politicians and the Slump: The Labour Government of 1929–1931 (1967) ALSO BY EDWARD SKIDELSKY Ernst Cassirer: The Last Philosopher of Culture (2009) Copyright © 2012 Robert Skidelsky and Edward Skidelsky Production Editor: Yvonne E.


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Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes by Mark Skousen

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Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, business climate, David Ricardo: comparative advantage, delayed gratification, experimental economics, financial independence, Financial Instability Hypothesis, full employment, Hernando de Soto, housing crisis, Hyman Minsky, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, laissez-faire capitalism, liquidity trap, means of production, microcredit, minimum wage unemployment, open economy, paradox of thrift, price stability, pushing on a string, rent control, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Shiller, rolodex, Ronald Coase, Ronald Reagan, school choice, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, unorthodox policies

No doubt the bold challenges made by Marx and Keynes and their disciples have had a positive effect. They have caused market economists to respond to their deft criticisms and improve the classical model that Adam Smith created. Today the neoclassical market framework is stronger than ever before, and its applications are ubiquitous. In 1930, at the beginning of the Great Depression, John Maynard Keynes wrote an optimistic essay, "Economic Possibilities for Our Grandchildren." After lambasting his disciples who predicted never-ending depression and permanent stagnation, Keynes foresaw a bright future. Goods and services would become so abundant and cheap that leisure would be the greatest challenge. What productive things can be done in one's spare time? According to Keynes, capital would become so inexpensive that interest rates might fall to zero.

Columbia professor Johr Austrian Eugen Bohm-Bawerk (1851- (1847-1938) countered l\ 1914) was the first economist to critique tation theory of labor with Marxist theory of capitalism. productivity theory. Yale Professor Irving Fi Cambridge professor Alfred Marshall 1947) created the first p (1842-1924) helped transform eco- and developed the qu£ T H E G E N E R A L T H E O R Y OF E M P L O Y M E N T I N T E R E S T A N D M O N E Y JOHN MAYNARD KEYNES MACMILLAN AND CO.. LIMITED ST. MARTIN'S STREET. LONDON 1936 John Maynard Keynes ( 1 8 8 3 - 1 9 4 6 ) , B r i t i s h e c o n o m i s t and s t a t e s m a n , published his influential General Theory in 1936: "I believe myself to be writing a book which will largely revolutionise the way the world thinks about economic problems." Keynes was a financial wizard who made Keynes shocked his Bloom Keynes, meeting Harry Dexter W h i t e MIT Professor Paul Anthony at Bretton Woods, New Hampshire, in ( 1 9 1 5 - ) and his p o p u l a r 1944, helped frame the post-war inter-Economics (1948), made Ke national e c o n o m i c s y s t e m based on the standard theory in the p fixed exchange rates and the creation of riod.

A Tract on Monetary Reform. London: Macmillan. . 1930. A Treatise on Money. 2 vols. London: Macmillan. . 1951 [1931]. Essays in Persuasion. New York: W.W. Norton. . 1963 [1930]. Essays in Biography. New York: W.W. Norton. . 1971. Activities 1906-1914: India and Cambridge. The Collected Works of John Maynard Keynes. Vol. 15. London: Macmillan. . 1973a [1936]. The General Theory of Employment, Interest and Money. London: Macmillan. . 1973b. The General Theory and After, Part I, Preparation. The Collected Works of John Maynard Keynes. Vol. 13, ed. by Donald Moggridge. London: Macmillan. Klamer, Arjo, and David Colander. 1990. The Making of an Economist. Boulder, CO: Westview. Knight, Frank H. 1959. "Review of Ricardian Economics." Southern Journal of Economics 25, 3 (January): 363-65. . 1982 [1947]. Freedom and Reform.


pages: 632 words: 159,454

War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt by Kwasi Kwarteng

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accounting loophole / creative accounting, anti-communist, Asian financial crisis, asset-backed security, Atahualpa, balance sheet recession, bank run, banking crisis, Big bang: deregulation of the City of London, Bretton Woods, British Empire, California gold rush, capital controls, Carmen Reinhart, central bank independence, centre right, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency manipulation / currency intervention, Deng Xiaoping, discovery of the americas, Etonian, eurozone crisis, fiat currency, financial innovation, floating exchange rates, Francisco Pizarro, full employment, German hyperinflation, hiring and firing, income inequality, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, market bubble, money: store of value / unit of account / medium of exchange, moral hazard, new economy, oil shock, Plutocrats, plutocrats, Ponzi scheme, price mechanism, quantitative easing, rolodex, Ronald Reagan, South Sea Bubble, the market place, The Wealth of Nations by Adam Smith, too big to fail, War on Poverty, Yom Kippur War

, Federal Reserve Bank of Cleveland, Cleveland, OH, 1999, p. 1. 44Jean Bodin, Response to the Paradoxes of Malestroit, trans. and ed. Henry Tudor and R. W. Dyson, Bristol, 1997 (1st edn 1568), pp. 59–60. 45Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, London, 2007 (1st edn 1776), p. 124. 46John Maynard Keynes, ‘Economic Possibilities for our Grandchildren’, in Essays in Persuasion, London, 1972 (1st edn 1931), p. 323. 47John Maynard Keynes, A Treatise on Money, 2 vols, London, 1930, vol. 2, pp. 155, 163. 48Ibid., pp. 153, 161. 49John Maynard Keynes, ‘Social Consequences of Changes in the Value of Money’ (1923), in Essays in Persuasion, pp. 67–8. Chapter 2: Rival Nations: Britain and France 1P. G. M. Dickson, The Financial Revolution in England: A Study in the Development of Public Credit, London, 1967, p. 7. 2C.

Williamson, ‘The Price of Gold, 1257–2011’, MeasuringWorth, 2012, http://www.measuringworth.com/gold Total world gold stock: ‘Thomson Reuters GFMS Historic Gold Stock’, in James Turk, The Aboveground Gold Stock: Its Importance and Its Size, GoldMoney Foundation, http://www.goldmoney.com/documents/goldmoney-gold-stock.xls Notes Introduction 1John Maynard Keynes, ‘Economic Possibilities for our Grandchildren’, in Essays in Persuasion, London, 1972 (1st edn 1931), p. 323. 2Joseph Schumpeter, The Crisis of the Tax State, Vienna, 1919. 3F. W. Maitland, Domesday Book and Beyond, Cambridge, 1907, p. 9. 4Ian Fleming, Goldfinger, London, 1959. 5Philip Coggan, Paper Promises: Money, Debt and the New World Order, London, 2011, p. 3. 6Carmen M. Reinhart and Kenneth S. Rogoff, This Time is Different: Eight Centuries of Financial Folly, Princeton, 2009. 7B. R. Mitchell, British Historical Statistics, Cambridge, 1988, pp. 601–3. 8Niall Ferguson, The Cash Nexus, London, 2001, p. 126. 9A. J. P. Taylor, The Origins of the Second World War, London, 1961, p. 25. 10John Maynard Keynes, General Theory of Employment, Interest and Money, London, 2007 (1st edn 1936), p. 383. 11Peer Vries, Public Finance in China and Britain in the Long Eighteenth Century, London School of Economics, Working Papers no. 167/12, London, August 2012, p. 17. 12John Kenneth Galbraith, Money: Whence It Came, Where It Went, 2nd edn, London, 1995 (1st edn 1975), pp. 3–4.

Bernstein’s comments were derived from a series of interviews he gave in Washington in November 1983. 6David Rees, Henry Dexter White: A Study in Paradox, London, 1973, p. 137. 7Barry Eichengreen, Globalizing Capital: A History of the International Monetary System, Princeton, 1996, p. 93. 8Clarke, Keynes, pp. 88–9. 9Paul Davidson, John Maynard Keynes, Basingstoke, 2007, p. 149. 10Philip Coggan, Paper Promises: Money, Debt and the New World Order, London, 2011, p. 100. 11Clarke, Keynes, p. 88. 12Barry Eichengreen, Exorbitant Privilege: The Rise and Fall of the Dollar, Oxford, 2011, p. 47. 13DNB, ‘Robert Boothby’. 14Robert Boothby, Goods or Gold? The Meaning of the Bretton Woods Agreement, London, 1944, pp. 4–5. 15Ibid., p. 7. 16John Maynard Keynes, letter to the Economist, 29 July 1944, in Collected Writings, vol. 26, London, 1980, p. 85. 17John Maynard Keynes, speech given in the House of Lords, 23 May 1944, in ibid., pp. 17–18. 18Ibid., p. 19. 19John Maynard Keynes, letter to H. D. White, 24 May 1944, in ibid., p. 27. 20Shirras G. Findlay, ‘The Position and Prospects of Gold’, Economic Journal, vol. 50, no. 198–9 (June–September 1940), pp. 207–23, at pp. 207–8. 21R.


pages: 322 words: 77,341

I.O.U.: Why Everyone Owes Everyone and No One Can Pay by John Lanchester

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asset-backed security, bank run, banking crisis, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black-Scholes formula, Celtic Tiger, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, George Akerlof, greed is good, hindsight bias, housing crisis, Hyman Minsky, interest rate swap, invisible hand, Jane Jacobs, John Maynard Keynes: Economic Possibilities for our Grandchildren, laissez-faire capitalism, liquidity trap, Long Term Capital Management, loss aversion, Martin Wolf, mortgage debt, mortgage tax deduction, mutually assured destruction, new economy, Nick Leeson, Northern Rock, Own Your Own Home, Ponzi scheme, quantitative easing, reserve currency, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, South Sea Bubble, statistical model, The Great Moderation, the payments system, too big to fail, tulip mania, value at risk

Morris, The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash. 3 There’s a chilling account of it in his book The Ascent of Money, chap. 6. 4 www.fsa.gov.uk/pubs/other/turner_review.pdf. 5 Posner, A Failure of Capitalism, xii. 6 Quoted by Gillian Tett in Fool’s Gold, p. 97. 7 Simon Johnson, “The Quiet Coup,” op cit. 8 Paul Krugman, “Out of the Shadows,” The New York Times, June 18, 2009 9 Financial Times, June 12, 2009 10 You can, amazingly, listen to this meeting in its entirety at The New York Times’s website. 11 “The Reckoning,” The New York Times, October 3, 2008. 12 Michael Lewis and David Einhorn, “The End of the Financial World as We Know It,” The New York Times, January 4, 2009. 13 Testimony to the House financial services committee. 4 February 2009. 14 Richard Posner, A Failure of Capitalism, p. 268. 15 “AIG Trail Leads to London Casino,” The Daily Telegraph, October 18, 2008. 16 Quoted by Richard Bitner in Confessions of a Subprime Lender: An Insider’s Tale of Greed, Fraud, and Ignorance, p. 117. 17 Ibid., p. 112. 18 Charles R. Morris, Trillion Dollar Meltdown, p. 77. CHAPTER SEVEN: THE BILL 1 John Maynard Keynes, “Economic Possibilities for Our Grandchildren.” From Essays in Persuasion. Volume IX of the Collected Writings of John Maynard Keynes, pp. 324 et seq. 2 Meena Thiruvengadam, U.S. Bailouts So Far Total $2.98 Trillion, Official Says The Wall Street Journal, March 31, 2009. 3 www.ritholtz.com/blog/2008/11/big-bailouts-bigger-bucks. 4 Interview with Bloomberg Television, 20 January 2009. INDEX accounting, 26, 28, 106, 231 Against the Gods (Bernstein), 149 AIG: bailout of, 39, 76–78 in CDS market, 75–78, 201 aircraft industry, 227 Alternative Mortgage Transaction Parity Act (AMPTA), 100 Animal Spirits (Akerlof and Shiller), 145n Annie Hall, 1–2 Apple, 34 appraisals, 128 arbitrage, 54–55 arms manufacturing, 200 Arthur Andersen, 106 Asano, Yukio, 18 asset price bubble, 176–77 assets, 10, 25–42, 106, 176 in balance sheets, 25–34, 37–38, 70, 120 banks and, 25, 32–42, 70, 74, 120, 194 of businesses, 29–30, 34 derivatives and, 38, 48–50, 52, 57–58, 120, 205–6 housing and, 96, 126, 130, 176–77 intangible, 30 leverage and, 35–36, 41 liquidity and, 28–29 risk and, 37, 146, 165 toxic, 37–38, 42, 75, 165, 189 ATMs, 7–9, 176 Austen Riggs Center, 140–41 automobiles, automobile industry, 1–2, 24, 40, 134, 197, 222 in balance sheets, 27–28 stocks in, 148–49 balance sheets, 25–35 banks and, 25–34, 37–39, 41–42, 70, 120, 205–7 of businesses, 29–34, 37, 106 of individuals, 27–29, 35 Baltimore, Md., 83–86, 127, 129, 163 Bankers Trust, 150 banking, bankers, banks, 19–22, 24–43, 169, 171–78, 216–20, 222–30 assets and, 25, 32–42, 70, 74, 120, 194 ATMs of, 7–9, 176 bailouts of, 32, 39–41, 77, 120, 204, 212, 219–20, 225–26 balance sheets and, 25–34, 37–39, 41–42, 70, 120, 205–7 of Canada, 116, 211–12 central, 36, 40, 52, 92, 102, 142, 167, 172–78, 180–81, 183, 189, 194–95, 206 check-clearing system of, 33 collapses of, 5, 39, 75, 78, 94, 180, 194, 204, 206, 225 credit and, 37, 41, 43, 209, 211 customer deposits of, 25, 27, 31–34, 74, 187, 224 derivatives and, 20, 51–54, 57–58, 63–71, 74–75, 77, 79, 115–17, 120–21, 132, 183–84, 200, 205–6, 211 economic centrality of, 24–26, 41 of Europe, 8, 35–36, 40, 51, 77, 83, 92, 120, 227 financial industry’s ascent and, 20–21 Glass-Steagall Act on, 64–65, 187–88, 200 holding, 40 housing and, 83–84, 86, 89, 91–95, 102, 126–27, 129–31, 174, 177, 194, 216–17 Iceland’s economic crisis and, 9–12, 24, 40 incentives and bonuses of, 19, 37, 76–78, 206–8, 224, 228 interest rates and, 24, 172–78 investment, 19, 39–40, 65, 77–78, 186–87, 163, 190, 200, 224–25, 227–28 lending of, 22, 24, 27, 33–36, 41–42, 58–60, 67, 69–70, 74, 83–84, 91–94, 102, 117, 127, 129–30, 143, 146, 165, 187, 216–17, 229 leverage of, 35–36, 41–42, 70, 190 mathematicization of, 53–54 narrow, 224–25 nationalization of, 39–40, 228–30 nonbank, 22, 201, 205, 224 paying the bill and, 219–20, 223 regulation and, 21, 33, 180–91, 194–96, 199–200, 202, 204–5, 208, 211, 223–27 risk and, 19, 34–37, 41, 133, 135–36, 143, 150–54, 156–57, 160, 165–66, 174, 187–88, 191–95, 202, 204–7, 216, 224, 226, 228, 230 of U.K., 5, 11, 32–36, 38–40, 51–54, 76–77, 89, 94, 120, 146, 180, 194–96, 199, 202, 204–6, 211–12, 217, 227–28 of U.S., 36–37, 39–40, 43, 63–71, 73, 75, 77–78, 84, 116, 120–21, 127, 150, 152, 163, 183, 185, 190, 195, 204, 211–12, 219–20, 225, 227–28 wish list of, 186–87, 195 zombie, 43, 229 banking-and-credit crisis, 192–96, 215–21, 225–28, 231 aftermath of, 215–17 bases of, 201–2 causes of, 182–83, 186, 196, 205–7, 217 economists on, 192–94 failure in forecasting of, 193–94, 211 journalists on, 192–93 profits in, 78, 227–28 and regulation, 182–83, 194–96, 202, 205, 211, 225–26 and risk, 192–95, 202, 205–7, 216 Bank of America, 39 Bank of England, 36, 52, 102, 167, 177–78, 206 and banking-and-credit crisis, 194–95 and interest rates, 178, 180 and regulation, 180–81, 195 Barclays, Barclays Bank, 11, 35–36, 77, 146, 227 Baring, Peter, 52 Barings Bank, 51–52, 54, 180 Barofsky, Neil, 219 Basel rules, 154, 208 derivatives and, 67–68, 120, 183 Bear Stearns, 39, 190 Belair-Edison Community Association, 127 Belgium, 40 Bell, Madison Smartt, 89 bell curve, 154–56, 160 Berlin Wall, fall of, 12, 16, 18, 23 Bernstein, Peter, 149 “Big Bang,” 22, 195–96, 200–201 Bitner, Richard, 124–27, 131 Black, Conrad, 59 Black, Fischer, 45, 47–48, 147 Black-Scholes formula, 48, 54, 116–17, 151 Blank, Victor, 40 BNP Paribas, 36, 77 bond market, bonds, 20, 22–23, 58–59, 73, 107–12 Broad Index Secured Trust Offering (BISTRO), 70–71, 121 corporate, 154, 210 derivatives and, 58, 63–67, 112, 114, 118–19, 210–11 of governments, 29–30, 61–62, 103, 109, 118, 144, 176–77, 208 incentives and, 209–11 investing and, 62–63, 102–3, 107–8, 111, 208–9 investment grade, 62 junk, 42, 62, 208 prices and, 61, 63, 102–3, 108–10, 144 in raising capital, 59, 61–63, 102–3 ratings of, 61–63, 114, 118–19, 208–11 risk and, 61–63, 103, 118, 144, 154, 208 Russia’s default and, 55–56, 162, 164–65 bonuses, 19, 37, 76–78, 207, 218, 224, 228 Bradford & Bingley, 40 Bragason, Valgarður, 10–11 British Airways, 199 Brown, Gordon, 12, 33, 88, 178 Buffett, Warren, 150 credit rating of, 123, 125 derivatives and, 56–57, 78 Bush, George W., 2, 78, 99, 142, 203, 219 regulation and, 19–20, 191, 195 businesses, 15, 58–63, 105–6, 187, 198–99, 221 balance sheets of, 29–34, 37, 106 banks and, 195, 229 bonds and, 59, 61–63, 102–3, 154, 208, 210 derivatives and, 112, 114, 153 lending to, 41–42, 60, 108 offshore, 70, 72 regulation and, 183, 195 risk and, 37, 145, 150–51, 153–54, 195 Canada, banks of, 116, 211–12 capitalism, 12–19, 116 banks and, 19, 25, 182–83, 202, 218, 228, 231 communism vs., 12, 16–17 failure of, 228, 230 free-market, 13–19, 21, 23–24, 96, 105n, 143, 173–75, 184, 192, 196, 202–4, 230–32 in Hong Kong, 13–14 laissez-faire, 142–43, 173, 182–83, 189, 191, 195–96, 202, 211–12 Marxist analysis of, 15–16 regulation and, 182, 192 as secular religion, 202–4 success and spread of, 14–15, 18–19, 21, 23–24 Carville, James, 22–23 cash ratios, 25 Cassano, Joseph, 201 check-clearing systems, 33 Chicago Board Options Exchange, 48 Chicago Mercantile Exchange, 47 China, People’s Republic of, 115, 124 economic boom in, 3–4, 14, 108–9 Hong Kong and, 13–14 U.S. investment of, 109, 176–77 Cisneros, Henry, 99 Citigroup, 120, 163, 219–20, 227 Citron, Robert, 51 City of London, 32, 195–97, 199–202, 217–18 and banking-and-credit crisis, 205–6 and Big Bang, 195–96, 200–201 derivatives and, 56–57, 79, 201 and financial vs. industrial interests, 197, 199 ideological hegemony of, 21–23 Wimbledonization of, 195–96 Civil Justice Network, 85, 128–29, 131 Cleveland, Ohio, 83 Clinton, Bill, 22, 43, 107 housing and, 99–100 regulation and, 19–20 Coggan, Philip, 25 cognitive illusions, 141–42 Cold War, 201–2 end of, 16, 18, 21, 164 collateralized debt obligations (CDOs), 183, 201, 210–12 bonds and, 112, 114, 118–19, 210–11 of CDOs, 119, 206 Gaussian copula function and, 116–17, 157–60, 163 mathematics and, 115–16 mortgages and, 75–76, 112–22, 132, 157, 159–60, 172, 210 risk and, 114–15, 117–22, 158–60, 163, 167, 212 securitization and, 113–14, 11719, 122 shortage of borrowers for, 121–22 tranching and, 117–18, 122 commodities, 227 derivatives and, 47, 49n, 51–52, 184 prices of, 3–4, 107–8, 148–49 Commodity Futures Modernization Act, 184 communism, 12, 16–18, 23 competition, 58, 96, 105n, 203, 226–27 regulation and, 187–88, 226 Confessions of a Subprime Lender (Bitner), 124, 127 Congress, U.S., 77, 100, 204 regulation and, 184–86 risk and, 142–43, 164–66 conservatism, housing and, 98 correlation, correlations: CDOs and, 115–16, 158, 167 risk and, 74, 148–49, 158–59, 165, 167 credit, 8, 169–73 banks and, 24–26, 37, 41, 43, 209, 211 bubbles in, 42, 60, 109, 170, 176, 216–17, 221, 223 CDOs and, 114–15, 119–20, 172 crunch in, 37, 41, 43, 54n, 77, 84–86, 92–93, 94n, 136, 163–64, 169, 171–73, 182, 193, 201–2, 215–16, 218–19 histories and ratings on, 85, 100, 123–26, 158, 163, 165, 208–11 housing and, 84–86, 92–93, 94n, 100, 109, 112, 125, 129–30, 132, 163–64 Iceland’s economic crisis and, 10–12 interest rates and, 172–73, 175, 209 risk and, 136, 158, 165 see also banking-and-credit crisis Crédit Agricole, 36 credit cards, 27, 217 credit ratings and, 123–24 Iceland’s economic crisis and, 9, 11–12 risk and, 158–59, 163 credit default swaps (CDSs), 20, 63, 65–80, 117, 158–59, 183–86 AIG and, 75–78, 201 attractive aspects of, 72–74 examples of, 57–58 Exxon deal and, 67–70, 121 over-the-counter trading of, 184–85, 201 regulation and, 68, 70, 73, 184–86 risk and, 58, 66–70, 72–75, 78–80, 212 securitized bundles of, 69–70, 74 streamlining and industrializing of, 68–69 unfortunate side effect of, 74–75 Credit Suisse, 36, 227 Cuomo, Andrew, 99 Cutter family, 126–27 Darling, Alistair, 172, 220 debt, debts, 27–29, 34, 59–63, 118, 172n, 179, 216, 229 in balance sheets, 27–28, 30–31 benefits of, 59–61 bonds and, 59, 61–63, 208, 210 credit and, 123–26, 221 derivatives and, 52, 67, 69–72 housing and, 93, 100, 132, 176 paying the bill and, 220–22 personal, 221–22 regulation and, 181, 190 Russian default on, 55–56, 162, 164–65 see also collateralized debt obligations default, defaults, default rates, 162–65 CDOs and, 114–15 on mortgages, 159–60, 163, 165, 229 risk and, 154, 159–60, 163 of Russia, 55–56, 162, 164–65 see also credit default swaps Demchak, William, 69 democracy, democracies, 15–18, 108–9, 179, 213 free-market capitalism and, 15, 17, 23 housing and, 87, 98 DePastina, Anthony, 85 Depository Institutions Deregulation and Monetary Control Act (DIDMCA), 100 deregulation, see regulation, deregulation derivatives, 45–58, 63–80, 86, 210–12 in balance sheets, 30–31, 70 banks and, 20, 51–54, 57–58, 63–71, 74–75, 77, 79, 115–17, 120–21, 132, 183–84, 200, 205–6, 211 Black-Scholes formula and, 48, 54, 116–17, 151 bonds and, 58, 63–67, 112, 114, 118–19, 210–11 Buffett and, 56–57, 78 and City of London, 56–57, 79, 201 complexity of, 52–54, 56–57 Enron and, 56, 105–6, 185 futures and, 46–47, 49n, 51–52, 54, 184 Greenspan on, 166, 183–84 in history, 45–48, 147 mathematics and, 47–48, 52–54, 115–17, 166 offshore companies and, 70, 72 options and, 46–47, 50–52, 151, 174, 184 over-the-counter trading of, 184–85, 201, 205–6 prices and, 38, 46–52, 54, 56, 75, 158–59, 166 regulation and, 68, 70, 73, 153, 183–86, 200–201 risk and, 46–47, 49–52, 54–55, 57–58, 66–75, 78–80, 114–15, 117–22, 151, 153, 158–60, 163, 166–67, 184–85, 205, 212 size of market in, 48, 56, 80, 117, 201 see also collateralized debt obligations; credit default swaps Detroit, Mich., 81–82 Deutsche Bank, 36, 77, 83, 227 diversification, 146–48, 177 dividends, 101, 147–48 Doctorow, E.

Almost everyone in the West lives a quality and length of life which would have been the envy of a pharaoh or a Roman emperor and which most of our ancestors, and most of the populations of the rest of the world, would swap for their own prospects in an eye blink. It’s an amazing state of affairs—and one which, broadly speaking, was predicted by the greatest economist who ever lived, John Maynard Keynes, in an essay he wrote in 1930, “Economic Possibilities for our Grandchildren.” He was writing in the immediate aftermath of the great Crash (which incidentally, in his capacity as an investor, cost him a packet), but he wasn’t pessimistic; indeed, he thought the general contemporary climate of pessimism was overdone. Britain had got steadily richer for decades and was going to continue to do so. Keynes, entertainingly, pinpointed the initial cause of British prosperity as Sir Francis Drake’s theft of gold from the Spanish in 1580.

., 77, 100, 204 regulation and, 184–86 risk and, 142–43, 164–66 conservatism, housing and, 98 correlation, correlations: CDOs and, 115–16, 158, 167 risk and, 74, 148–49, 158–59, 165, 167 credit, 8, 169–73 banks and, 24–26, 37, 41, 43, 209, 211 bubbles in, 42, 60, 109, 170, 176, 216–17, 221, 223 CDOs and, 114–15, 119–20, 172 crunch in, 37, 41, 43, 54n, 77, 84–86, 92–93, 94n, 136, 163–64, 169, 171–73, 182, 193, 201–2, 215–16, 218–19 histories and ratings on, 85, 100, 123–26, 158, 163, 165, 208–11 housing and, 84–86, 92–93, 94n, 100, 109, 112, 125, 129–30, 132, 163–64 Iceland’s economic crisis and, 10–12 interest rates and, 172–73, 175, 209 risk and, 136, 158, 165 see also banking-and-credit crisis Crédit Agricole, 36 credit cards, 27, 217 credit ratings and, 123–24 Iceland’s economic crisis and, 9, 11–12 risk and, 158–59, 163 credit default swaps (CDSs), 20, 63, 65–80, 117, 158–59, 183–86 AIG and, 75–78, 201 attractive aspects of, 72–74 examples of, 57–58 Exxon deal and, 67–70, 121 over-the-counter trading of, 184–85, 201 regulation and, 68, 70, 73, 184–86 risk and, 58, 66–70, 72–75, 78–80, 212 securitized bundles of, 69–70, 74 streamlining and industrializing of, 68–69 unfortunate side effect of, 74–75 Credit Suisse, 36, 227 Cuomo, Andrew, 99 Cutter family, 126–27 Darling, Alistair, 172, 220 debt, debts, 27–29, 34, 59–63, 118, 172n, 179, 216, 229 in balance sheets, 27–28, 30–31 benefits of, 59–61 bonds and, 59, 61–63, 208, 210 credit and, 123–26, 221 derivatives and, 52, 67, 69–72 housing and, 93, 100, 132, 176 paying the bill and, 220–22 personal, 221–22 regulation and, 181, 190 Russian default on, 55–56, 162, 164–65 see also collateralized debt obligations default, defaults, default rates, 162–65 CDOs and, 114–15 on mortgages, 159–60, 163, 165, 229 risk and, 154, 159–60, 163 of Russia, 55–56, 162, 164–65 see also credit default swaps Demchak, William, 69 democracy, democracies, 15–18, 108–9, 179, 213 free-market capitalism and, 15, 17, 23 housing and, 87, 98 DePastina, Anthony, 85 Depository Institutions Deregulation and Monetary Control Act (DIDMCA), 100 deregulation, see regulation, deregulation derivatives, 45–58, 63–80, 86, 210–12 in balance sheets, 30–31, 70 banks and, 20, 51–54, 57–58, 63–71, 74–75, 77, 79, 115–17, 120–21, 132, 183–84, 200, 205–6, 211 Black-Scholes formula and, 48, 54, 116–17, 151 bonds and, 58, 63–67, 112, 114, 118–19, 210–11 Buffett and, 56–57, 78 and City of London, 56–57, 79, 201 complexity of, 52–54, 56–57 Enron and, 56, 105–6, 185 futures and, 46–47, 49n, 51–52, 54, 184 Greenspan on, 166, 183–84 in history, 45–48, 147 mathematics and, 47–48, 52–54, 115–17, 166 offshore companies and, 70, 72 options and, 46–47, 50–52, 151, 174, 184 over-the-counter trading of, 184–85, 201, 205–6 prices and, 38, 46–52, 54, 56, 75, 158–59, 166 regulation and, 68, 70, 73, 153, 183–86, 200–201 risk and, 46–47, 49–52, 54–55, 57–58, 66–75, 78–80, 114–15, 117–22, 151, 153, 158–60, 163, 166–67, 184–85, 205, 212 size of market in, 48, 56, 80, 117, 201 see also collateralized debt obligations; credit default swaps Detroit, Mich., 81–82 Deutsche Bank, 36, 77, 83, 227 diversification, 146–48, 177 dividends, 101, 147–48 Doctorow, E. L., 64 Dorgan, Byron, 188 dot-com bust, 3, 104–7, 109, 142, 175 Dow Jones Industrial Average, 152 Drake, Sir Francis, 214 Dunfermline Building Society, 40 Dutch tulip bubble, 47, 104, 136 Ebbers, Bernie, 105 “Economic Possibilities for Our Grandchildren” (Keynes), 213–15 economics, economy, economists: booms in, 2–4, 14, 16, 23, 81, 108–9, 214, 216 contractions in, 170–71, 222–23 crises in, 4–6, 9–12, 16, 23–24, 39–40, 57, 73, 76–79, 142, 150–52, 160–62, 164–67, 170–72, 175–76, 182–83, 185–87, 189, 191–96, 199, 201–2, 205–7, 211, 213, 215–21, 223, 225–28, 230–31 ignorance of, 5–6, 23 liberalism in, 136 rationalism in, 136–38 Economist, The, 3, 170, 193, 202–3 education, 4–5, 9, 13, 17, 21, 198, 200, 217, 222 efficient portfolio, 149 Elizabeth I, Queen of Great Britain, 214 Ellis, William Webb, 201 employment, employees, 8, 28, 40, 51, 171, 179, 203–4, 217 banks and, 206, 229 economic contractions and, 222–23 Enron and, 106, 226 and financial vs. industrial interests, 197–98 free-market capitalism and, 15–17, 19 housing and, 86, 88–89, 94, 96–97, 99–100, 126–27, 131, 163 interest rates and, 102, 172–73, 221 Marxist analysis of, 15–16 paying the bill and, 221–23 Enron: collapse of, 105–7, 175, 226, 231 derivatives and, 56, 105–6, 185 equality, inequality, 15–17, 21, 164 in free-market capitalism, 15–16, 23 in mortgage market, 99–101 equity, 27–31, 34–37, 41–42, 55, 190 leverage and, 35, 41, 60 negative, 28–29, 42 return on (ROE), 36–37 selling of, 58–59 Europe, European Union, 177, 180, 191 banks of, 8, 35–36, 40, 51, 77, 83, 92, 120, 227 comparisons between U.S. and, 17 contracting economies in, 222–23 housing in, 40, 83–84, 91–95, 110 European Bank for Reconstruction and Development (EBRD), 68–70 Exxon, 67–70, 121 Failure of Capitalism, A (Posner), 174 fair value theory, 147–48 Fannie Mae, 39, 95, 99–100, 113, 124 Federal Reserve (Fed), 40, 102, 142, 173–74, 183, 189 Ferguson, Niall, 177 FICO scores, 123–24 films, film industry, 1–2, 198–99 finance, financial industry: favored treatment of, 19–21 gap between world of general public and, 5–6 industrial interests vs., 196–99 power of, 164 Financial Services Authority (FSA), 180–82, 194–95, 201 Financial Times, 193, 227 Flanders, Stephanie, 37 Florida, 10, 59, 83, 115 Fooled by Randomness (Taleb), 53 Fool’s Gold (Tett), 121 foreclosure rescue, 129–31 Fortis, 36, 40 Fortune, 105 4:15 report, 152 France, French, 36, 156, 229 housing in, 92–94 Nazi occupation of, 138–39 Freddie Mac, 39, 95, 99–100, 113, 124 Friedman, Thomas, 208 front running, 192 Fuld, Richard, 204, 206 funny smells, 169–73, 208, 211 and banking-and-credit crisis, 194, 201 credit crunch and, 169, 171–72 Galway’s water and, 169–71 Greenspan and, 173, 176 regulation and, 169, 192, 201, 211 futures, 46–47, 49n, 184 how they work, 47, 51–52 losing money on, 51–52, 54 Galway, 169–71 Garn–St.


pages: 151 words: 38,153

With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don't Pay Enough by Peter Barnes

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Alfred Russel Wallace, banks create money, Buckminster Fuller, collective bargaining, David Ricardo: comparative advantage, declining real wages, deindustrialization, diversified portfolio, en.wikipedia.org, Fractional reserve banking, full employment, hydraulic fracturing, income inequality, Jaron Lanier, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, land reform, Mark Zuckerberg, Network effects, oil shale / tar sands, profit maximization, quantitative easing, rent-seeking, Ronald Coase, Ronald Reagan, Silicon Valley, sovereign wealth fund, the map is not the territory, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Tyler Cowen: Great Stagnation, Upton Sinclair, winner-take-all economy

On the upside, everyone will enjoy free Wi-Fi and limitless entertainment.23 Other plausible futures are even grimmer: climate mayhem, financial collapse, a surveillance state. A strong case can be made that any of these futures is likelier than a middle-class renaissance. Yet it’s too soon to throw in the towel. In the darkest days of the Great Depression, with Hitler rising in Germany, John Maynard Keynes wrote an essay called Economic Possibilities for Our Grandchildren. Reading it now, in the lifetime of those grandchildren, I’m surprised not only by how hopeful Keynes was but also by how prescient. Keynes predicted that, barring all-out war, “the standard of life in progressive countries … will be between four and eight times as high as it is today,” and he was right, even with an all-out war. He foresaw that “there will be ever larger … groups of people from whom problems of economic necessity have been practically removed,” and he was right about that as well.

See also Alaska model cap-and-dividend system, 105–107 carbon taxing and, 115 from co-owned wealth, 3–4, 86 from electromagnetic spectrum, 145 Europe, plans in, 129–130 from intellectual property rights, 144 offshoots and, 75 perceptual advantage of, 77 potential dividends and co-owned wealth, 139–146 practical application of, 87–89 sources of money for, 93–94 for sustaining middle class, 75–76 universal dividend systems, 73–74 wind energy dividends in Oregon, 128 Dobbs, Lou, 86–87, 125 Dole, Bob, 79 E Earned Income Tax Credit (EITC), 81 Earth Day, 134 “The Economic Equivalent of War” (Barnes), 34–35 Economic Possibilities for Our Grandchildren (Keynes), 135–136 Economic stimulus package, 37 The Economist on robots, 26 Education, 21, 24–25 80/20 rule, 30–31 Eldredge, Niles, 120 El Paso Natural Gas, 102 Employee stock ownership plans (ESOPs), 81–82 Employment. See Jobs; Unemployment Energy and Commerce Committee, 109 England, textile machinery in, 18 Environmental Defense Fund, 99 Environmental movement, 134–135 Epstein, Joshua, 31–33 Equity leverage, 47–48 European carbon trading system, 99, 104–105 European Union (EU) universal guaranteed income ideas in, 129–130 value added taxes (VATs) and, 140–141 Euthanasia of the rentier, 56 Everyone-gets-a-share capitalism, 3–4, 42, 126 Externalities, 63–64, 98–99 Extracted rent, 43, 45–57 recycled rent compared, 60 Extreme inequality, 33–34 ExxonMobil, 102 F Facebook, 48 Fair market value, 52 Fallacy of composition, 24–25 Family Assistance Plan, 80–81 Federal Reserve on new money creation, 144 quantitative easing, 22 shared market economy and, 83 FedEx, 26 Fee and dividend program, 115 Financial derivatives, global value of, 57 Financial infrastructure.

Further, it not only adds no value to the economy but “distorts resource allocation and makes the economy weaker.”14 And finally: “There’s no begrudging the wealth accrued by those who have transformed our economy—the inventors of the computer, the pioneers of biotechnology. But, for the most part, these are not the people at the top of our economic pyramid. Rather, to a too large extent, it’s people who have excelled at rent seeking in one form or another.” EIGHTY YEARS AGO, JOHN MAYNARD KEYNES looked forward to what he called “the euthanasia of the rentier.” That day would come when the supply of capital was so large, relative to the demand for it, that the return to capital “would have to cover little more than [its] exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgment.” At that point, Keynes opined, “the intelligence and determination and executive skill of the financier will be harnessed to the service of the community on reasonable terms of reward.”15 Alas, it was not to be.

When the Money Runs Out: The End of Western Affluence by Stephen D. King

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Albert Einstein, Asian financial crisis, asset-backed security, banking crisis, Basel III, Berlin Wall, Bernie Madoff, British Empire, capital controls, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, congestion charging, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-subsidies, debt deflation, Deng Xiaoping, Diane Coyle, endowment effect, eurozone crisis, Fall of the Berlin Wall, financial innovation, financial repression, floating exchange rates, full employment, George Akerlof, German hyperinflation, Hyman Minsky, income inequality, income per capita, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, London Interbank Offered Rate, loss aversion, market clearing, moral hazard, mortgage debt, new economy, New Urbanism, Nick Leeson, Northern Rock, Occupy movement, oil shale / tar sands, oil shock, price mechanism, price stability, quantitative easing, railway mania, rent-seeking, reserve currency, rising living standards, South Sea Bubble, sovereign wealth fund, technology bubble, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, trickle-down economics, Washington Consensus, women in the workforce, working-age population

, John F. Kennedy School of Government, Harvard University, Cambridge, MA, Feb. 2001 Keynes, J. M. ‘The Economic Consequences of Mr Churchill’, in Essays in Persuasion, Norton, New York, 1963 275 4099.indd 275 29/03/13 2:23 PM When the Money Runs Out Keynes, J. M. ‘Economic Possibilities for Our Grandchildren’, in Essays in Persuasion, Norton, New York, 1963 Keynes, J. M. ‘The Economy Bill (Sept. 19, 1931)’, in Essays in Persuasion, Norton, New York, 1963 Keynes, J. M. ‘Einstein’, in The Collected Works of John Maynard Keynes, vol. 28: Social, Political and Literary Writings, Macmillan, London, 1982 Keynes, J. M. Essays in Persuasion, Norton, New York, 1963 Keynes, J. M. The General Theory of Employment, Interest and Money, Macmillan, London, 1936 Keynes, J. M. How to Pay for the War: A Radical Plan for the Chancellor of the Exchequer, Macmillan, London, 1940 King, M.

And that history should cover not just the obvious episodes – the Great Depression, the inflation of the 1970s – but also those many occasions during which nations tried to live beyond their means, pretending that it would all turn out all right on the night when, in reality, both economic and political disaster threatened. Only by studying these events can economists really claim to have anything useful to say about the challenges we face today and, doubtless, will face tomorrow. ECONOMIC CHALLENGES FOR OUR GRANDCHILDREN In 1930, Keynes published a short essay titled ‘Economic Possibilities for our Grandchildren’.11 Even as the world economy was heading into depression, Keynes was confident that, in decades to come, incomes would rise rapidly: It is common to hear people say how the epoch of enormous economic progress . . . is over; that the rapid improvement in the standard of life is now going to slow down . . .; that a decline in prosperity is more likely than an improvement . . .

‘Forecasting Recessions under the Gramm-­Rudman-­Hollings Law’, NBER Working Paper No. 2066, Nov. 1986 278 4099.indd 278 29/03/13 2:23 PM INDEX Africa 19 ageing populations 78, 88, 250 age-related expenditure 48 generational divide 171–4, 241, 243–5 Germany 136 Japan 23, 25 AIG 30 Akerlof, George 123–4 American War of Independence 154 ancien régime and the French Revolution 151–7 Angola 19, 82 Anwar Ibrahim 200 Arab Spring 160 Argentina 13–19, 24–6, 39, 42, 161 Arizona Support Our Law Enforcement and Safe Neighbourhoods Act (SB 1070) 192 Armstrong, Neil 9–10, 35 Arrow, Kenneth J. 132–3 Asian crisis 192–6 recovery from 204–5, 206, 208–9 asset prices 62–3 asset-backed securities 73 Audit Commission 173–4 austerity 67–8, 111, 205, 226, 242 and political extremism 227 Statute of Labourers 211 versus stimulus 4 wartime 114, 143 see also Snowden’s budget Australia 15, 16, 117, 187 Austria 225 baby boomers 1, 7, 243 bailouts 61–2, 241 Balls, Ed 101 Bank Negara 199 Bank of England 33, 61, 90–2 economic growth forecasts 74 interest rates 71, 102 and Libor 126 Bank of Japan 21 banking free 255, 257 and protectionism 215 union (eurozone) 256 banks 125–31, 252–7 bankers’ rewards 48–9 failure 30–1, 255 liquidity buffers 84, 90 mortgage loan-to-value ratios 51–2 regulatory uncertainty 251–2 and savers 136 see also central banks Barclays Bank plc 126, 127–8 279 4099.indd 279 29/03/13 2:23 PM When the Money Runs Out Basel III regulations 83 Bean, Charlie 63–5, 75 Bear Stearns 30 Belgium 184 Ben Ali, Zine al-Abidine 160 Benedetti, Count 182 benefits 47, 203–4 see also social spending Bernanke, Ben 4, 21–2 Beveridge, William 44–5 bimetallism 184–5 Bismarck, Otto von 182 Black Death 209–10, 213 blame culture 108, 161, 189, 200–1, 226–7 Blenheim Palace 222–3 bonds 73, 77, 80, 86, 221 borrowers 97, 133–4, 137 borrowing, government borrower of last resort 86–7 heavy 143–4 international 142 and low interest rates 71, 245 and the New Deal 109 to offset private saving 217–18 relative to national income 198, 247 rising 32 see also credit: queues Botswana 19 Brazil 19, 89, 163 Britain see UK (United Kingdom) British Empire 14, 15, 16 Bryan, William Jennings 187 budget deficits 58, 69, 79, 110, 117 France 54 Germany 54 Spain 54 UK 52, 54, 66–7 US 53–4, 66–7, 118 Buenos Aires 15 Business Week 29–30 Buxton, Thomas Fowell 128 California 173 Calonne, Charles-Alexandre de 154–5 Canada 15, 16 capital adequacy ratios 256 controls 16, 199–200, 201, 234 flight and the euro 191 foreign 198, 202 immobile 250–2 markets 31, 133 and the rise of living standards 180 Carr, Jimmy 148 Case-Shiller house price index 63 Catalonia 153 Central African Republic 163 central banks and bailouts 241 expansion of remit 86 and government debt 80–1 and illusory wealth 64–5 interest rates 71 and a new monetary framework 245–6 nominal GDP targeting 247–50 and politics 78, 89–90, 91–5 and redistribution 121 see also quantitative easing (QE) Chicago 15 China and commodity prices 77 financial systems 135 and globalization 167 income inequality 160, 163 living standards 27 per capita incomes 251 and regional tensions 228 renminbi currency 177 silver standard 183, 185 trading partners 82 and the US 12, 139 Chinese Exclusion Act 188–9 Chrysi Avgi 227 Churchill, Winston 103 circuit breakers 242, 256 Coinage Act 184–5 Committee on National Expenditure 98–9 commodity prices 77, 109, 116–17 conduits 129–30 Connecticut 163 consumer credit 11–12, 52, 135 contingent redistribution 236 credit consumer 11–12, 52, 135 derivation of word 125 expansion 56–7 and the property boom 61 and protectionism 215 queues 80–1, 83–4, 85–9, 217 Creditanstalt 225 creditors creditor nations 224–5, 232 and debtors 139–43, 174–7, 188, 191, 232–4 280 4099.indd 280 29/03/13 2:23 PM Index foreign 193, 221, 223 home grown 138 Japan 22 cross-subsidization, of banking services 256–7 currencies 177, 221 ‘currency wars’ 82, 190 see also eurozone; renminbi; ringgit; sterling Darling, Alistair 92–3 debt and asset prices 63 and central banks 241–2 eurozone crisis 145, 235–9 excessive 67, 213–14 France 154 household 12, 63–4, 85 and inflation 220 Japan 23 and national incomes 52, 118, 141–2 and quantitative easing (QE) 79–80 repaying 34 debt deflation 115 debtors and creditors 139–43, 174–7, 188, 191, 232–4 eurozone 224–5 home grown 138 deficient demand 57, 59 deficit expansion 119 deficit reduction 242 deficits 58, 69, 79, 110, 117 France 54 Germany 54 Korea 202 pension funds 75, 172 Spain 54 and surpluses 134–7, 232–4 UK 52, 54, 66–7 US 53–4, 66–7, 118 deflation 21–2, 185 democratic deficit 143, 221 Deng Xiaoping 12, 160 Denmark 158 the Depression 55–7, 59, 70, 106–10, 131 and the UK 98, 101 Dexia 30 Diamond, Bob 126 Dickens, Charles 43 disaster-avoidance 7 District of Columbia 163 dollar standard 190 dotcom bubble 169 Draghi, Mario 94 economics profession 3–4, 5–6, 258–9 Edelman Trust Barometer 148 education 12 financial 257–9 literacy 15 training 254 Edward III 211 Egana, Amaia 153 emerging nations 28, 116 employment 115–16 see also labour; unemployment enfranchisement 222, 242–4 the Enlightenment 6, 11, 154 entitlement culture 45, 48, 137, 143, 209, 218 absent from Asia 204, 209 need to reduce 178, 205 equities 79, 172 ethics 254 Ethiopia 19 European Central Bank (ECB) 92, 93–5, 119–20, 144–5, 146 eurozone banking union 256 crisis 224–6, 235–9 and the European Central Bank 93–5 northern creditors and southern debtors 67, 139, 145, 157, 191, 232–3 and trust 145–6 and the UK 111, 214 variations in borrowing costs 215–16 exchange rates 81–2, 111–12, 175, 239–42 executive pay 48 exports 11, 112 extremism, political 226–9 Fannie Mae 190 Federal Reserve 74, 92, 105, 241 and the Great Depression 59, 106–7 Ferguson, Niall 26 Ferguson, Roger 194 feudalism 213 financial services 168–70 innovations 11–12, 38, 133–4 Financial Services Authority (FSA) 171 Finland 158 First World War 103, 114 ‘fiscal club’ concept 237–9 fiscal policy 58, 66–7, 69–70, 77–8, 246–7 fiscal trap 79–81 281 4099.indd 281 29/03/13 2:23 PM When the Money Runs Out fiscal unions 236–7 Fisher, Irving 108, 115 football 165 forecasting 52–3, 63, 71–2, 74, 108 Fortis 30 France age-related expenditure 48 ancien régime and the Revolution 151–7 and Austria 225–6 benefits 204 budget deficit 54 exports 82 Latin monetary union 184 per capita incomes 101, 105 and political extremism 192 and public spending 49 Franco-Prussian War 182 Frank, Barney 65 fraudulent acts 35–6 Freame, John 127–8 Freddie Mac 190 free banking 255, 257 French Revolution, and the ancien régime 151–7 Freud, Sigmund 51 Friedman, Milton 59, 60, 86, 106, 188 Fuld, Dick 253 GDP forecasts 48, 52–4 targeting 247–50 General Strike 104 generational divide 171–4, 241, 243–5 see also ageing populations Germany ageing population 48, 136, 171 benefits 204 budget deficit 54 and the eurozone crisis 34, 191, 225, 232–3, 235 exports 82 Franco-Prussian War reparations 184, 186 government borrowing 71, 144 interest rates 146 late 19th-century economy 186, 189–90 living standards 13–14 national income 32 per capita incomes 101, 105 and the Protestant work ethic 26 and public spending 50 surplus 135–7 Treaty of Versailles 103 unification 182–3 Weimar Republic 55–6, 89 GfK/NOP Inflation Attitudes Survey 92 globalization 166–7, 169, 214–16, 224–6, 250–1 Gold Standard 186 and Germany 184 and the UK 57, 98–9, 102, 103, 105 and the US 107, 109, 187–8 gold standards 183–4, 185 Golden Dawn Party 227 Goodwin, Fred 253 Gordon, Robert J. 4 government bonds 73, 77, 80, 86, 221 government borrowing borrower of last resort 86–7 heavy 143–4 international 142 and low interest rates 71, 245 and the New Deal 109 to offset private saving 217–18 relative to national income 198, 247 rising 32 see also credit: queues government debt and central banks 241–2 eurozone crisis 145 excessive 67, 213–14 France 154 and inflation 220 and national incomes 52, 118, 141–2 and quantitative easing (QE) 79–80 governments and central bank bailouts 241 and credit queues 83–92 mistrust 140, 147–8, 217–18 social spending 45–7 spending 58, 109, 119, 142, 203 spending increases 49–50, 66 Gramm-Rudman-Hollings Act 242 Great Depression 55–7, 59, 70, 106–10, 131 and the UK 98, 101 Great Railroad Strike 187 Greece 82, 134, 140–1, 144–6, 234 and the euro 191 and political extremism 192, 227 Greenback Party 187 Greenspan, Alan 61–2 growth forecasting 74 global 28 start of the 21st century 169–70 targeting 247–50 282 4099.indd 282 29/03/13 2:23 PM Index Hamada Marine Bridge 23 Hayek, Friedrich 56, 207 HBOS 30 health spending 45–6 Helmsley, Leona 148 high-quality liquid assets (HQLA) 83–4 home bias 215–16, 251–2 Hong Kong 163, 204 Hoover administration 118 housing markets 30–1, 61, 63–5, 115–16, 130 foreign buyers 177, 223 see also mortgage-backed securities; subprime HSBC 126, 254 Hundred Years War 209–10 Hungary 89 hyperinflation 78, 89 Iceland 32 Illinois 173, 174 illusions and asset prices 62–3 illusory prosperity 49–51, 56–7, 64–5, 68 and investment philosophy 137–8 public sector 52–3 IMF 200, 202 import tariffs 16 income inequalities 25, 34, 48, 158–70 income, national 32, 49–50, 141–2, 247 Germany 33 Japan 32 UK 110–11, 112 US 117–18 incomes, per capita 27, 49, 159–60, 163 Argentina 14 China 251 France 101, 105 Germany 14, 101, 105 India 27, 251 Indonesia 197 Japan 21 Korea 202 Malaysia 198 UK 1, 44, 101, 105 US 14, 101 India 27, 183, 185, 251 Indonesia 193, 195, 196–7 industrial relations 103–4 Industrial Revolution 38 IndyMac 30 inflation and ageing populations 250 Argentina 18 and commodity prices 116–17 deflation 21–2, 185 excessive 77–8, 89 housing market 64 and the New Deal 109 and stagnation 219–20 targeting 59–61, 87–8, 246, 247 UK 114 US 115 infrastructure projects 236 innovations, financial 11–12, 38, 133–4 interest rates and asset prices 63 credit queue jumping 83–92, 217 expected future 87–8 falls 32, 69, 137, 146–7 inflation versus GDP targeting 248–9 Libor 126 and monetary and fiscal policies 245–6 persistently low 72, 75, 76, 89–91, 239 and stimulus 58 subsidizing 190 UK 61, 71, 102 US 57, 61, 105, 135, 193 intergenerational divide 171–4, 241, 243–5 see also ageing populations International Monetary Fund (IMF) 144–5, 200, 201, 202 international/domestic conflict 232–5 investment demand for financial services 168 and income inequality 162–3 international 134, 136, 176–7, 193, 232 private investors 144–5 Ireland 49, 134 Israeli–Palestinian conflict 122–3 Italy 49–50, 82, 146, 184, 191 ageing populations 171 Japan 20–6 ageing populations 171 attempted reforms 42 debt repayment 135 exports 11 government borrowing 144 government debt 52 liquidity trap 72 living standards 14 national income 32–3 and quantitative easing (QE) 85 stockpile of assets 240 and trust 161 unreliable estimates 113 283 4099.indd 283 29/03/13 2:23 PM When the Money Runs Out Jay Cooke and Company 186 Jerusalem trip 122–3 Jews, attitudes towards 189, 200–1, 213 jobs 115–16 see also labour; unemployment Kahneman, D. 41 Kalecki, Michael 59 Das Kapital(Marx) 179 Keynes, John Maynard 38, 57–9, 72, 86, 108 ‘Economic Possibilities for our Grandchildren’ 259–60 Essays in Persuasion 100 The General Theory of Employment, Interest and Money 58–9, 89 on the Gold Standard 104 How to Pay for the War 114 Keynes Plan 233 Keynesian policies 60 on the Snowden budget 99 King, Mervyn 73, 90–1, 92–3, 180 Knetsch, J. L. 41 Knickerbocker Trust Company 131 Korea 14, 193, 195, 202–4, 205 Krugman, Paul 112–15, 117, 118–19 labour market 115–16, 252 productivity 53 Landes, David 26 Latin American debt crisis 216 Layard, Richard 114, 117 Lehman Brothers 30, 255 Leveson inquiry 148 Libor 126 life expectancy 47 liquidity 84, 90 liquidity trap 72 Liquidity Coverage Ratio (LCR) 83 Little Dorrit (Dickens) 138–9 living standards 11, 27, 158, 169, 180–1 belief in ever rising 13, 34 China 27 Indonesia 197 Japan 23 Korea 195 late 19th century 185, 186 Malaysia 198 post-Second World War 139 US 11, 163 loan-to-value ratios, mortgage 51–2 Long Depression 189–90 loss aversion 40–1 lotteries 164–5 Macroeconomic Imbalance Procedure (MIP) 233 macroeconomic policies 32, 60, 121, 181, 253 Japan 21 macroprudential rules 256 Madoff, Bernie 35 Mahathir Mohamad 198–201, 205 Malaysia 193, 198–201, 205 Malthus, Thomas 37–9 Manchester United 165–6 Marr, Wilhelm 189 Marx, Karl 57, 179–80 Mary Poppins 131–2 May Report 98 Megawati Sukarnoputri 197 Mellon, Andrew 106, 108 Mexico 158 Mieno, Yasushi 21 miners 103–4 Mississippi 163 mistrust creditors and debtors 141 cross-border 176 endemic 147–9 governments 140, 217–18 of money 219–21 and political extremism 227 monetarism 59 monetary policy 58, 68–74, 77–9, 87–9, 97, 111–12 a new monetary framework 245–50 see also Gold Standard; interest rates; quantitative easing (QE) Monetary Policy Committee 90–1 monetary unions 236–7 see also eurozone moral hazard 62 mortgage-backed securities 30, 65, 136–7 mortgages 51–2, 63–5 Napoleon Bonaparte 156 Napoleon III 182 National Bank of North America 131 national incomes 32, 49–50, 141–2, 247 Germany 33 Japan 32 UK 33, 110–11, 112 US 33, 70, 109, 115, 117–18 284 4099.indd 284 29/03/13 2:23 PM Index National Lottery 164–5 nationalism 228 the Netherlands 48 New Deal 108–9 ‘new economy’ of the 1990s 29–30 New Order (Indonesia) 197 New Zealand 187 Nicholson, Viv 50 Nigeria 19 Northern Rock 30, 51–2, 129, 255 Norway 158 Occupy movement 162, 170–1 Office for Budget Responsibility 33 Oliver Twist (Dickens) 43 Osborne, George 231 Overend, Gurney and Co. 131 painkillers 70–1, 89 ‘The Panic of 1873’ 186 Paul, Ron 93 Peasants’ Revolt 213 Pension Protection Fund (PPF) 172 pensioners’ voting patterns 88 pensions 47, 51, 75, 171–3, 174 per capita incomes 27, 49, 159–60, 163 Argentina and Germany 14 China 251 France 101, 105 Germany 101, 105 India 27, 251 Indonesia 197 Japan 21 Korea 202 Malaysia 198 UK 1, 44, 101, 105 US 14, 101, 105 Perón, Eva 16 Perón, Juan 16–17 Pew Center report 173 Pickett, Kate 159 Pigou, Arthur 59 policies and central bankers 65 fiscal 58, 66–7, 69–70, 77–8, 246–7 macroeconomic 21, 32, 60, 121, 181, 253 monetary 58, 68–74, 77–9, 87–9, 97, 111–12 new monetary framework 245–50 political extremism 226–9 politics and central bankers 78, 89–90, 91–5 and economics 24–6, 34, 102, 191–2, 217 and the eurozone 224–5, 237 and expectations 152–3 and income inequality 160–1 and lack of trust 147–8, 149 and monetary regimes 119–20 voters 50, 78, 88, 222, 242–4 poll tax 211 populations, ageing 78, 88, 250 age-related expenditure 48 generational divide 171–4, 241, 243–5 Germany 136 Japan 23, 25 Portugal 50, 146, 158, 191 precious metal standards 183–4 see also Gold Standard prices asset 73 commodity 77, 109, 116–17 rising 157 see also deflation; inflation property sector see housing markets protectionism 214–15 capital controls 16, 199–200, 201, 234 tariffs 16 Protestant work ethic 26, 28 public sector see governments public spending 49–50, 66, 142, 147–8, 203 government spending 58, 109, 119 social spending 45–7 quantitative easing (QE) 72–82, 84–6, 91, 97, 176–7 ratings agencies 234–5 rationing 114–15, 142–3 recessions 2 recovery from the Asian crisis 195–6, 204–5, 206, 208–9 UK in the 1930s 101–2 redistribution by stealth 90 Reform Acts 222, 242–3 regulation 125, 256 dangers of further 214, 251 dollar transactions 177 reduction 168 the regulatory trap 83–4 Statute of Labourers 213 renminbi (currency) 177 Réveillon, Jean-Baptiste 155–6 Ricardo, David 183–4 Richard II 211–12 ringgit (currency) 198 285 4099.indd 285 29/03/13 2:23 PM When the Money Runs Out risk and banks 255–6 creditors and debtors imbalance 234 and financial services 168 and rapid economic change 170 risk aversion 216 Roosevelt, Franklin Delano 107–9, 117–18, 119, 219 Royal Bank of Scotland 30 Royal Navy 99 Russia 117, 135 Rwanda 19 Samuel, Herbert 104 Saudi Arabia 117, 135 savers and banks 136 confidence 65 and illusions 137 and income inequality 162–3 and interest rates 90, 91, 97 and the subprime boom 133–4 schisms between debtors and creditors 174–7, 191 generational 170–4 income inequality 158–70 Schwartz, Anna 59, 106, 188 second-hand car market 123–4 Sierra Leone 163 silver standard 183 SIVs (structured investment vehicles) 129–30 Skidelsky, R. and E. 37 Smith, Adam 39–40, 207 melancholy state 42, 124–5, 159–60 Snowden’s budget 99–102, 105 soccer 165 social contract, between generations 244–5 social insurance 44–8 social security systems 12 social spending 45–7 Soros, George 200 South Korea 14, 193, 195, 202–4, 205 South Sea Bubble 29 space exploration 9–10, 35 Spain deficit 54, 134 and the eurozone 191, 235–6 exports 82 fiscal position 85 government borrowing 144 interest rates 146 political disenfranchisement 95 property bubble 140 suicide of Amaia Egana 153 spending government 58, 109, 119 public sector 49–50, 66, 142, 147–8, 203 social 45–7 stagnation 37–43, 50, 52–3, 158, 219 and political extremism 227–8 Standard & Poor’s 80 ‘stately home’ effect 221–3 Statute of Labourers 211, 213 sterling 98–106, 110 Stern Review 38–9 stimulus 3–4 and jobs 116 monetary and fiscal 30, 57–8, 181 Paul Krugman 112–15, 118–19 policy 32, 69–70, 82 political debate 205 prior to the financial crisis 67 stock markets 20–1, 30, 193 stock-market crashes 18, 61–2, 66, 99, 186 Straw, Jack 212 structured investment vehicles (SIVs) 129–30 subprime boom 130, 133–4 crisis 190 Suharto 196–7, 205 surpluses 66, 135–7, 204, 232–4 Sweden 158, 204 Switzerland 158, 184 Taiwan 14 Takeshita, Noburo 24 Tanzania 19 tariffs 16 tax avoidance 49, 211, 214 taxation ancien régime and the French Revolution 154–5 death duties 139 medieval poll tax 211 taxpayers 145, 170, 174, 215, 254 technological progress 2–3, 10–11 dotcom bubble 169 and financial industry wages 167 Industrial Revolution 38 Thailand 193, 195 Thaler, R.


pages: 355 words: 92,571

Capitalism: Money, Morals and Markets by John Plender

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Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, bonus culture, Bretton Woods, business climate, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, corporate governance, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, Fractional reserve banking, full employment, Gordon Gekko, greed is good, Hyman Minsky, income inequality, inflation targeting, invention of the wheel, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, labour market flexibility, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, means of production, Menlo Park, moral hazard, moveable type in China, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Plutocrats, plutocrats, price stability, principal–agent problem, profit motive, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, short selling, Silicon Valley, South Sea Bubble, spice trade, Steve Jobs, technology bubble, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, tulip mania, Upton Sinclair, We are the 99%, Wolfgang Streeck

So the dysfunctionality of a corporate sector that under-invests in plant and machinery is a reflection of dysfunctional corporate governance. Consider, now, the ethical concern that most exercised John Maynard Keynes, namely the central role of the money motive in capitalism – or, to put it more bluntly, greed. One of the sayings attributed to the great economist is that capitalism amounts to ‘the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds’.220 And that certainly is consonant with the view he expressed – only slightly tongue in cheek, according to his biographer Robert Skidelsky – in his essay ‘Economic Possibilities for Our Grandchildren’: When the accumulation of wealth is no longer of high social importance, there will be great change in the code of morals. We shall be able to rid ourselves of many of the pseudomoral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues.

Shaw even went so far as to say that the lack of money was the root of all evil. Shaw’s fellow Irishman Oscar Wilde was less of a windbag, but of much the same conviction: ‘There is only one class in the community that thinks more about money than the rich, and that is the poor. The poor can think of nothing else. That is the misery of being poor.’ A further dimension to the argument is provided by the great economist John Maynard Keynes. Like Dr Johnson, who declared that ‘there are few ways in which a man can be more innocently employed than in getting money’, Keynes thought that moneymaking was a socially productive way of channelling the basest instincts: Dangerous human proclivities can be canalised into comparatively harmless channels by the existence of opportunities for money making and private wealth, which, if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandisement.

How far society’s waning tolerance of these excesses will lead to a much more heavily regulated, lower growth form of capitalism turns heavily on these difficult issues about the moral character of money. Certainly money and business have suffered a major setback on the path towards respectability as a result of the great financial crisis that struck in 2008. CHAPTER TWO ANIMAL SPIRITS Few understood better than John Maynard Keynes the importance of enterprise for the workings of the capitalist system. Yet the great economist had a poor view of entrepreneurs. His celebrated reference to their so-called animal spirits in the General Theory of Employment, Interest and Money is a lofty implicit put-down and he regarded the money motive as a form of morbidity. That view may well have been influenced by Karl Marx, who saw the urge to accumulate capital as the sole motivation of the entrepreneurial capitalist.


pages: 339 words: 88,732

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, American Society of Civil Engineers: Report Card, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, British Empire, business intelligence, business process, call centre, clean water, combinatorial explosion, computer age, computer vision, congestion charging, corporate governance, crowdsourcing, David Ricardo: comparative advantage, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, falling living standards, Filter Bubble, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, full employment, game design, global village, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, inventory management, James Watt: steam engine, Jeff Bezos, jimmy wales, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Mark Zuckerberg, Mars Rover, means of production, Narrative Science, Nate Silver, natural language processing, Network effects, new economy, New Urbanism, Nicholas Carr, Occupy movement, oil shale / tar sands, oil shock, pattern recognition, payday loans, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Rodney Brooks, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Simon Kuznets, six sigma, Skype, software patent, sovereign wealth fund, speech recognition, statistical model, Steve Jobs, Steven Pinker, Stuxnet, supply-chain management, TaskRabbit, technological singularity, telepresence, The Bell Curve by Richard Herrnstein and Charles Murray, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen: Great Stagnation, Vernor Vinge, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K

He described unemployment as something close to a mirage: “the army of the unemployed is no more unemployed than are firemen who wait in fire-houses for the alarm to sound, or the reserve police force ready to meet the next call.”14 The creative forces of capitalism, in short, required a supply of ready labor, which came from people displaced by previous instances of technological progress. John Maynard Keynes was less confident that things would always work out so well for workers. His 1930 essay “Economic Possibilities for our Grandchildren,” while mostly optimistic, nicely articulated the position of the second camp—that automation could in fact put people out of work permanently, especially if more and more things kept getting automated. His essay looked past the immediate hard times of the Great Depression and offered a prediction: “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment.

In one paper, Erik estimated that the elasticity of demand for computer hardware was about 1.1, implying that each 1 percent increase in price led to a 1.1 percent increase in demand, so as a result total spending increased as technology made computers more efficient. See Erik Brynjolfsson, “The Contribution of Information Technology to Consumer Welfare,” Information Systems Research 7, no. 3 (1996): 281–300. 22. This is an example of Say’s Law, which states that demand and supply are always kept in balance. 23. John Maynard Keynes, “Economic Possibilities for Our Grandchildren,” Keynes on Possibilities, 1930, http://www.econ.yale.edu/smith/econ116a/keynes1.pdf. 24. Tim Kreider, “The ‘Busy’ Trap,” Opinionator, June 30, 2012, http://opinionator.blogs.nytimes.com/2012/06/30/the-busy-trap/. 25. Nobel Prize winner Joe Stiglitz has argued that rapid automation of agriculture, such as via gasoline-engine tractors, is part of the explanation for the high unemployment of the 1930s.

Because of these and other factors, we often hear from business leaders something very close to what Eric Spiegel, the CEO of Siemens USA, said in an interview: “The U.S. is a great place for manufacturing these days. We’re making things here in the U.S. that we’re shipping over to China. . . . We just need to make sure that we’ve . . . got the infrastructure in place to be able to handle the increased work.”25 There’s an interesting historical wrinkle in discussions about infrastructure investment. The legendary economist John Maynard Keynes, whose name is attached to a school of thought that advocates stimulus spending, famously suggested in 1936 that during recessions the government should put money in bottles, bury the bottles deep in old coal mines, then sell the rights to dig them up.26 Doing so, he argued only partly in jest, would “be better than nothing” because it would create demand during periods when labor and capital would otherwise go unused.


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The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order by Benn Steil

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Albert Einstein, Asian financial crisis, banks create money, Bretton Woods, British Empire, capital controls, currency manipulation / currency intervention, currency peg, deindustrialization, European colonialism, facts on the ground, fiat currency, financial independence, floating exchange rates, full employment, global reserve currency, imperial preference, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, margin call, means of production, money: store of value / unit of account / medium of exchange, Monroe Doctrine, New Journalism, open economy, Potemkin village, price mechanism, price stability, psychological pricing, reserve currency, road to serfdom, seigniorage, South China Sea, special drawing rights, The Great Moderation, the market place, trade liberalization, Works Progress Administration

The Collected Writings of John Maynard Keynes: Volume I, Indian Currency and Finance. Cambridge: Cambridge University Press. ———. 1919 [1971]. The Collected Writings of John Maynard Keynes: Volume II, The Economic Consequences of the Peace. Cambridge: Cambridge University Press. ———. 1923 [1971]. The Collected Writings of John Maynard Keynes: Volume IV, A Tract on Monetary Reform. Cambridge: Cambridge University Press. ———. 1925–1926. Unpublished fragment. Keynes Papers, PS/6. King’s College Archive Centre, University of Cambridge. ———. 1930 [1971]. The Collected Writings of John Maynard Keynes: Volume V, A Treatise on Money in Two Volumes: 1 The Pure Theory of Money. Cambridge: Cambridge University Press. ———. 1930 [1971]. The Collected Writings of John Maynard Keynes: Volume VI, A Treatise on Money in Two Volumes: 2 The Applied Theory of Money.

Economic Journal LVI, No. 222: 172–187. ———. 1978. The Collected Writings of John Maynard Keynes: Volume XIV, The General Theory and After: Defence and Development. Cambridge: Cambridge University Press. ———. 1978. The Collected Writings of John Maynard Keynes: Volume XVI, Activities 1914–19: The Treasury and Versailles. Cambridge: Cambridge University Press. ———. 1978. The Collected Writings of John Maynard Keynes: Volume XXII, Activities 1939–45: Internal War Finance. Cambridge: Cambridge University Press. ———. 1979. The Collected Writings of John Maynard Keynes: Volume XXIII, Activities 1940–43: External War Finance. Cambridge: Cambridge University Press. ———. 1979. The Collected Writings of John Maynard Keynes: Volume XXIV, Activities 1944–46: The Transition to Peace. Cambridge: Cambridge University Press. ———. 1980.

The Collected Writings of John Maynard Keynes: Volume XXV, Activities 1940–44: Shaping the Post-war World: The Clearing Union. Cambridge: Cambridge University Press. ———. 1980. The Collected Writings of John Maynard Keynes: Volume XXVI, Activities 1943–46: Shaping the Post-war World: Bretton Woods and Reparation. Cambridge: Cambridge University Press. ———. 1980. The Collected Writings of John Maynard Keynes: Volume XXVII, Activities 1940–46: Shaping the Post-war World: Employment and Commodities. Cambridge: Cambridge University Press. ———. 1981. The Collected Writings of John Maynard Keynes: Volume XIX, Activities 1924–29: The Return to Gold and Industrial Policy: Part I and II. Cambridge: Cambridge University Press. ———. 1981. The Collected Writings of John Maynard Keynes: Volume XX, Activities 1929–31: Rethinking Employment and Unemployment Policies.


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Hard Times: The Divisive Toll of the Economic Slump by Tom Clark, Anthony Heath

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Affordable Care Act / Obamacare, British Empire, Carmen Reinhart, credit crunch, Daniel Kahneman / Amos Tversky, debt deflation, deindustrialization, Etonian, eurozone crisis, falling living standards, full employment, Gini coefficient, hiring and firing, income inequality, interest rate swap, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, low skilled workers, mortgage debt, new economy, Northern Rock, obamacare, oil shock, Plutocrats, plutocrats, price stability, quantitative easing, Ronald Reagan, science of happiness, statistical model, The Wealth of Nations by Adam Smith, unconventional monetary instruments, War on Poverty, We are the 99%, women in the workforce, working poor

The history of light suggests not’, in Robert J. Gordon and Timothy F. Bresnahan, The Economics of New Goods, University of Chicago Press for National Bureau of Economic Research, Chicago, 1997, at: http://papers.nber.org/books/bres96–1/ Page 31 gives a wax candle's emission as 13 lumens; Table 1.4 gives hours of labour at prevailing US wages required to buy 1,000 lumens in different years. 21. John Maynard Keynes, Essays in Persuasion: The collected writings of John Maynard Keynes, vol. 9, Cambridge University Press, Cambridge, 1978. The relevant essay is available online: at: www.econ.yale.edu/smith/econ116a/keynes1.pdf 22. In the first ‘lost decade’, 1991–2000, real growth averaged just 0.5%; over the second, 2000–10, the average was 0.8%. See W.R. Garside, Japan's Great Stagnation: Forging ahead, falling behind, Edward Elgar, Cheltenham, 2012, p. 83; Masaaki Shirakawa, ‘Deleveraging and growth: Japan's long and winding road’, lecture at the London School of Economics, 10 January 2012, at: www.lse.ac.uk/asiaResearchCentre/_files/Shirak­awaLectureTranscript.pdf 23.

At that time, Thomas De Quincey was admittedly guessing when he ventured that a quarter of all human misery was toothache; but thanks to progress in dentistry – and our ability to afford it – no one would make the same guess today. All this growth, then, is real money; it should be able to offer society real protection against hard times. As the world slid towards the abyss in 1930, Keynes took a brief break from peering over the edge and looked forward instead, to the ‘Economic Possibilities for Our Grandchildren’.21 He correctly predicted how much magic technology would work, and then suggested that there might come a point when getting richer would ‘no longer [be] of high social importance’. It has always been said that the most valuable things are those that money can't buy. Keynes’ essentially accurate long-range forecast prompts the thought that we might already have reached a pass where we can afford to protect the things that really matter – things like mental health, family and community – from the vicissitudes of the business cycle.

, BBC News, 24 July 2012, at: www.bbc.co.uk/news/uk–18973923; on anti-depressants see Mark Easton, ‘The north/south divide on antidepressants’, BBC News, 2 August 2012, at: www.bbc.co.uk/news/uk–19076219 8. On Gallup's 0–10 scale the overall average score fell from 6.9 to 6.4 between February and November 2008. By January 2009, however, the overall average score was back at 6.9. 9. Layard, Happiness, pp. 49–50. 10. Keynes, ‘Economic possibilities for our grandchildren’, in Essays in Persuasion, available online at: www.econ.yale.edu/smith/econ116a/keynes1.pdf 11. Rather than a 1–10 life satisfaction score, Eurobarometer asks respondents whether they are satisfied with their lives on a four-point scale. In the text we concentrate on the total proportion satisfied, i.e. the proportion ‘very’ or ‘fairly’, as against those who are ‘fairly’ or ‘very’ dissatisfied.


pages: 364 words: 99,613

Servant Economy: Where America's Elite Is Sending the Middle Class by Jeff Faux

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back-to-the-land, Bernie Sanders, Black Swan, Bretton Woods, BRICs, British Empire, call centre, centre right, cognitive dissonance, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, David Brooks, David Ricardo: comparative advantage, falling living standards, financial deregulation, financial innovation, full employment, hiring and firing, Howard Zinn, Hyman Minsky, illegal immigration, indoor plumbing, informal economy, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, lake wobegon effect, Long Term Capital Management, market fundamentalism, Martin Wolf, McMansion, medical malpractice, mortgage debt, Naomi Klein, new economy, oil shock, Plutocrats, plutocrats, price mechanism, price stability, private military company, Ralph Nader, reserve currency, rising living standards, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, school vouchers, Silicon Valley, single-payer health, South China Sea, statistical model, Steve Jobs, Thomas L Friedman, Thorstein Veblen, too big to fail, trade route, Triangle Shirtwaist Factory, union organizing, upwardly mobile, urban renewal, War on Poverty, We are the 99%, working poor, Yogi Berra, Yom Kippur War

Meritt Roe Smith, Military Enterprise and Technological Change: Perspectives on the American Experience (Cambridge, MA: MIT Press, 1985), 4; John Gertner, “True Innovation,” Washington Post, February 20, 2012; Fred Block, “Innovation and the Invisible Hand of Government,” in State of Information: The U.S. Government’s Role in Technology Development, ed. Fred Black and Matthew R. Keller (Boulder, CO: Paradigm Publishers, 2011), 5–10. 21. Robert Whaples, “Hours of Work in U.S. History,” Economic History Association, February 1, 2010, http://eh.net/encyclopedia/article/whaples.cork.hours.us. 22. John Maynard Keynes, “Economic Possibilities for Our Grandchildren,” Essays in Persuasion (New York: W. W. Norton, 1963). 3 The Cushion Deflates For the three decades immediately after World War II, U.S. wages and incomes rose three times as fast as they had in the previous seven decades. Then suddenly the paycheck prosperity came to a halt. After 1973, the average real wages for non-managers (adjusted for price changes) fell for several years, inched back up in 1979, and virtually stagnated for the next three decades.

Although not quite as secure, the largest concentrations of wealth held by Americans also have a sort of immortality that is the special privilege bestowed on the corporation by the state. Individual corporations can die from bad luck and incompetence or a reorganization of investors’ portfolios. But adequately managed, the wealth moves from one protected corporate nest to another—deathless as long as its special status is indulged by society. “In the long run,” John Maynard Keynes famously said, “we are all dead.” But living off large privileged stores of capital, most members of the governing classes are protected on the downside from the natural capitalist cycles of boom and bust. Recessions, even depressions and other economic calamities, are not typically life-threatening. As the crash of 2008 taught us once more, money may be lost, CEOs may be forced to retire early, and some assets might have to be sold, but those who drove the economy off the cliff did not end up sleeping on park benches.

In response, employers cut wages, and therefore consumer spending, making things worse. Even Herbert Hoover—who, somewhat unfairly, was blamed for the Depression—understood that there was something fundamentally wrong in this response. In 1931, he signed the Davis-Bacon Act, which established the eight-hour workday in construction and required employers to maintain prevailing wage levels in government-financed projects. British economist John Maynard Keynes provided the economic theory for what almost all businesspeople understood in practice: that they expanded their businesses not when workers received lower wages but when they saw customers coming in the door with money in their pockets. In 1914, Henry Ford, otherwise a brutal and repressive employer, doubled the basic wage he paid to his auto workers. When his horrified fellow capitalists complained, he reminded them that their workers had to earn enough to become customers for the products that they made.


pages: 323 words: 90,868

The Wealth of Humans: Work, Power, and Status in the Twenty-First Century by Ryan Avent

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3D printing, Airbnb, American energy revolution, autonomous vehicles, Bakken shale, barriers to entry, Bernie Sanders, BRICs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, first square of the chessboard, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Francis Fukuyama: the end of history, future of work, gig economy, global supply chain, global value chain, hydraulic fracturing, income inequality, indoor plumbing, industrial robot, interchangeable parts, Internet of things, inventory management, invisible hand, Jacquard loom, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low skilled workers, lump of labour, Lyft, manufacturing employment, means of production, new economy, performance metric, pets.com, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Ronald Coase, savings glut, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, single-payer health, software is eating the world, supply-chain management, supply-chain management software, TaskRabbit, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, very high income, working-age population

If you believe the copy of this e-book you are reading infringes on the author’s copyright, please notify the publisher at: us.macmillanusa.com/piracy. A man must always live by his work, and his wages must at least be sufficient to maintain him. Adam Smith, The Wealth of Nations1 Don’t mourn for me, friends, don’t weep for me never, For I’m going to do nothing for ever and ever. Epitaph for a charwoman, traditional, quoted in ‘Economic Possibilities for our Grandchildren’, John Maynard Keynes, 19302 Introduction In January of 2014, The Economist, my employer, published a piece I had written on the future of work in an age of rapid automation. A sample: Ten years ago technologically minded economists pointed to driving cars in traffic as the sort of human accomplishment that computers were highly unlikely to master. Now Google cars are rolling round California driver-free no one doubts such mastery is possible … A taxi driver will be a rarity in many places by the 2030s or 2040s … bad news for journalists who rely on that most reliable source of local knowledge and prejudice.1 Not long after, a minor earthquake rattled the city of Los Angeles early in the morning.

Utopia might, then, seem to be waiting just over the horizon (as a number of recent books, such as Postcapitalism by Paul Mason,13 argue); all that must be managed is the slow reduction of hours devoted to menial work, combined with the distribution across society of the common wealth generated by productive technologies. But is this better world of work achievable? Scholars have been imagining it for generations. In 1930, the British economist John Maynard Keynes wrote an essay describing his view of how the economic future would unfold.14 At the time, the world was caught in a deepening depression. ‘We are suffering just now from a bad attack of economic pessimism,’ Keynes noted in the opening to his essay, ‘Economic Possibilities for our Grandchildren’. Yet in the piece he invited readers to look past short-term troubles to the remarkable long-run process of growth and progress in which humanity was engaged. After long millennia of labour in which living standards grew imperceptibly slowly, the societies of northwest Europe had, in the two or three centuries leading up to the depression, made a clear and extraordinary break with the economic past.

Abbreviations BEA US Bureau of Economic Analysis BLS US Bureau of Labor Statistics EIA US Energy Information Administration IMF International Monetary Fund NBER National Bureau of Economic Research OECD Organization for Economic Co-operation and Development EPIGRAPH   1.  Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776).   2.  Keynes, John Maynard, ‘Economic Possibilities for our Grandchildren’, Essays in Persuasion (London: Macmillan, 1931). INTRODUCTION   1. ‘The Onrushing Wave’, The Economist, 18 January 2014.   2. ‘Is 4.4 jolt an end to Los Angeles’ “earthquake drought”?’, Los Angeles Times, 17 March 2014.   3. http://www.statista.com/chart/612/newspaper-advertising-revenue-from-1950-to-2012/   4. OECD, Average Annual Wages, in national currency units, constant (https://stats.oecd.org/Index.aspx?


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The Lights in the Tunnel by Martin Ford

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Albert Einstein, Bill Joy: nanobots, Black-Scholes formula, call centre, cloud computing, collateralized debt obligation, credit crunch, double helix, en.wikipedia.org, factory automation, full employment, income inequality, index card, industrial robot, inventory management, invisible hand, Isaac Newton, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, knowledge worker, low skilled workers, moral hazard, pattern recognition, prediction markets, Productivity paradox, Ray Kurzweil, Search for Extraterrestrial Intelligence, Silicon Valley, Stephen Hawking, strong AI, superintelligent machines, technological singularity, Thomas L Friedman, Turing test, Vernor Vinge, War on Poverty

Transitional Economy Average Income Value Consumers and Workers Decoupled Machines Getting Better Machines Becoming Autonomous Time Copyrighted Material – Paperback/Kindle available @ Amazon Transition / 189 Keynesian Grandchildren While few contemporary economists seem particularly concerned about the seemingly inevitable transition to an automated economy, one legendary economist did have remarkable insight into the future. In 1930, as the world plunged into the Great Depression, John Maynard Keynes wrote an essay entitled “Economic Possibilities for our Grandchildren.”53 In his essay, Keynes coined the term “technological unemployment,” writing: We are being inflicted with a new disease of which some readers many not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.* Keynes recognized that, in 1930, technological unemployment would be a temporary phenomenon and that the economy would eventually absorb the excess workers.

Web: http://www.foreignaffairs.org/19971101faessay3815/alan-sblinder/is-government-too-political.html 50 Jeremy Rifkin, The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era, NewYork, Penguin Group, 1995. 49 Chapter 4: Transition 51 Cornelia Dean, “Scientific Savvy? In U.S. Not Much”, NewYork Times, August 30, 2005, web: http://www.nytimes.com/2005/08/30/science/30profile.html 52 See Chris Anderson’s The LongTail: Whythe Future of Business is Selling Less of More, a book based on an article in Wired Magazine, October 2004. Web: http://www.wired.com/wired/archive/12.10/tail.html 53 John Maynard Keynes, “Economic Possibilities for our Grandchildren,” (written in 1930), Essays in Persuasion, NewYork, W.W. Norton, 1963. Web: http://www.econ.yale.edu/smith/econ116a/keynes1.pdf p. 195 footnote, Einstein’s viewon technological unemployment, see: Walter Isaacson, Einstein: His Life and Universe, NewYork, Simon & Schuster, 2007, p.403. Chapter 5: The Green Light For more on the challenges of addressing poverty, see: William Easterly, The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, Cambridge, MA, MIT Press, 2002. 54 Appendix / Final Thoughts 55 A.M Turing, “Computing Machinery and Intelligence”, Mind, 1950.


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Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence by Jerry Kaplan

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Affordable Care Act / Obamacare, Amazon Web Services, asset allocation, autonomous vehicles, bank run, bitcoin, Brian Krebs, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, combinatorial explosion, computer vision, corporate governance, crowdsourcing, en.wikipedia.org, Erik Brynjolfsson, estate planning, Flash crash, Gini coefficient, Goldman Sachs: Vampire Squid, haute couture, hiring and firing, income inequality, index card, industrial robot, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Loebner Prize, Mark Zuckerberg, mortgage debt, natural language processing, Own Your Own Home, pattern recognition, Satoshi Nakamoto, school choice, Schrödinger's Cat, Second Machine Age, self-driving car, sentiment analysis, Silicon Valley, Silicon Valley startup, Skype, software as a service, The Chicago School, Turing test, Watson beat the top human players on Jeopardy!, winner-take-all economy, women in the workforce, working poor, Works Progress Administration

It’s to rebalance the supply of economically motivated workers with the available pool of paid jobs. We can do this by adjusting the incentives for people to do other productive things with their time. I’m by no means the first one to consider what the world will be like when our basic needs can be met without our own labor. None other than John Maynard Keynes, the legendary economist, wrote a fascinating meditation on this question in 1930 entitled “Economic Possibilities for Our Grandchildren.” In this thoughtful essay, he projects that within a century (which is nearly up, of course), continued economic growth would permit us to meet the basic needs of all humans with little to no effort. As he puts it, “All this means in the long run that mankind is solving its economic problem” (his italics). He goes on to distinguish between absolute needs and relative needs, suggesting that once the former are met, many people will “devote their energies to non-economic purposes.”44 His economic analysis was spot on but, to our disgrace, his expectations for wealth distribution have yet to be realized.

See assets ownership stock markets IP addresses, 28 iPhone, 46, 198 IRAs (individual retirement accounts), 169 Jain, Kapil, 213n7 Jennings, Ken, 30, 150 Jeopardy! (TV quiz show), 30, 36, 150, 198–99 job mortgage loans proposal, 13–15, 153–57 jobs. See labor market John, George, 70, 72 Johnson, Lyndon B., 167 Kaiser Permanente, 214n8 Kennedy, John F., ix Keynes, John Maynard, “Economic Possibilities for Our Grandchildren,” 186 kitchen equipment, multipurpose, 46–47 Kiva Systems, 135 Kleiner, Perkins, Caufield and Byers, 95 knowledge engineers, 23 Komisar, Randy, 218n15 Labor Department, 157 labor market, 119–27 advanced technology and, 191 alternatives to paid work and, 185–86 autonomous systems as threat to, 10–12, 20, 126–27, 131–58 average salary and, 116 competition for jobs and, 121–25 conventional economics and, 12 education-work sequence and, 13, 153, 157–58 excess workers and, 158 exclusions from, 170–71 federal measures and, 170, 171–72 historical comparisons and, 115–16, 164, 222n3 job skills and (see skills) letters of intent to hire and, 14, 154, 155 predictions about, 138–39, 140 reasons for working and, 184–85 salaries and, 116, 120, 145 tectonic shifts in, 133–35 turnover (2013) in, 137 workday standardization and, 171 work incentives and, 184–85 working adult statistics and, 172–74, 176.

For instance, you may have shares in a retirement fund that holds a particular stock in its name, as opposed to yours—but you are the entity we are trying to measure. As a first approximation, I would suggest that the closure has to be computed until it reaches a natural person. 43. William McBride, “New Study Ponders Elimination of the Corporate Income Tax,” Tax Foundation, April 11, 2014, http://taxfoundation.org/blog/new-study-ponders-elimination-corporate-income-tax. 44. John Maynard Keynes, Essays in Persuasion (New York: Classic House Books, 2009). OUTRODUCTION 1. These are called “portmanteaus,” ironically itself a mash-up of the French words porter (carry) and manteau (coat). 2. John Philip Sousa, “The Menace of Mechanical Music,” Appleton’s 8 (1906), http://explorepahistory.com/odocument.php?docId=1-4-1A1. 3. Harry Pearson is quoted at http://en.wikipedia.org/wiki/Comparison_of_analog_and_digital_recording, last modified December 11, 2014; Michael Fremer is quoted by Eric Drosin, “Vinyl Rises from the Dead as Music Lovers Fuel Revival,” Wall Street Journal, May 20, 1997, http://www.wsj.com/articles/SB864065981213541500. 4.


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Seventeen Contradictions and the End of Capitalism by David Harvey

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accounting loophole / creative accounting, bitcoin, Branko Milanovic, Bretton Woods, BRICs, British Empire, business climate, California gold rush, call centre, central bank independence, clean water, cloud computing, collapse of Lehman Brothers, colonial rule, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Deng Xiaoping, deskilling, falling living standards, fiat currency, first square of the chessboard, first square of the chessboard / second half of the chessboard, Food sovereignty, Frank Gehry, future of work, global reserve currency, Guggenheim Bilbao, income inequality, informal economy, invention of the steam engine, invisible hand, Isaac Newton, Jane Jacobs, Jarndyce and Jarndyce, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Just-in-time delivery, knowledge worker, low skilled workers, Mahatma Gandhi, market clearing, Martin Wolf, means of production, microcredit, new economy, New Urbanism, Occupy movement, peak oil, phenotype, Plutocrats, plutocrats, Ponzi scheme, quantitative easing, rent-seeking, reserve currency, road to serfdom, Robert Gordon, Ronald Reagan, short selling, Silicon Valley, special economic zone, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, Tyler Cowen: Great Stagnation, wages for housework, Wall-E, women in the workforce, working poor, working-age population

But what is certain is that the rise of the money form and the capacity for its private appropriation has created a space for the proliferation of human behaviours that are anything but virtuous and noble. Accumulations of wealth and power (accumulations that were ritually disposed of in the famous potlatch system of pre-capitalist societies) have not only been tolerated but welcomed and treated as something to be admired. This led the British economist John Maynard Keynes, writing on ‘Economic Possibilities for our Grandchildren’ in 1930, to hope that: When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues.

Contradiction 2: The Social Value of Labour and Its Representation by Money 1. This fascinating story is told in Paul Seabright (ed.), The Vanishing Rouble: Barter Networks and Non-Monetary Transactions in Post-Soviet Societies, London, Cambridge University Press, 2000. 2. John Maynard Keynes, Essays in Persuasion, New York, Classic House Books, 2009, p. 199. 3. Silvio Gesell, (1916); http:www.archive.org/details/TheNaturalEconomicOrder, p. 121. For some further discussion of Gesell’s ideas see John Maynard Keynes, The General Theory of Employment, Interest, and Money, New York, Harcourt Brace, 1964, p. 363, and Charles Eisenstein, Sacred Economics: Money, Gift and Society in the Age of Transition, Berkeley, CA, Evolver Editions, 2011. Contradiction 3: Private Property and the Capitalist State 1.

., Disposable Women and Other Myths of Global Capitalism, New York, Routledge, 2006 Index Numbers in italics indicate Figures. 2001: A Space Odyssey (film) 271 A Abu Ghraib, Iraq 202 acid deposition 255, 256 advertising 50, 121, 140, 141, 187, 197, 236, 237, 275, 276 Aeschylus 291 Afghanistan 202, 290 Africa and global financial crisis 170 growth 232 indigenous population and property rights 39 labour 107, 108, 174 ‘land grabs’ 39, 58, 77, 252 population growth 230 Agamben, Giorgio 283–4 agglomeration 149, 150 economies 149 aggregate demand 20, 80, 81, 104, 173 aggregate effective demand 235 agribusiness 95, 133, 136, 206, 247, 258 agriculture ix, 39, 61, 104, 113, 117, 148, 229, 239, 257–8, 261 Alabama 148 Algerian War (1954–62) 288, 290 alienation 57, 69, 125, 126, 128, 129, 130, 198, 213, 214, 215, 263, 266–70, 272, 275–6, 279–80, 281, 286, 287 Allende, Salvador 201 Althusser, Louis 286 Amazon 131, 132 Americas colonisation of 229 indigenous populations 283 Amnesty International 202 anti-capitalist movements 11, 14, 65, 110, 111, 162 anti-capitalist struggle 14, 110, 145, 193, 269, 294 anti-globalisation 125 anti-terrorism xiii apartheid 169, 202, 203 Apple 84, 123, 131 apprenticeships 117 Arab Spring movement 280 Arbenz, Jacobo 201 Argentina 59, 107, 152, 160, 232 Aristotelianism 283, 289 Aristotle 1, 4, 200, 215 arms races 93 arms traffickers 54 Arrighi, Giovanni 136 Adam Smith in Beijing 142 Arthur, Brian: The Nature of Technology 89, 95–9, 101–4, 110 artificial intelligence xii, 104, 108, 120, 139, 188, 208, 295 Asia ‘land grabs’ 58 urbanisation 254 assembly lines 119 asset values and the credit system 83 defined 240 devalued 257 housing market 19, 20, 21, 58, 133 and predatory lending 133 property 76 recovery of 234 speculation 83, 101, 179 associationism 281 AT&T 131 austerity xi, 84, 177, 191, 223 Australia 152 autodidacts 183 automation xii, 103, 105, 106, 108, 138, 208, 215, 295 B Babbage, Charles 119 Bangkok riots, Thailand (1968) x Bangladesh dismantlement of old ships 250 factories 129, 174, 292 industrialisation 123 labour 108, 123, 129 protests against unsafe labour conditions 280 textile mill tragedies 249 Bank of England 45, 46 banking bonuses 164 electronic 92, 100, 277 excessive charges 84 interbank lending 233 and monopoly power 143 national banks supplant local banking in Britain and France 158 net transfers between banks 28 power of bankers 75 private banks 233 profits 54 regional banks 158 shell games 54–5 systematic banking malfeasance 54, 61 Baran, Paul and Sweezy, Paul: Monopoly Capitalism 136 Barcelona 141, 160 barrios pobres ix barter 24, 25, 29 Battersea Power Station, London 255 Battle of Algiers, The (film) 288 Bavaria, Germany 143, 150 Becker, Gary 186 Bernanke, Ben 47 Bhutan 171 billionaires xi, 165, 169, 170 biodiversity 246, 254, 255, 260 biofuels 3 biomedical engineering xii Birmingham 149 Bitcoin 36, 109 Black Panthers 291 Blade Runner (film) 271 Blankfein, Lloyd 239–40 Bohr, Niels 70 Bolivia 257, 260, 284 bondholders xii, 32, 51, 152, 158, 223, 240, 244, 245 bonuses 54, 77, 164, 178 Bourdieu, Pierre 186, 187 bourgeois morality 195 bourgeois reformism 167, 211 ‘Brady Bonds’ 240 Braudel, Fernand 193 Braverman, Harry: Labor and Monopoly Capital 119 Brazil a BRIC country 170, 228 coffee growers 257 poverty grants 107 unrest in (2013) 171, 243, 293 Brecht, Bertolt 265, 293 Bretton Woods (1944) 46 brewing trade 138 BRIC countries 10, 170, 174, 228 Britain alliance between state and London merchant capitalists 44–5 banking 158 enclosure movement 58 lends to United States (nineteenth century) 153 suppression of Mau Mau 291 surpluses of capital and labour sent to colonies 152–3 welfare state 165 see also United Kingdom British Empire 115, 174 British Museum Library, London 4 British Petroleum (BP) 61, 128 Buffett, Peter 211–12, 245, 283, 285 Buffett, Warren 211 bureaucracy 121–2, 165, 203, 251 Bush, George, Jr 201, 202 C Cabet, Étienne 183 Cabral, Amilcar 291 cadastral mapping 41 Cadbury 18 Cairo uprising (2011) 99 Calhoun, Craig 178 California 29, 196, 254 Canada 152 Cape Canaveral, Florida 196 capital abolition of monopolisable skills 119–20 aim of 92, 96–7, 232 alternatives to 36, 69, 89, 162 annihilation of space through time 138, 147, 178 capital-labour contradiction 65, 66, 68–9 and capitalism 7, 57, 68, 115, 166, 218 centralisation of 135, 142 circulation of 5, 7, 8, 53, 63, 67, 73, 74, 75, 79, 88, 99, 147, 168, 172, 177, 234, 247, 251, 276 commodity 74, 81 control over labour 102–3, 116–17, 166, 171–2, 274, 291–2 creation of 57 cultural 186 destruction of 154, 196, 233–4 and division of labour 112 economic engine of 8, 10, 97, 168, 172, 200, 253, 265, 268 evolution of 54, 151, 171, 270 exploitation by 156, 195 fictitious 32–3, 34, 76, 101, 110–11, 239–42 fixed 75–8, 155, 234 importance of uneven geographical development to 161 inequality foundational for 171–2 investment in fixed capital 75 innovations 4 legal-illegal duality 72 limitless growth of 37 new form of 4, 14 parasitic forms of 245 power of xii, 36, 47 private capital accumulation 23 privatisation of 61 process-thing duality 70–78 profitability of 184, 191–2 purpose of 92 realisation of 88, 173, 192, 212, 231, 235, 242, 268, 273 relation to nature 246–63 reproduction of 4, 47, 55, 63, 64, 88, 97, 108, 130, 146, 161, 168, 171, 172, 180, 181, 182, 189, 194, 219, 233, 252 spatiality of 99 and surplus value 63 surpluses of 151, 152, 153 temporality of 99 tension between fixed and circulating capital 75–8, 88, 89 turnover time of 73, 99, 147 and wage rates 173 capital accumulation, exponential growth of 229 capital gains 85, 179 capital accumulation 7, 8, 75, 76, 78, 102, 149, 151–5, 159, 172, 173, 179, 192, 209, 223, 228–32, 238, 241, 243, 244, 247, 273, 274, 276 basic architecture for 88 and capital’s aim 92, 96 collapse of 106 compound rate of 228–9 and the credit system 83 and democratisation 43 and demographic growth 231 and household consumerism 192 and lack of aggregate effective demand in the market 81 and the land market 59 and Marx 5 maximising 98 models of 53 in a new territories 152–3 perpetual 92, 110, 146, 162, 233, 265 private 23 promotion of 34 and the property market 50 recent problems of 10 and the state 48 capitalism ailing 58 an alternative to 36 and capital 7, 57, 68, 115, 166, 218 city landscape of 160 consumerist 197 contagious predatory lawlessness within 109 crises essential to its reproduction ix; defined 7 and demand-side management 85 and democracy 43 disaster 254–5, 255 economic engine of xiii, 7–8, 11, 110, 220, 221, 252, 279 evolution of 218 geographical landscape of 146, 159 global xi–xii, 108, 124 history of 7 ‘knowledge-based’ xii, 238 and money power 33 and a moneyless economy 36 neoliberal 266 political economy of xiv; and private property rights 41 and racialisation 8 reproduction of ix; revivified xi; vulture 162 capitalist markets 33, 53 capitalo-centric studies 10 car industry 121, 138, 148, 158, 188 carbon trading 235, 250 Caribbean migrants 115 Cartesian thinking 247 Cato Institute 143 Central America 136 central banks/bankers xi–xii, 37, 45, 46, 48, 51, 109, 142, 156, 161, 173, 233, 245 centralisation 135, 142, 144, 145, 146, 149, 150, 219 Césaire, Aimé 291 CFCs (chloro-fluorocarbons) 248, 254, 256, 259 chambers of commerce 168 Chandler, Alfred 141 Chaplin, Charlie 103 Charles I, King 199 Chartism 184 Chávez, Hugo 123, 201 cheating 57, 61, 63 Cheney, Dick 289 Chicago riots (1968) x chicanery 60, 72 children 174 exploitation of 195 raising 188, 190 trading of 26 violence and abuse of 193 Chile 136, 194, 280 coup of 1973 165, 201 China air quality 250, 258 becomes dynamic centre of a global capitalism 124 a BRIC country 170, 228 capital in (after 2000) 154 class struggles 233 and competition 150, 161 consumerism 194–5, 236 decentralisation 49 dirigiste governmentality 48 dismantlement of old ships 250 dispossessions in 58 education 184, 187 factories 123, 129, 174, 182 famine in 124–5 ‘great leap forward’ 125 growth of 170, 227, 232 income inequalities 169 industrialisation 232 Keynesian demand-side and debt-financed expansion xi; labour 80, 82, 107, 108, 123, 174, 230 life expectancy 259 personal debt 194 remittances 175 special economic zones 41, 144 speculative booms and bubbles in housing markets 21 suburbanisation 253 and technology 101 toxic batteries 249–50 unstable lurches forward 10 urban and infrastructural projects 151 urbanisation 232 Chinese Communist Party 108, 142 Church, the 185, 189, 199 circular cumulative causation 150 CitiBank 61 citizenship rights 168 civil rights 202, 205 class affluent classes 205 alliances 143, 149 class analysis xiii; conflict 85, 159 domination 91, 110 plutocratic capitalist xiii; power 55, 61, 88, 89, 92, 97, 99, 110, 134, 135, 221, 279 and race 166, 291 rule 91 structure 91 class struggle 34, 54, 67, 68, 85, 99, 103, 110, 116, 120, 135, 159, 172, 175, 183, 214, 233 climate change 4, 253–6, 259 Clinton, President Bill 176 Cloud Atlas (film) 271 CNN 285 coal 3, 255 coercion x, 41–4, 53, 60–63, 79, 95, 201, 286 Cold War 153, 165 collateralised debt obligations (CDOs) 78 Collins, Suzanne: The Hunger Games 264 Colombia 280 colonialism 257 the colonised 289–90 indigenous populations 39, 40 liberation from colonial rule 202 philanthropic 208, 285 colonisation 229, 262 ‘combinatorial evolution’ 96, 102, 104, 146, 147, 248 commercialisation 262, 263, 266 commodification 24, 55, 57, 59–63, 88, 115, 140, 141, 192, 193, 235, 243, 251, 253, 260, 262, 263, 273 commodities advertising 275 asking price 31 and barter 24 commodity exchange 39, 64 compared with products 25–6 defective or dangerous 72 definition 39 devaluation of 234 exchange value 15, 25 falling costs of 117 importance of workers as buyers 80–81 international trade in 256 labour power as a commodity 62 low-value 29 mobility of 147–8 obsolescence 236 single metric of value 24 unique 140–41 use value 15, 26, 35 commodity markets 49 ‘common capital of the class’ 142, 143 common wealth created by social labour 53 private appropriation of 53, 54, 55, 61, 88, 89 reproduction of 61 use values 53 commons collective management of 50 crucial 295 enclosure of 41, 235 natural 250 privatised 250 communications 99, 147, 148, 177 communism 196 collapse of (1989) xii, 165 communist parties 136 during Cold War 165 scientific 269 socialism/communism 91, 269 comparative advantage 122 competition and alienated workers 125 avoiding 31 between capitals 172 between energy and food production 3 decentralised 145 and deflationary crisis (1930s) 136 foreign 148, 155 geopolitical 219 inter-capitalist 110 international 154, 175 interstate 110 interterritorial 219 in labour market 116 and monopoly 131–45, 146, 218 and technology 92–3 and turnover time of capital 73, 99 and wages 135 competitive advantage 73, 93, 96, 112, 161 competitive market 131, 132 competitiveness 184 complementarity principle of 70 compounding growth 37, 49, 222, 227, 228, 233, 234, 235, 243, 244 perpetual 222–45, 296 computerisation 100, 120, 222 computers 92, 100, 105, 119 hardware 92, 101 organisational forms 92, 93, 99, 101 programming 120 software 92, 99, 101, 115, 116 conscience laundering 211, 245, 284, 286 Conscious Capitalism 284 constitutional rights 58 constitutionality 60, 61 constitutions progressive 284 and social bond between human rights and private property 40 US Constitution 284 and usurpation of power 45 consumerism 89, 106, 160, 192–5, 197, 198, 236, 274–7 containerisation 138, 148, 158 contracts 71, 72, 93, 207 contradictions Aristotelian conception of 4 between money and the social labour money represents 83 between reality and appearance 4–6 between use and exchange value 83 of capital and capitalism 68 contagious intensification of 14 creative use of 3 dialectical conception of 4 differing reactions to 2–3 and general crises 14 and innovation 3 moved around rather than resolved 3–4 multiple 33, 42 resolution of 3, 4 two modes of usage 1–2 unstable 89 Controller of the Currency 120 corporations and common wealth 54 corporate management 98–9 power of 57–8, 136 and private property 39–40 ‘visible hand’ 141–2 corruption 53, 197, 266 cosmopolitanism 285 cost of living 164, 175 credit cards 67, 133, 277 credit card companies 54, 84, 278 credit financing 152 credit system 83, 92, 101, 111, 239 crises changes in mental conceptions of the world ix-x; crisis of capital 4 defined 4 essential to the reproduction of capitalism ix; general crisis ensuing from contagions 14 housing markets crisis (2007–9) 18, 20, 22 reconfiguration of physical landscapes ix; slow resolution of x; sovereign debt crisis (after 2012) 37 currency markets, turbulence of (late 1960s) x customary rights 41, 59, 198 D Davos conferences 169 DDT 259 Debord, Guy: The Society of the Spectacle 236 debt creation 236 debt encumbrancy 212 debt peonage 62, 212 decentralisation 49, 142, 143, 144, 146, 148, 219, 281, 295 Declaration of Independence (US) 284 decolonisation 282, 288, 290 decommodification 85 deindustrialisation xii, 77–8, 98, 110, 148, 153, 159, 234 DeLong, Bradford 228 demand management 81, 82, 106, 176 demand-side management 85 democracy 47, 215 bourgeois 43, 49 governance within capitalism 43 social 190 totalitarian 220, 292 democratic governance 220, 266 democratisation 43 Deng Xiaoping x depressions 49, 227 1930s x, 108, 136, 169, 227, 232, 234 Descartes, René 247 Detroit 77, 136, 138, 148, 150, 152, 155, 159, 160 devaluation 153, 155, 162 of capital 233 of commodities 234 crises 150–51, 152, 154 localised 154 regional 154 developing countries 16, 240 Dhaka, Bangladesh 77 dialectics 70 Dickens, Charles 126, 169 Bleak House 226 Dombey and Son 184 digital revolution 144 disabled, the 202 see also handicapped discrimination 7, 8, 68, 116, 297 diseases 10, 211, 246, 254, 260 disempowerment 81, 103, 116, 119, 198, 270 disinvestment 78 Disneyfication 276 dispossession accumulation by 60, 67, 68, 84, 101, 111, 133, 141, 212 and capital 54, 55, 57 economies of 162 of indigenous populations 40, 59, 207 ‘land grabs’ 58 of land rights of the Irish 40 of the marginalised 198 political economy of 58 distributional equality 172 distributional shares 164–5, 166 division of labour 24, 71, 112–30, 154, 184, 268, 270 and Adam Smith 98, 118 defined 112 ‘the detail division of labour’ 118, 121 distinctions and oppositions 113–14 evolution of 112, 120, 121, 126 and gender 114–15 increasing complexity of 124, 125, 126 industrial proletariat 114 and innovation 96 ‘new international division of labour’ 122–3 organisation of 98 proliferating 121 relation between the parts and the whole 112 social 113, 118, 121, 125 technical 113, 295 uneven geographical developments in 130 dot-com bubble (1990s) 222–3, 241 ‘double coincidence of wants and needs’ 24 drugs 32, 193, 248 cartels 54 Durkheim, Emile 122, 125 Dust Bowl (United States, 1930s) 257 dynamism 92, 104, 146, 219 dystopia 229, 232, 264 E Eagleton , Terry: Why Marx Was Right 1, 21, 200, 214–15 East Asia crisis of 1997–98 154 dirigiste governmentality 48 education 184 rise of 170 Eastern Europe 115, 230 ecological offsets 250 economic rationality 211, 250, 252, 273, 274, 275, 277, 278, 279 economies 48 advanced capitalist 228, 236 agglomeration 149 of dispossession 162 domination of industrial cartels and finance capital 135 household 192 informal 175 knowledge-based 188 mature 227–8 regional 149 reoriented to demand-side management 85 of scale 75 solidarity 66, 180 stagnant xii ecosystems 207, 247, 248, 251–6, 258, 261, 263, 296 Ecuador 46, 152, 284 education 23, 58, 60, 67–8, 84, 110, 127–8, 129, 134, 150, 156, 168, 183, 184, 185, 187, 188, 189, 223, 235, 296 efficiency 71, 92, 93, 98, 103, 117, 118, 119, 122, 126, 272, 273, 284 efficient market hypothesis 118 Egypt 107, 280, 293 Ehrlich, Paul 246 electronics 120, 121, 129, 236, 292 emerging markets 170–71, 242 employment 37 capital in command of job creation 172, 174 conditions of 128 full-time 274 opportunities for xii, 108, 168 regional crises of 151 of women 108, 114, 115, 127 see also labour enclosure movement 58 Engels, Friedrich 70 The Condition of the English Working Class in England 292 English Civil War (1642–9) 199 Enlightenment 247 Enron 133, 241 environmental damage 49, 61, 110, 111, 113, 232, 249–50, 255, 257, 258, 259, 265, 286, 293 environmental movement 249, 252 environmentalism 249, 252–3 Epicurus 283 equal rights 64 Erasmus, Desiderius 283 ethnic hatreds and discriminations 8, 165 ethnic minorities 168 ethnicisation 62 ethnicity 7, 68, 116 euro, the 15, 37, 46 Europe deindustrialisation in 234 economic development in 10 fascist parties 280 low population growth rate 230 social democratic era 18 unemployment 108 women in labour force 230 European Central Bank 37, 46, 51 European Commission 51 European Union (EU) 95, 159 exchange values commodities 15, 25, 64 dominance of 266 and housing 14–23, 43 and money 28, 35, 38 uniform and qualitatively identical 15 and use values 15, 35, 42, 44, 50, 60, 65, 88 exclusionary permanent ownership rights 39 experts 122 exploitation 49, 54, 57, 62, 68, 75, 83, 107, 108, 124, 126, 128, 129, 150, 156, 159, 166, 175, 176, 182, 185, 193, 195, 208, 246, 257 exponential growth 224, 240, 254 capacity for 230 of capital 246 of capital accumulation 223, 229 of capitalist activity 253 and capital’s ecosystem 255 in computer power 105 and environmental resources 260 in human affairs 229 and innovations in finance and banking 100 potential dangers of 222, 223 of sophisticated technologies 100 expropriation 207 externality effects 43–4 Exxon 128 F Facebook 236, 278, 279 factories ix, 123, 129, 160, 174, 182, 247, 292 Factory Act (1864) 127, 183 famine 124–5, 229, 246 Fannie Mae 50 Fanon, Frantz 287 The Wretched of the Earth 288–90, 293 fascist parties 280 favelas ix, 16, 84, 175 feminisation 115 feminists 189, 192, 283 fertilisers 255 fetishes, fetishism 4–7, 31, 36–7, 61, 103, 111, 179, 198, 243, 245, 269, 278 feudalism 41 financial markets 60, 133 financialisation 238 FIRE (finance, insurance and real estate) sections 113 fishing 59, 113, 148, 249, 250 fixity and motion 75–8, 88, 89, 146, 155 Food and Drug Administration 120 food production/supply 3, 229, 246, 248, 252 security 253, 294, 296 stamp aid 206, 292 Ford, Martin 104–8, 111, 273 foreclosure 21, 22, 24, 54, 58, 241, 268 forestry 113, 148, 257 fossil fuels 3–4 Foucault, Michel xiii, 204, 209, 280–81 Fourier, François Marie Charles 183 Fourierists 18 Fourteen Points 201 France banking 158 dirigiste governmentality under de Gaulle 48 and European Central Bank 46 fascist parties 280 Francis, Pope 293 Apostolic Exhortation 275–6 Frankfurt School 261 Freddie Mac 50 free trade 138, 157 freedom 47, 48, 142, 143, 218, 219, 220, 265, 267–270, 276, 279–82, 285, 288, 296 and centralised power 142 cultural 168 freedom and domination 199–215, 219, 268, 285 and the good life 215 and money creation 51 popular desire for 43 religious 168 and state finances 48 under the rule of capital 64 see also liberty and freedom freedom of movement 47, 296 freedom of thought 200 freedom of the press 213 French Revolution 203, 213, 284 G G7 159 G20 159 Gallup survey of work 271–2 Gandhi, Mahatma 284, 291 Gaulle, Charles de 48 gay rights 166 GDP 194, 195, 223 Gehry, Frank 141 gender discriminations 7, 8, 68, 165 gene sequences 60 General Motors xii genetic engineering xii, 101, 247 genetic materials 235, 241, 251, 261 genetically modified foods 101 genocide 8 gentrification 19, 84, 141, 276 geocentric model 5 geographical landscape building a new 151, 155 of capitalism 159 evolution of 146–7 instability of 146 soulless, rationalised 157 geopolitical struggles 8, 154 Germany and austerity 223 autobahns built 151 and European Central Bank 46 inflation during 1920s 30 wage repression 158–9 Gesell, Silvio 35 Ghana 291 global economic crisis (2007–9) 22, 23, 47, 118, 124, 132, 151, 170, 228, 232, 234, 235, 241 global financialisation x, 177–8 global warming 260 globalisation 136, 174, 176, 179, 223, 293 gold 27–31, 33, 37, 57, 227, 233, 238, 240 Golden Dawn 280 Goldman Sachs 75, 239 Google 131, 136, 195, 279 Gordon, Robert 222, 223, 230, 239, 304n2 Gore, Al 249 Gorz, André 104–5, 107, 242, 270–77, 279 government 60 democratic 48 planning 48 and social bond between human rights and private property 40 spending power 48 governmentality 43, 48, 157, 209, 280–81, 285 Gramsci, Antonio 286, 293 Greco, Thomas 48–9 Greece 160, 161, 162, 171, 235 austerity 223 degradation of the well-being of the masses xi; fascist parties 280 the power of the bondholders 51, 152 greenwashing 249 Guantanamo Bay, Cuba 202, 284 Guatemala 201 Guevara, Che 291 Guggenheim Museum, Bilbao 141 guild system 117 Guinea-Bissau 291 Gulf Oil Spill (2010) 61 H Habermas, Jürgen 192 habitat 246, 249, 252, 253, 255 handicapped, the 218 see also disabled Harvey, David The Enigma of Capital 265 Rebel Cities 282 Hayek, Friedrich 42 Road to Serfdom 206 health care 23, 58, 60, 67–8, 84, 110, 134, 156, 167, 189, 190, 235, 296 hedge funds 101, 162, 239, 241, 249 managers 164, 178 Heidegger, Martin 59, 250 Heritage Foundation 143 heterotopic spaces 219 Hill, Christopher 199 Ho Chi Minh 291 holocausts 8 homelessness 58 Hong Kong 150, 160 housing 156, 296 asset values 19, 20, 21, 58 ‘built to order’ 17 construction 67 controlling externalities 19–20 exchange values 14–23, 43 gated communities ix, 160, 208, 264 high costs 84 home ownership 49–50 investing in improvements 20, 43 mortgages 19, 21, 28, 50, 67, 82 predatory practices 67, 133 production costs 17 rental markets 22 renting or leasing 18–19, 67 self-built 84 self-help 16, 160 slum ix, 16, 175 social 18, 235 speculating in exchange value 20–22 speculative builds 17, 28, 78, 82 tenement 17, 160 terraced 17 tract ix, 17, 82 use values 14–19, 21–2, 23, 67 housing markets 18, 19, 21, 22, 28, 32, 49, 58, 60, 67, 68, 77, 83, 133, 192 crisis (2007–9) 18, 20, 22, 82–3 HSBC 61 Hudson, Michael 222 human capital theory 185, 186 human evolution 229–30 human nature 97, 198, 213, 261, 262, 263 revolt of 263, 264–81 human rights 40, 200, 202 humanism 269 capitalist 212 defined 283 education 128 excesses and dark side 283 and freedom 200, 208, 210 liberal 210, 287, 289 Marxist 284, 286 religious 283 Renaissance 283 revolutionary 212, 221, 282–93 secular 283, 285–6 types of 284 Hungary: fascist parties 280 Husserl, Edmund 192 Huygens, Christiaan 70 I IBM 128 Iceland: banking 55 identity politics xiii illegal aliens (‘sans-papiers’) 156 illegality 61, 72 immigrants, housing 160 imperialism 135, 136, 143, 201, 257, 258 income bourgeois disposable 235 disparities of 164–81 levelling up of 171 redistribution to the lower classes xi; see also wages indebtedness 152, 194, 222 India billionaires in 170 a BRIC country 170, 228 call centres 139 consumerism 236 dismantlement of old ships 250 labour 107, 230 ‘land grabs’ 77 moneylenders 210 social reproduction in 194 software engineers 196 special economic zones 144 unstable lurches forward 10 indigenous populations 193, 202, 257, 283 dispossession of 40, 59, 207 and exclusionary ownership rights 39 individualism 42, 197, 214, 281 Indonesia 129, 160 industrial cartels 135 Industrial Revolution 127 industrialisation 123, 189, 229, 232 inflation 30, 36, 37, 40, 49, 136, 228, 233 inheritance 40 Inner Asia, labour in 108 innovation 132 centres of 96 and the class struggle 103 competitive 219 as a double-edged sword xii; improving the qualities of daily life 4 labour-saving 104, 106, 107, 108 logistical 147 organisational 147 political 219 product 93 technological 94–5, 105, 147, 219 as a way out of a contradiction 3 insurance companies 278 intellectual property rights xii, 41, 123, 133, 139, 187, 207, 235, 241–2, 251 interest compound 5, 222, 224, 225, 226–7 interest-rate manipulations 54 interest rates 54, 186 living off 179, 186 on loans 17 money capital 28, 32 and mortgages 19, 67 on repayment of loans to the state 32 simple 225, 227 usury 49 Internal Revenue Service income tax returns 164 International Monetary Fund (IMF) 49, 51, 100, 143, 161, 169, 186, 234, 240 internet 158, 220, 278 investment: in fixed capital 75 investment pension funds 35–6 IOUs 30 Iran 232, 289 Iranian Revolution 289 Iraq war 201, 290 Ireland dispossession of land rights 40 housing market crash (2007–9) 82–3 Istanbul 141 uprising (2013) 99, 129, 171, 243 Italy 51,161, 223, 235 ITT 136 J Jacobs, Jane 96 James, C.L.R. 291 Japan 1980s economic boom 18 capital in (1980s) 154 economic development in 10 factories 123 growth rate 227 land market crash (1990) 18 low population growth rate 230 and Marshall Plan 153 post-war recovery 161 Jewish Question 213 JPMorgan 61 Judaeo-Christian tradition 283 K Kant, Immanuel 285 Katz, Cindi 189, 195, 197 Kenya 291 Kerala, India 171 Keynes, John Maynard xi, 46, 76, 244, 266 ‘Economic Possibilities for our Grandchildren’ 33–4 General Theory of Employment, Interest, and Money 35 Keynesianism demand management 82, 105, 176 demand-side and debt-financed expansion xi King, Martin Luther 284, 291 knowledge xii, 26, 41, 95, 96, 100, 105, 113, 122, 123, 127, 144, 184, 188, 196, 238, 242, 295 Koch brothers 292 Kohl, Helmut x L labour agitating and fighting for more 64 alienated workers 125, 126, 128, 129, 130 artisan 117, 182–3 and automation 105 capital/labour contradiction 65, 66, 68–9, 146 collective 117 commodification of 57 contracts 71, 72 control over 74, 102–11, 119, 166, 171–2, 274, 291–2 deskilling 111, 119 discipline 65, 79 disempowering workers 81, 103, 116, 119, 270 division of see division of labour; domestic 196 education 127–8, 129, 183, 187 exploitation of 54, 57, 62, 68, 75, 83, 107, 108, 126, 128, 129, 150, 156, 166, 175, 176, 182, 185, 195 factory 122, 123, 237 fair market value 63, 64 Gallup survey 271–2 house building 17 housework 114–15, 192 huge increase in the global wage labour force 107–8 importance of workers as buyers of commodities 80–81 ‘industrial reserve army’ 79–80, 173–4 migrations of 118 non-unionised xii; power of 61–4, 71, 73, 74, 79, 81, 88, 99, 108, 118–19, 127, 173, 175, 183, 189, 207, 233, 267 privatisation of 61 in service 117 skills 116, 118–19, 123, 149, 182–3, 185, 231 social see social labour; surplus 151, 152, 173–4, 175, 195, 233 symbolic 123 and trade unions 116 trading in labour services 62–3 unalienated 66, 89 unionised xii; unpaid 189 unskilled 114, 185 women in workforce see under women; worked to exhaustion or death 61, 182 see also employment labour markets 47, 62, 64, 66–9, 71, 102, 114, 116, 118, 166 labour-saving devices 104, 106, 107, 173, 174, 277 labour power commodification of 61, 88 exploitation of 62, 175 generation of surplus value 63 mobility of 99 monetisation of 61 private property character of 64 privatisation of 61 reserves of 108 Lagos, Nigeria, social reproduction in 195 laissez-faire 118, 205, 207, 281 land commodification 260–61 concept of 76–7 division of 59 and enclosure movement 58 establishing as private property 41 exhausting its fertility 61 privatisation 59, 61 scarcity 77 urban 251 ‘land grabs’ 39, 58, 77, 252 land market 18, 59 land price 17 land registry 41 land rents 78, 85 land rights 40, 93 land-use zoning 43 landlords 54, 67, 83, 140, 179, 251, 261 Latin America ’1and grabs’ 58, 77 labour 107 reductions in social inequality 171 two ‘lost decades’ of development 234 lawyers 22, 26, 67, 82, 245 leasing 16, 17, 18 Lebed, Jonathan 195 Lee Kuan-Yew 48 Leeds 149 Lefebvre, Henri 157, 192 Critique of Everyday Life 197–8 left, the defence of jobs and skills under threat 110 and the factory worker 68 incapable of mounting opposition to the power of capital xii; remains of the radical left xii–xiii Lehman Brothers investment bank, fall of (2008) x–xi, 47, 241 ‘leisure’ industries 115 Lenin, Vladimir 135 Leninism 91 Lewis, Michael: The Big Short 20–21 LGBT groups 168, 202, 218 liberation struggle 288, 290 liberty, liberties 44, 48–51, 142, 143, 212, 276, 284, 289 and bourgeois democracy 49 and centralised power 142 and money creation 51 non-coercive individual liberty 42 popular desire for 43 and state finances 48 liberty and freedom 199–215 coercion and violence in pursuit of 201 government surveillance and cracking of encrypted codes 201–2 human rights abuses 202 popular desire for 203 rhetoric on 200–201, 202 life expectancy 250, 258, 259 light, corpuscular theory of 70 living standards xii, 63, 64, 84, 89, 134, 175, 230 loans fictitious capital 32 housing 19 interest on 17 Locke, John 40, 201, 204 logos 31 London smog of 1952 255 unrest in (2011) 243 Los Angeles 150, 292 Louis XIV, King of France 245 Lovelace, Richard 199, 200, 203 Luddites 101 M McCarthyite scourge 56 MacKinnon, Catherine: Are Women Human?


pages: 565 words: 151,129

The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism by Jeremy Rifkin

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3D printing, additive manufacturing, Airbnb, autonomous vehicles, back-to-the-land, big-box store, bioinformatics, bitcoin, business process, Chris Urmson, clean water, cleantech, cloud computing, collaborative consumption, collaborative economy, Community Supported Agriculture, computer vision, crowdsourcing, demographic transition, distributed generation, en.wikipedia.org, Frederick Winslow Taylor, global supply chain, global village, Hacker Ethic, industrial robot, informal economy, intermodal, Internet of things, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Julian Assange, Kickstarter, knowledge worker, labour mobility, Mahatma Gandhi, manufacturing employment, Mark Zuckerberg, market design, means of production, meta analysis, meta-analysis, natural language processing, new economy, New Urbanism, nuclear winter, Occupy movement, oil shale / tar sands, pattern recognition, peer-to-peer lending, personalized medicine, phenotype, planetary scale, price discrimination, profit motive, RAND corporation, randomized controlled trial, Ray Kurzweil, RFID, Richard Stallman, risk/return, Ronald Coase, search inside the book, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, smart cities, smart grid, smart meter, social web, software as a service, spectrum auction, Steve Jobs, Stewart Brand, the built environment, The Nature of the Firm, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, transaction costs, urban planning, Watson beat the top human players on Jeopardy!, web application, Whole Earth Catalog, Whole Earth Review, WikiLeaks, working poor, Zipcar

The race Lange outlines is relentless over the long run, with productivity continually pushing costs and prices down, forcing profit margins to shrink. While most economists today would look at an era of nearly free goods and services with a sense of foreboding, a few earlier economists expressed a guarded enthusiasm over the prospect. Keynes, the venerable twentieth-century economist whose economic theories still hold considerable weight, penned a small essay in 1930 entitled “Economic Possibilities for Our Grandchildren,” which appeared as millions of Americans were beginning to sense that the sudden economic downturn of 1929 was in fact the beginning of a long plunge to the bottom. Keynes observed that new technologies were advancing productivity and reducing the cost of goods and services at an unprecedented rate. They were also dramatically reducing the amount of human labor needed to produce goods and services.

George, 242 The Descent of Man (Darwin), 63 Deutsche Telekom, 54, 101, 198 Dini, Erico, 97 DIY culture, 90, 94–95, 99–100 Dobb, Maurice, 40 Doctorow, Cory, 95 dominance of social media, 201 see also Facebook; Friendster; Myspace; Twitter driverless vehicle(s), 126, 230–231 Drucker, Peter, 264 Duffy, John, 137 eBay becoming an online monopoly, 201–205 cuts out the middlemen, 232 and free currency, 262 as a profit-seeking enterprise, 252 ecological footprint, 107, 274–276, 284, 286, 302 Econofly, 145 economic need for greener/cleaner energy, 10 “Economic Policy for the Information Economy” (Summers and DeLong), 7–9 “Economic Possibilities for Our Grandchildren” (Keynes), 6–7 The Economist, 5, 77–78, 121–122, 251, 259, 265 economy of abundance, 297–303 and a biosphere lifestyle, 297–303 circular, idea of a, 236–237 and the sustainable cornucopia, 273–296 education, higher. see massive open online courses (MOOCs) edX, 115–116 Eisenstein, Elizabeth, 179 electricity importance of, 51–53 liberates women, 285 Electric Power Research Institute (EPRI), 142, 293–294 electromagnetic spectrum, 148, 165, 167, 185, 189–190 electronic healthcare records, 13, 130, 244 Elkington, John, 264 The Empathetic Civilization (Hegel), 301 employment, new kinds of, 266–269 Enclosure Movement, 17, 31, 169 The End of Work (Rifkin), 121–122 energy adaptive computing, 85 Commons, 205–206 cooperatives, 215–217 costs at data centers, 84–86 and economics, 10–11 and fossil fuel(s). see fossil fuel(s) free, 81–84 and Germany. see Germany infrastructure is vulnerable to climate change, 290 IT. see Cleanweb Movement use, proactive rather than reactive, 143 Energy Watch Group, 83–84 entrepreneurialism, strengthened by Protestant theologians, 59 entropy, definition of, 10 Entropy: A New World View (Rifkin), 100 environmentalist(s), 170–172, 187–188 Environmental Movement, 173, 182, 185 era of transparency, 75–77 Etsy, 91, 262 European Bioinformatics Institute, 86 European Commission, 11, 76–77 European enclosures, and birth of the market economy, 29–38 exponential curves, 79– 81 “extreme productivity,” 3, 70–73 ExxonMobil, 49, 54 the Fab Lab, 70, 94–95, 310 Facebook becoming an online monopoly, 201–205 changes the concept of privacy, 76 as communication, 151, 234, 248, 250, 302 exploiting the Commons for commercial ends, 199–200, 310 and freedom, 226 and GM’s decision to yank ads from, 251 as a podium for activism, 189 revenue and market share, 201 and the “Social Energy App,” 147 and Spotify, 145 and Yerdle, 237 and Zuckerberg, 145 Farber, Amy, 241–242 Federal Communications Commission (FCC), 147–151, 194, 198–199 Ferris, Cameron, 246 fertility rate, falling, 285 Filabot, 96 “fit-lifters,” 127 Flickr, 180, 234, 250 forager/hunter society(ies), 298–302 Ford, Henry, 52–54, 71, 98, 105, 123, 308 Fortune 500 companies, 22, 114, 175, 310 fossil fuel(s) costs of, 69, 87, 91, 140, 142 and cyberattacks, 294 location of, 22–23 reliance on, 54, 194–195 stalwart supporters of, 86–87 versus renewables, 69–72, 81–87, 216–217, 267, 283 see also oil “free” energy, 81–84 as a marketing device, 5 in price and free from scarcity, 273 Free Culture Movement, 173–188, 202 Freecycle Network (TFN), 236 “free-riders dilemma,” 156, 258 Free Software Foundation, 174–175 Free Software Movement, 100, 170, 174–179 free wi-fi, 147–149 feudal commons, 16–17, 29–32, 36–37, 58–61, 132, 155–156, 167, 269 Foundation on Economic Trends (FOET), 165–167, 182 Friendster, 200, 204 Frischmann, Brett M., 193–194 Frydman, Gilles, 242 Gaia hypothesis, 184 Gandhi, Mahatma, 104–108 Gates, Bill, 171, 174 GDP, 17, 20–22, 54, 74, 123, 129, 240, 266 General Electric (GE), 13, 14, 54, 73–74, 165, 210, 234 General Motors, 53, 54, 228–230 General Public Licenses (GPL), 94, 175–176 Germany and cooperatives, 213–216 flood in, 287 and Google, 201 and renewable energy, 82–83, 101, 141, 253, 257 and 3D printing, 101–102 Gershenfeld, Neil, 94 Gillespie, Tarleton, 203 Girsky, Stephen, 228–229 globalization versus reopening the global commons, 187–192 GM, teams up with RelayRides, 228–229 GNU operating system, 174–176 God of oil. see Hall, Andy Google cashes in on selling Big Data, 199–200 and control of the U.S. media market, 54 and driverless vehicles, 230 energy usage, 85 favors free Wi-Fi connection, 148 market share and revenue generated by, 201 as natural monopoly, 202–205 Ngram Viewer, 18 primary revenue stream is weakening, 251 as tracking tool, 245 Gore, Al, 219 Gorenflo, Neal, 238 Gou, Terry, 124 “The Governing of the Commons” (Ostrom), 158–162 Gram Power, 103–104 Green Button initiative, 146 Great Chain of Being, 30, 58–59, 61 Great Recession, 20, 122–129, 233, 255–262, 281–282 green feed-in tariff(s), 139, 206 Guardian, 104, 116 guilds by trade, 36–37 Gutenberg, Johannes, 35–37 hacker(s) connotations of the term, 93 and cyberterrorists, 291–292 and environmentalist(s), 170–172, 187–188 and the Free Culture Movement, 173–174 and the Makers Movement, 99–104 and 3D printing, 95 Hall, Andy, 87 Hansen, James, 287 Happiness: Lessons from a New Science (Layard), 277 Haque, Umair, 253 Hardin, Garrett, 155–159 Hazen, Paul, 213 healthcare, 13, 74, 130, 240–247 hedonistic treadmill, 276 Hegel, Georg Friedrich, 279, 301 Heilbroner, Robert, 5, 105 Herr, Bill, 129 higher education. see massive open online courses (MOOCs) The High Price of Materialism (Kasser), 277 high-tech Armageddon. see cyber attacks/cyberterrorism Hoch, Dan, 243–244 Hotelling, Harold, 136–137, 150, 206–211 how best to judge economic success, 20–21 Hoyt, Robert, 58 human race empathetic sensibility of, 278–286, 301 and Enlightenment, 60–65 and human nature through a capitalist lens, 57–65 liberating the, 7, 70 and ostracism, 163 rethinking salvation, 58–59 what makes us happy, 276–285 Hume, David, 62, 308 hybrid economy. see capitalism; Collaborative Commons IBM, 13, 14, 80, 130, 234, 250 infofacture vs. manufacture, 90 Infrastructure: The Social Value of Shared Resources (Frischmann), 193–194 Integrated Transportation Provider Services (ITPS), 228 Intel, 79, 148 Internet Corporation for Assigned Names and Numbers (ICANN), 195–196 the Internet of Everything, 14, 73 the Internet generation, 132, 145, 179, 226, 230 the Internet of Things (IoT), 11–16, 65 and Big Data. see Big Data and the chief productivity officer (CPO), 15 as a double-edged sword, 78, 267 and healthcare. see healthcare made up of, 11, 14–15 and near zero marginal cost society, 73–78 negatives associated with, 14 obstacles that slowed the deployment of, 74 and smart cities. see smart cities as source of employment, 267–268 and use of sensors, 11–13, 73–74, 143, 219, 230 Internet of Things European Research Cluster, 11 infrastructure, requirements of, 14 Izz ad-Din al-Qassam Cyber Fighters, 292 Jakubowski, Marcin, 102–103 James, William, 279–280 Jennings, Ken, 130 Jobs, Steve, 305, 308 Jumpstart Our Business Start Ups Act, 257 Kaku, Michio, 79 Kasser, Tim, 277 Keynes, John Maynard, 5–7, 105, 268 Khoshnevis, Dr.

Many, though not all, of the old guard in the commercial arena can’t imagine how economic life would proceed in a world where most goods and services are nearly free, profit is defunct, property is meaningless, and the market is superfluous. What then? Some are just beginning to ask that question. They might find some solace in the fact that several of the great architects of modern economic thinking glimpsed the problem long ago. John Maynard Keynes, Robert Heilbroner, and Wassily Leontief, to name a few, pondered the critical contradiction that drove capitalism forward. They wondered whether, in the distant future, new technologies might so boost productivity and lower prices as to create the coming state of affairs. Oskar Lange, a University of Chicago professor of the early twentieth century, captured a sense of the conundrum underlying a mature capitalism in which the search for new technological innovations to advance productivity and cheapen prices put the system at war with itself.


pages: 179 words: 43,441

The Fourth Industrial Revolution by Klaus Schwab

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3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, Buckminster Fuller, call centre, clean water, collaborative consumption, conceptual framework, continuous integration, crowdsourcing, disintermediation, distributed ledger, Edward Snowden, Elon Musk, epigenetics, Erik Brynjolfsson, future of work, global value chain, Google Glasses, income inequality, Internet Archive, Internet of things, invention of the steam engine, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, life extension, Lyft, megacity, meta analysis, meta-analysis, more computing power than Apollo, mutually assured destruction, Narrative Science, Network effects, Nicholas Carr, personalized medicine, precariat, precision agriculture, Productivity paradox, race to the bottom, randomized controlled trial, reshoring, RFID, rising living standards, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, smart cities, smart contracts, software as a service, Stephen Hawking, Steve Jobs, Steven Levy, Stuxnet, The Spirit Level, total factor productivity, transaction costs, Uber and Lyft, Watson beat the top human players on Jeopardy!, WikiLeaks, winner-take-all economy, women in the workforce, working-age population, Y Combinator, Zipcar

http://www.frbsf.org/economic-research/publications/economic-letter/2015/february/economic-growth-information-technology-factor-productivity/ 21 The economist Brad DeLong makes this point in: J. Bradford DeLong, “Making Do With More”, Project Syndicate, 26 February 2015. http://www.project-syndicate.org/commentary/abundance-without-living-standards-growth-by-j--bradford-delong-2015-02 22 John Maynard Keynes, “Economic Possibilities for our Grandchildren” in Essays in Persuasion, Harcourt Brace, 1931. 23 Carl Benedikt Frey and Michael Osborne, “The Future of Employment: How Susceptible Are Jobs to Computerisation?”, Oxford Martin School, Programme on the Impacts of Future Technology, University of Oxford, 17 September 2013. http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf 24 Shelley Podolny, “If an Algorithm Wrote This, How Would You Even Know?”

We need, however, to also recognize and manage the negative impacts it can have, particularly with regard to inequality, employment and labour markets. 3.1.2 Employment Despite the potential positive impact of technology on economic growth, it is nonetheless essential to address its possible negative impact, at least in the short term, on the labour market. Fears about the impact of technology on jobs are not new. In 1931, the economist John Maynard Keynes famously warned about widespread technological unemployment “due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour”.22 This proved to be wrong but what if this time it were true? Over the past few years, the debate has been reignited by evidence of computers substituting for a number of jobs, most notably bookkeepers, cashiers and telephone operators.


pages: 339 words: 105,938

The Skeptical Economist: Revealing the Ethics Inside Economics by Jonathan Aldred

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airport security, Berlin Wall, carbon footprint, citizen journalism, clean water, cognitive dissonance, congestion charging, correlation does not imply causation, Diane Coyle, experimental subject, Fall of the Berlin Wall, first-past-the-post, framing effect, greed is good, happiness index / gross national happiness, invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, labour market flexibility, laissez-faire capitalism, libertarian paternalism, new economy, pension reform, positional goods, Ralph Waldo Emerson, RAND corporation, risk tolerance, school choice, spectrum auction, trade liberalization, ultimatum game

The great economists of the past saw economics and ethics as inextricably entwined; one example of this is their emphasis on the limits of economic prosperity in bringing about broader improvements in the human condition, and hence the relative insignificance they attached to economic prosperity alone. Adam Smith was dismissive of economic success as an end in itself: ‘if the trappings of wealth are viewed philosophically, they will always appear in the highest degree contemptible and trifling’.6 John Maynard Keynes, the most influential economist of the 20th century, shared similar concerns. In ‘Economic possibilities for our grandchildren’, Keynes described the ‘love of money as a possession’ as ‘one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease’.7 Keynes accurately predicted British average income per head in the early 21st century, and went on to anticipate the problems of affluenza, and the renewed importance of an ethical framework once society ceases to be focused solely on economic growth.8 In all this, he was remarkably prescient: the essay was written in 1930.

For many outcomes, impacts or considerations, a true numerical measurement does not exist, so the numbers we produce cannot be good estimates of it. Since there is no true number to be found, the search for one often becomes desperate, searching in ways which will definitely lead to numbers, regardless of their relevance. It is reminiscent of the drunkard who searched for his wallet under the street light, not because he lost it there, but because that was the only place he could see. Or as John Maynard Keynes possibly commented: ‘I would rather be vaguely right than precisely wrong.’58 Second, the values that emerge from economic theory provide too flimsy a platform for policy advice. The idea that value-free economic advice is possible is another myth, but chasing it has left economics with minimalist values which are too denuded of ethical content to support practical conclusions. As we have seen, the gap is filled with ad hoc assumptions which are often left unstated.

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are usually distilling their frenzy from some academic scribbler of a few years back. (John Maynard Keynes, The General Theory) What economists don’t admit Economics shapes our lives in countless ways. Each chapter of this book has illustrated this in a practical context. In the process we have uncovered some common themes in the way orthodox economists think. Considered in isolation they might seem only of academic interest, but as previous chapters and Keynes’ remarks suggest, they should interest all of us.


pages: 378 words: 110,518

Postcapitalism: A Guide to Our Future by Paul Mason

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Alfred Russel Wallace, bank run, banking crisis, banks create money, Basel III, Bernie Madoff, Bill Gates: Altair 8800, bitcoin, Branko Milanovic, Bretton Woods, BRICs, British Empire, business process, butterfly effect, call centre, capital controls, Claude Shannon: information theory, collaborative economy, collective bargaining, Corn Laws, corporate social responsibility, credit crunch, currency manipulation / currency intervention, currency peg, David Graeber, deglobalization, deindustrialization, deskilling, discovery of the americas, Downton Abbey, en.wikipedia.org, energy security, eurozone crisis, factory automation, financial repression, Firefox, Fractional reserve banking, Frederick Winslow Taylor, full employment, future of work, game design, income inequality, inflation targeting, informal economy, Internet of things, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kevin Kelly, knowledge economy, knowledge worker, late capitalism, low skilled workers, market clearing, means of production, Metcalfe's law, money: store of value / unit of account / medium of exchange, mortgage debt, Network effects, new economy, Norbert Wiener, Occupy movement, oil shale / tar sands, oil shock, payday loans, post-industrial society, precariat, price mechanism, profit motive, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, RFID, Richard Stallman, Robert Gordon, secular stagnation, sharing economy, Stewart Brand, structural adjustment programs, supply-chain management, the scientific method, The Wealth of Nations by Adam Smith, Transnistria, union organizing, universal basic income, urban decay, urban planning, wages for housework, women in the workforce

Cottrell, ‘Economic Planning, Computers and Labor Values’, Working Paper, January 1999, http://ricardo.ecn.wfu.edu/~cottrell/socialism_book/index.html 24. O. Yun, Improvement of Soviet Economic Planning (Moscow, 1988) 25. Cockshott and Cottrell, ‘Economic Planning, Computers and Labor Values,’ p. 7 26. P. Cockshott, A. Cottrell and H. Dieterich, Transition to 21st Century Socialism in the European Union, Lulu.com, 2010, pp. 1–20 27. A. Gorz, Capitalism, Socialism, Ecology (London, 1994), p. 1 28. J. M. Keynes, ‘The Economic Possibilities for our Grandchildren’, in J. M. Keynes, Essays in Persuasion (New York, 1963), pp. 358–73 29. D. Thompson, ‘The Economic History of the Last 2000 Years: Part II’, The Atlantic, 20 June 2012 30. http://www.plospathogens.org/article/info%3Adoi%2F10.1371%2Fjournal.ppat.1001134 31. D. Herlihy, The Black Death and the Transformation of the West (Cambridge, 1997), p. 48 32. E. L. Eisenstein, The Printing Revolution in Early Modern Europe (2nd edn, Cambridge, 2005) 33. http://intersci.ss.uci.edu/wiki/eBooks/BOOKS/Bacon/Novum%20Organum%20Bacon.pdf 34.

‘Done, for you big boy,’ writes one Barclays employee to another as they manipulate LIBOR, the rate at which banks lend to each other, the most important interest rate on the planet.10 We should listen carefully to the tone in these emails – the irony, the dishonesty, the repeated use of smileys, slang and manic punctuation. It is evidence of systemic self-deception. At the heart of the finance system, which is itself the heart of the neoliberal world, they knew it didn’t work. John Maynard Keynes once called money ‘a link between the present and the future’.11 He meant that what we do with money today is a signal of how we think things are going to change in years to come. What we did with money in the run-up to 2008 was to massively expand its volume: the global money supply rose from $25 trillion to $70 trillion in the seven years before the crash – incomparably faster than growth in the real economy.

From Varga’s recalcitrant works committees in Budapest to the Russian workers who insisted on self-control, or the Fiat workers in Milan who even tried to produce cars without the help of managers, this problem – workers control vs planning – would hit the socialist leaders as a total surprise. If these early attempts at socialism failed, it is worth remembering that capitalist attempts at stabilization also failed. The peace deal of 1919 condemned Germany’s recovery to stall under the stranglehold of reparations. ‘In continental Europe,’ wrote a distraught John Maynard Keynes, shortly after storming out of the British delegation at Versailles, ‘the earth heaves and no one but is aware of the rumblings. There it is not just a matter of extravagance or “labour troubles”; but of life and death, of starvation and existence, and of the fearful convulsions of a dying civilization.’24 With hindsight, we can see 1917–21 as a near-terminal social crisis, but as an economic crisis it was not inevitable; it was the result of poor policy decisions.


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Only Humans Need Apply: Winners and Losers in the Age of Smart Machines by Thomas H. Davenport, Julia Kirby

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AI winter, Andy Kessler, artificial general intelligence, asset allocation, Automated Insights, autonomous vehicles, Baxter: Rethink Robotics, business intelligence, business process, call centre, carbon-based life, Clayton Christensen, clockwork universe, conceptual framework, dark matter, David Brooks, deliberate practice, deskilling, Edward Lloyd's coffeehouse, Elon Musk, Erik Brynjolfsson, estate planning, follow your passion, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, game design, general-purpose programming language, Google Glasses, Hans Lippershey, haute cuisine, income inequality, index fund, industrial robot, information retrieval, intermodal, Internet of things, inventory management, Isaac Newton, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Khan Academy, knowledge worker, labor-force participation, loss aversion, Mark Zuckerberg, Narrative Science, natural language processing, Norbert Wiener, nuclear winter, pattern recognition, performance metric, Peter Thiel, precariat, quantitative trading / quantitative finance, Ray Kurzweil, Richard Feynman, Richard Feynman, risk tolerance, Robert Shiller, Robert Shiller, Rodney Brooks, Second Machine Age, self-driving car, Silicon Valley, six sigma, Skype, speech recognition, spinning jenny, statistical model, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, superintelligent machines, supply-chain management, transaction costs, Tyler Cowen: Great Stagnation, Watson beat the top human players on Jeopardy!, Works Progress Administration, Zipcar

Other Depression-era job creation programs included the Civilian Conservation Corps, a program for young men focused on planting trees and building parks. It’s important to be clear that the Depression was the result of a massive failure of the financial system and not due to the automation of work that was proceeding apace in the nation’s factories. Still, the potential threat to jobs that automation also posed had certainly been noted. John Maynard Keynes, most famously, diagnosed in his 1930 essay “Economic Possibilities for Our Grandchildren” what he called a “new disease” in the world’s largest economies. He called it “technological unemployment” and explained that it was “due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.” And a clever YouTube video, “No Humans Need Apply,” points out that it wouldn’t be that difficult for automation to lead to the same levels of unemployment—about 25 percent in the United States—found in the Depression.

But when the intent is to augment human capabilities, any kind of digital intelligence can be put to the task. Working in partnership with a machine can let you be you, only better. And it can let you keep your job, while making it a better one. Whatever Happened to the Fifteen-Hour Workweek? If you were reading this book half a century ago, you might be very surprised to find us referring to augmentation as something that would help you retain your work, not be rid of it. In 1928, John Maynard Keynes penned an essay he titled “Economic Prospects for Our Grandchildren,” which argued that decades of productivity and technology improvements would leave those progeny with a new kind of problem: figuring out what to do with their vast leisure time. He wrote: “For the first time since his creation man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won.”9 Keynes expected that by now we’d all be working about fifteen hours per week.

Maddy Myers, “Google Glass: Inspired by Terminator,” Slice of MIT, May 30, 2013, https://slice.mit.edu/2013/05/30/google-glass-inspired-by-terminator/. 7. David Scott, remarks at the opening of the Computer Museum, June 10, 1982, transcript accessed October 29, 2015, http://klabs.org/history/history_docs/ech/agc_scott.pdf. 8. David A. Mindell, Digital Apollo: Human and Machine in Spaceflight (Cambridge, MA: MIT Press, 2008). 9. John Maynard Keynes, Essays in Persuasion (New York: Norton, 1963), 358–73. 10. David H. Autor, “Polanyi’s Paradox and the Shape of Employment Growth,” prepared for the Federal Reserve Bank of Kansas City’s economic policy symposium on “Reevaluating Labor Market Dynamics,” September 3, 2014, http://economics.mit.edu/files/9835. 11. Tyler Cowen, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013). 12.


pages: 357 words: 95,986

Inventing the Future: Postcapitalism and a World Without Work by Nick Srnicek, Alex Williams

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3D printing, additive manufacturing, air freight, algorithmic trading, anti-work, back-to-the-land, banking crisis, battle of ideas, blockchain, Bretton Woods, call centre, capital controls, carbon footprint, Cass Sunstein, centre right, collective bargaining, crowdsourcing, cryptocurrency, David Graeber, decarbonisation, deindustrialization, deskilling, Doha Development Round, Elon Musk, Erik Brynjolfsson, Ferguson, Missouri, financial independence, food miles, Francis Fukuyama: the end of history, full employment, future of work, gender pay gap, housing crisis, income inequality, industrial robot, informal economy, intermodal, Internet Archive, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, late capitalism, low skilled workers, manufacturing employment, market design, Martin Wolf, means of production, minimum wage unemployment, Mont Pelerin Society, neoliberal agenda, New Urbanism, Occupy movement, oil shale / tar sands, oil shock, patent troll, pattern recognition, post scarcity, postnationalism / post nation state, precariat, price stability, profit motive, quantitative easing, reshoring, Richard Florida, rising living standards, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Slavoj Žižek, social web, stakhanovite, Steve Jobs, surplus humans, the built environment, The Chicago School, Tyler Cowen: Great Stagnation, universal basic income, wages for housework, We are the 99%, women in the workforce, working poor, working-age population

Rather than settling for marginal improvements in battery life and computer power, the left should mobilise dreams of decarbonising the economy, space travel, robot economies – all the traditional touchstones of science fiction – in order to prepare for a day beyond capitalism. Neoliberalism, as secure as it may seem today, contains no guarantee of future survival. Like every social system we have ever known, it will not last forever. Our task now is to invent what happens next. Notes INTRODUCTION 1.John Maynard Keynes, ‘Economic Possibilities for Our Grandchildren’, in Essays in Persuasion (New York: W. W. Norton & Co., 1963); George Young, The Russian Cosmists: The Esoteric Futurism of Nikolai Fedorov and His Followers (Oxford: Oxford University Press, 2012); Mark Dery, ‘Black to the Future: Interviews with Samuel R. Delany, Greg Tate, and Tricia Rose’, in Mark Dery, ed., Flame Wars: The Discourse of Cyberculture (Durham, NC: Duke University Press, 1994); Shulamith Firestone, The Dialectic of Sex: The Case for Feminist Revolution (New York: Morrow, 1970). 2.For exemplars of this stance, see Franco Berardi, After the Future (Edinburgh: AK Press, 2011); T.

, Organization, 2013, at sagepub.com. 58.Witold Rybczynski, Waiting for the Weekend (New York: Penguin, 1991), pp. 115–17; Thompson, ‘Time, Work-Discipline, and Industrial Capitalism’, p. 76. 59.Rybczynski, Waiting for the Weekend, p. 133. 60.Hunnicutt, Work Without End, p. 1. 61.Ibid., p. 155. 62.Ibid., pp. 147–9. 63.Paul Lafargue, ‘The Right to Be Lazy’, in Bernard Marszalek, ed., The Right to Be Lazy: Essays by Paul Lafargue (Oakland: AK Press, 2011), p. 34. 64.John Maynard Keynes, ‘Economic Possibilities for Our Grandchildren’, in Essays in Persuasion (New York: W. W. Norton, 1963); Hunnicutt, Work Without End, p. 155. 65.Marx, Capital, Volume III, p. 820. 66.Hunnicutt, Work Without End, Chapter 7. 67.A handful of EU countries – most notably France – have reduced the working week to as little as thirty-five hours, but the overall trend has been to maintain a forty-hour working week. The 1970s also saw some sectors strike explicitly in support of a shorter working week.


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The Future of the Professions: How Technology Will Transform the Work of Human Experts by Richard Susskind, Daniel Susskind

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23andMe, 3D printing, additive manufacturing, AI winter, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, Andrew Keen, Atul Gawande, Automated Insights, autonomous vehicles, Big bang: deregulation of the City of London, big data - Walmart - Pop Tarts, Bill Joy: nanobots, business process, business process outsourcing, Cass Sunstein, Checklist Manifesto, Clapham omnibus, Clayton Christensen, clean water, cloud computing, computer age, computer vision, conceptual framework, corporate governance, crowdsourcing, Daniel Kahneman / Amos Tversky, death of newspapers, disintermediation, Douglas Hofstadter, en.wikipedia.org, Erik Brynjolfsson, Filter Bubble, Frank Levy and Richard Murnane: The New Division of Labor, full employment, future of work, Google Glasses, Google X / Alphabet X, Hacker Ethic, industrial robot, informal economy, information retrieval, interchangeable parts, Internet of things, Isaac Newton, James Hargreaves, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Khan Academy, knowledge economy, lump of labour, Marshall McLuhan, Narrative Science, natural language processing, Network effects, optical character recognition, personalized medicine, pre–internet, Ray Kurzweil, Richard Feynman, Richard Feynman, Second Machine Age, self-driving car, semantic web, Skype, social web, speech recognition, spinning jenny, strong AI, supply-chain management, telepresence, the market place, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, transaction costs, Turing test, Watson beat the top human players on Jeopardy!, young professional

Precisely because it was crafted by a human being, we may prefer to buy a sculpture by a person, even though a robot could do a better and cheaper job. In the professions, though, our general view is that this (often nostalgic) preference for the old ways of working will be too high a price to pay, especially if the quality of service is demonstrably lower than that provided by a machine. 7.3. Technological unemployment? In 1930, speculating about ‘the economic possibilities for our grandchildren’, John Maynard Keynes introduced the concept of ‘technological unemployment’.23 The basic idea is simple—that new technologies might put people out of work. The question to which we now turn is whether there will be technological unemployment in the professions in the very long term. The short answer is, ‘there will’. We can find no economic law that will somehow secure employment for professionals in the face of increasingly capable machines.24 However, it is uncertain how extensive the job-loss will be.

A very big thank-you also to Darcy Hill for helping us so diligently with the bibliography, and to Patricia Cato and Suzanne Richmond for their assistance with early drafts of the book. Our friends at Oxford University Press have been notably patient. David Musson has been an ongoing source of encouragement and of wise counsel; and we are grateful also at OUP to Kim Behrens, Kate Farquhar-Thomson, Phil Henderson, and Clare Kennedy for their enthusiasm and professionalism. Thank you also to Jeff New for his superb copy-editing. The epigraph by John Maynard Keynes, The General Theory of Employment, Interest and Money (1936), © The Royal Economic Society, published by Cambridge University Press, is reproduced with permission. Alan Susskind reviewed the entire manuscript. His observations and his ongoing support were very much appreciated. At the same time, Werner Susskind merits special mention for keeping us fully supplied with relevant articles from the BMJ.

Only when, in addition to just institutions, the increase of mankind shall be under the deliberate guidance of judicious foresight, can the conquests made from the powers of nature by the intellect and energy of scientific discoverers become the common property of the species, and the means of improving and elevating the universal lot. John Stuart Mill The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds. John Maynard Keynes Contents List of Boxes and Figure Introduction PART I. CHANGE 1. The Grand Bargain 1.1 Everyday conceptions 1.2 The scope of the professions 1.3 Historical context 1.4 The bargain explained 1.5 Theories of the professions 1.6 Four central questions 1.7 Disconcerting problems 1.8 A new mindset 1.9 Some common biases 2. From the Vanguard 2.1 Health 2.2 Education 2.3 Divinity 2.4 Law 2.5 Journalism 2.6 Management consulting 2.7 Tax and audit 2.8 Architecture 3.


pages: 424 words: 115,035

How Will Capitalism End? by Wolfgang Streeck

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accounting loophole / creative accounting, Airbnb, Ben Bernanke: helicopter money, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, Clayton Christensen, collective bargaining, conceptual framework, corporate governance, credit crunch, David Brooks, David Graeber, debt deflation, deglobalization, deindustrialization, en.wikipedia.org, eurozone crisis, failed state, financial deregulation, financial innovation, first-past-the-post, full employment, Gini coefficient, global reserve currency, Google Glasses, haute cuisine, income inequality, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, labour mobility, late capitalism, market bubble, means of production, moral hazard, North Sea oil, offshore financial centre, open borders, pension reform, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, post-industrial society, private sector deleveraging, profit maximization, profit motive, quantitative easing, reserve currency, rising living standards, Robert Gordon, savings glut, secular stagnation, shareholder value, sharing economy, sovereign wealth fund, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Uber for X, upwardly mobile, winner-take-all economy, Wolfgang Streeck

, Oxford: Oxford University Press 2013, pp. 1–2. 13What Marx calls entgegenwirkende Ursachen in Capital, Vol. 3, in the context of the ‘law of the tendency of the profit rate to fall’ (Chs. 13ff. in the German original, Karl Marx, Das Kapital. Kritik der Politischen Ökonomie, Dritter Band, Berlin: Dietz Verlag 1966 [1894]). In fact, Collins does deal with countervailing factors, which he calls ‘escapes’, but to show that they are not or no longer effective. See below. 14John Maynard Keynes, ‘Economic Possibilities for our Grandchildren’. In: Keynes, John Maynard, Essays in Persuasion, New York: W. W. Norton & Co. 1963 [1930]. 15For a different, more ‘optimistic’ view of indeterminacy see Wallerstein et al. (Does Capitalism Have a Future?, p. 4): ‘We find hope … exactly in the degree to which our future is politically underdetermined. Systemic crisis loosens and shatters the structural constraints that are themselves the inheritance of past dilemmas … Deep capitalist crisis may be an opportunity to reorganize the planetary affairs of humanity in a way that promotes more social justice and a more livable planet.’

More specifically, a rational capitalistic establishment is one with capital accounting, that is, an establishment which determines its income yielding power by calculation according to the methods of modern bookkeeping and the striking of a balance’ (Max Weber, General Economic History, New Brunswick, NJ: Transaction Publishers 2003 [1927], p. 275); Schumpeter: ‘Capitalism is that form of private property economy in which innovations are carried out by means of borrowed money, which in general, though not by logical necessity, implies credit creation’ (Joseph A. Schumpeter, Business Cycles, Vol. 1, Philadelphia, PA: Porcupine Press 1982 [1939], p. 223); Keynes: ‘… the essential characteristic of capitalism [seems to me] the dependence upon an intense appeal to the money-making and money-loving instincts of individuals as the main motive force of the economic machine’ (John Maynard Keynes, The End of Laissez-Faire: The Collected Writings of John Maynard Keynes, Vol. 9, London: Macmillan Press Ltd 1972 [1931], p. 293). As to Marx, Chiapello, in a penetrating article, claims that he never used the concept (Eve Chiapello, ‘Accounting and the Birth of the Notion of Capitalism’, Critical Perspectives on Accounting, vol. 18, no. 3, pp. 263–96; see also Ivan Tibor Berend, ‘Capitalism’. In: Smelser, Neil and Paul Baltes, eds, International Encyclopedia of the Social and Behavioral Sciences, Vol. 3, Amsterdam: Elsevier 2001, pp. 1454–9; Jürgen Kocka, Geschichte des Kapitalismus, München: Verlag C.

While Höhn did not get enough votes, the members, in order not to antagonize the new government, decided to suspend the association for the time being rather than dissolving it. It was revived only after 1945. In the 1950s Höhn reemerged to set up and run, well into the 1970s, the leading management school of the Federal Republic. 4Amitai Etzioni, The Active Society, New York: The Free Press, 1968. 5John Maynard Keynes, The General Theory of Employment, Interest and Money, New York: Harcourt, Brace and Company 1967 [1936], chapter 24. Index If denotes figure A accumulated weaknesses, syndrome of, 13 The Accumulation of Capital (Luxenburg), 100 The Active Society (Etzioni), 245 Adidas, 101 Adorno, Theodor, 244 Andreotti, Giulio, 145 Argentina, borrowing practices of, 125 artificial intelligence, 9, 10 austerity, 19, 20, 69, 83, 84, 88, 90, 91, 92, 93, 126, 127, 128, 130, 132, 133, 134, 135, 136, 138, 141, 143, 148, 216, 219 at the level of government.


pages: 126 words: 37,081

Men Without Work by Nicholas Eberstadt

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Carmen Reinhart, centre right, deindustrialization, financial innovation, full employment, illegal immigration, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labor-force participation, low skilled workers, moral hazard, Ronald Reagan, secular stagnation, Simon Kuznets, War on Poverty, women in the workforce, working-age population

It has been over twenty years since Juliet Schor, Boston College professor, coined the phrase “the overworked American,”11 underscoring our unusual proclivity for long hours and short to nonexistent vacations in relation to our affluent peers abroad. Not generally appreciated, however, is that the land of “the overworked American” is also home to an unusually large and rapidly growing contingent of “underworked Americans”: relatively young men who spend absolutely no time at a job and are not acting to alter that situation. In 1930, John Maynard Keynes famously speculated about life in the future in his “Economic Possibilities for Our Grandchildren.”12 Those grandchildren would most likely be living right about now. In that essay, he dared to predict that the workweek would be much shorter and income levels would be much higher for these future generations. Keynes was correct in the gist of his prophecies: throughout Europe and the rest of the West, income levels are far higher today than when his argument was first published, and the workweek is appreciably shorter (abeit not yet as short as he boldly suggested it might come to be).


pages: 308 words: 84,713

The Glass Cage: Automation and Us by Nicholas Carr

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Airbnb, Andy Kessler, Atul Gawande, autonomous vehicles, business process, call centre, Captain Sullenberger Hudson, Checklist Manifesto, cloud computing, David Brooks, deliberate practice, deskilling, Elon Musk, Erik Brynjolfsson, Flash crash, Frank Gehry, Frank Levy and Richard Murnane: The New Division of Labor, Frederick Winslow Taylor, future of work, global supply chain, Google Glasses, Google Hangouts, High speed trading, indoor plumbing, industrial robot, Internet of things, Jacquard loom, Jacquard loom, James Watt: steam engine, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, knowledge worker, Lyft, Mark Zuckerberg, means of production, natural language processing, new economy, Nicholas Carr, Norbert Wiener, Oculus Rift, pattern recognition, Peter Thiel, place-making, Plutocrats, plutocrats, profit motive, Ralph Waldo Emerson, RAND corporation, randomized controlled trial, Ray Kurzweil, recommendation engine, robot derives from the Czech word robota Czech, meaning slave, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley ideology, software is eating the world, Stephen Hawking, Steve Jobs, TaskRabbit, technoutopianism, The Wealth of Nations by Adam Smith, Watson beat the top human players on Jeopardy!

Levasseur, “The Concentration of Industry, and Machinery in the United States,” Publications of the American Academy of Political and Social Science, no. 193 (1897): 178–197. 16.Oscar Wilde, “The Soul of Man under Socialism,” in The Collected Works of Oscar Wilde (Ware, U.K.: Wordsworth Editions, 2007), 1051. 17.Quoted in Amy Sue Bix, Inventing Ourselves out of Jobs? America’s Debate over Technological Unemployment, 1929–1981 (Baltimore: Johns Hopkins University Press, 2000), 117–118. 18.Ibid., 50. 19.Ibid., 55. 20.John Maynard Keynes, “Economic Possibilities for Our Grandchildren,” in Essays in Persuasion (New York: W. W. Norton, 1963), 358–373. 21.John F. Kennedy, “Remarks at the Wheeling Stadium,” in John F. Kennedy: Containing the Public Messages, Speeches, and Statements of the President (Washington, D.C.: U.S. Government Printing Office, 1962), 721. 22.Stanley Aronowitz and William DiFazio, The Jobless Future: Sci-Tech and the Dogma of Work (Minneapolis: University of Minnesota Press, 1994), 14.

The uncontrolled acceleration of progress, its author wrote, had left society chronically unprepared to deal with the consequences.19 But the Depression did not entirely extinguish the Wildean dream of a machine paradise. In some ways, it rendered the utopian vision of progress more vivid, more necessary. The more we saw machines as our foes, the more we yearned for them to be our friends. “We are being afflicted,” wrote the great British economist John Maynard Keynes in 1930, “with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment.” The ability of machines to take over jobs had outpaced the economy’s ability to create valuable new work for people to do. But the problem, Keynes assured his readers, was merely a symptom of “a temporary phase of maladjustment.”


pages: 274 words: 93,758

Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof, Robert J. Shiller, Stanley B Resor Professor Of Economics Robert J Shiller

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Andrei Shleifer, asset-backed security, Bernie Madoff, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, en.wikipedia.org, endowment effect, equity premium, financial intermediation, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, late fees, loss aversion, Menlo Park, mental accounting, Milgram experiment, moral hazard, new economy, payday loans, Ponzi scheme, profit motive, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, too big to fail, transaction costs, Unsafe at Any Speed, Upton Sinclair, Vanguard fund, wage slave

Chicago: Illinois Labor History Society, 1986. Kelly, Kate, Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street. New York: Penguin, 2009. Kessler, Glen. “Revisiting the Cost of the Bush Tax Cuts.” Washington Post, May 10, 2011. http://www.washingtonpost.com/blogs/fact-checker/post/ revisiting-the-cost-of-the-bush-tax-cuts/2011/05/09/AFxTFtbG_blog.html. Keynes, John Maynard. “Economic Possibilities for Our Grandchildren.” In Essays in Persuasion, pp. 358–73. London: Macmillan, 1931. —. The General Theory of Employment, Interest and Money. Harcourt Brace Jovanovich, 1964. Knowledge@Wharton. “Goldman Sachs and Abacus 2007-AC1: A Look beyond the Numbers.” April 28, 2010. Accessed March 15, 2015. http://knowledge.wharton.upenn.edu/article/goldman-sachs-and-abacus -2007-ac1-a-look-beyond-the-numbers/.

Even in the current United States, where the vast majority of the population has a level of consumption un­­ paralleled in human history, most people worry about how to make the ends meet. Some even go over the edge: into bankruptcy; or eviction. Another Perspective Another assay poses for us the Suze Orman puzzle in a different perspective. Most of us think that if our income went up more than fivefold we would be on easy street. Our financial problems would be over. Indeed, that is exactly what John Maynard Keynes, one of the most astute economists of all time, thought would be the case when he looked forward from 1930. In an essay, which was little noticed when published, Keynes projected what life would be like “for our grandchildren,” in 2030: one hundred years thence.12 In one respect he almost hit a bull’s-eye. He “supposed” that the standard of living would be eight times higher. For the United States, as of 2010, real income per capita was 5.6 times higher.13 With another twenty years to go on Keynes’s stopwatch, and with annual growth in per capita income at its historic average between 1.5 percent and 2 percent, his supposition will be remarkably close to target.

The eviction rate for occupied rental housing in all neighborhoods was 3.5 percent; and 7.2 percent in high-poverty neighborhoods (p. 97). Desmond describes the difficulties of those who get evicted, with a court record that makes it difficult to rent again. Even if these numbers are too high for some unknown reason, they still make the point: many families get thrown out of their homes and it will be difficult for them to find another. 12. John Maynard Keynes, “Economic Possibilities for Our Grand­ children,” in Essays in Persuasion (London: Macmillan, 1931), pp. 358–73. 13. Eight times: ibid., p. 365. For the growth of US per capita income we used Angus Maddison’s calculations for 1930 to 2000 (“US Real Per Capita GDP from 1870–2001,” September 24, 2012, accessed December 1, 2014, http://socialdemocracy21stcentury.blogspot.com/2012/09/us-real-per-capita -gdp-from-18702001.html).


pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

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affirmative action, Affordable Care Act / Obamacare, airline deregulation, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, income inequality, income per capita, indoor plumbing, inflation targeting, invisible hand, John Harrison: Longitude, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, London Interbank Offered Rate, lone genius, low skilled workers, Mark Zuckerberg, market bubble, market fundamentalism, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, obamacare, offshore financial centre, paper trading, patent troll, payday loans, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, women in the workforce

A survey of the evidence for both developed and developing countries is in Andrew E. Clark and Claudia Senik, “Will GDP Growth Increase Happinenss in Developing Countries?,” Paris School of Economics, Working Paper no. 2010-43, March 2011. 50. John Maynard Keynes, Economic Possibilities for Our Grandchildren: Essays in Persuasion (originally published 1930) (New York: Norton, 1963), pp. 358–73. The discussion here draws upon my reflections on that essay: “Toward a General Theory of Consumerism: Reflections on Keynes’ Economic Possibilities for Our Grandchildren,” in Revisiting Keynes: Economic Possibilities for Our Grandchildren, ed. G. Piga and L. Pecchi (Cambridge: MIT Press, 2008), pp. 41–87. See also the other essays in that volume. 51. Adam Smith, Lectures on Jurisprudence, ed. Ronald L. Meek, D. D. Raphael, and Peter Stein (New York: Clarendon Press, 1978), (A) vi.54.

In the last chapter, we observed the enormous decline in the wage share in this recession; the decline amounted to more than a half trillion dollars a year.5 That’s an amount much greater than the value of the stimulus package passed by Congress. That stimulus package was estimated to reduce unemployment by 2 to 2½ percentage points. Taking money away from workers has, of course, just the opposite effect. Since the time of the great British economist John Maynard Keynes, governments have understood that when there is a shortfall of demand—when unemployment is high—they need to take action to increase either public or private spending. The 1 percent has worked hard to restrain government spending. Private consumption is encouraged through tax cuts, and that was the strategy undertaken by President Bush, with three large tax cuts in eight years. It didn’t work.

David Kessler, the former head of the Food and Drug Administration who led the U.S. government charge against the cigarette companies, points out that producers of fast foods, snacks, and other products do quite similar things (even if it isn’t precisely addiction), through their fine understanding of how smells and tastes stimulate the brain and create cravings. See Kessler, The End of Overeating: Taking Control of the Insatiable American Appetite (New York: Rodale Books, 2009). 17. John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace & World, 1936), p. 383. 18. See George Soros, The Soros Lectures: At the Central European University (New York: Public Affairs, 2010). 19. See in particular the report The Financial Crisis Inquiry Report of the bipartisan National Commission on the Causes of the Financial and Economic Crisis in the United States, which concluded that Fannie Mae and Freddie Mac “contributed to the crisis, but were not a primary cause” (p. xxvi).


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

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accounting loophole / creative accounting, bank run, banking crisis, banks create money, Bernie Madoff, bitcoin, blockchain, borderless world, Bretton Woods, BRICs, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, computer age, conceptual framework, credit crunch, cross-subsidies, David Graeber, debt deflation, dematerialisation, disintermediation, eurozone crisis, fiat currency, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, German hyperinflation, Goldman Sachs: Vampire Squid, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, mobile money, money: store of value / unit of account / medium of exchange, mortgage debt, new economy, Nixon shock, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer lending, Ponzi scheme, post scarcity, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative finance, remote working, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Satoshi Nakamoto, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Wave and Pay, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond

Citing Zarathustra’s “intoxicated song,” Brown is drawn to Nietzsche’s suggestion that the desire for an heir is a refusal of one’s own life (Brown 1959: 107): But everything unripe wants to live: alas! Woe says: “Fade! Be gone, woe!” But everything that suffers wants to live, that it may grow ripe and merry and passionate, passionate for remoter, higher, brighter things. “I want heirs,” thus speaks everything that suffers, “I want children, I do not want myself.” (Nietzsche 2003b: 331) Brown finds similar sentiments in Keynes’s “Economic Possibilities for Our Grandchildren,” which describes the “purposive” man who seeks a “spurious and delusive immortality for his acts by pushing his interest in them forward into time … For him, jam is not jam unless it is a case of jam tomorrow and never jam to-day” (Keynes 1972: 370). There are shades of Benjamin in Keynes’s observation—which Brown cites (Brown 1959: 286)—that the financial corollary of the promise of immortality is the principle of compound interest (Keynes 1972: 371).

Brown finds a Dionysian “witches’ brew” in the eroticism of de Sade and the politics of Hitler, but he also discerns it in the Romantic reaction to both; indeed, he finds here “the entry of Dionysus into consciousness” (Brown 1959: 176). So where might its entry into economy be? Brown attributes to Keynes the correct diagnosis of the “crisis of our time.” The text he uses is Keynes’s “Economic Possibilities for Our Grandchildren,” published in the same year (1930) as “Auri Sacra Fames.” Keynes deplores the fact that “we have been expressly evolved by nature” for the sole purpose of solving the economic problem, that is to say, with tackling scarcity. He asks rhetorically what would happen to us were that problem to be solved: “There is no country and no people who can look forward to the age of leisure and abundance without a dread” (Keynes 1972).

See also true prices just wage, 343 Kant, Immanuel, 27, 34, 81, 83, 86, 227; and the transcendental apperception X, 82 Karatani, Kojin, 8, 12, 80–87, 245; on association, 84; on the base and superstructure, 84; on capital, state and nation, 84; on Kant, 81; on LETS, 84–87, 345; on the parallax view, 80–81, 205; on phenomenon versus noumenon, 82; and Simmel, 27–8, 320; Transcritique, 80; on the transcendental apperception X, 82; on the transcendental illusion, 82 Kaufmann, Walter, 140 Kay, John, 366, 369 Keynes, John Maynard, 8, 12, 20n, 22, 45, 50, 66, 108n24, 178–79, 296; “Auri Sacra Fames,” 155; on austerity, 130; on compound interest, 153; on convention, 119, 120; on deflation, 318; on demand management, 68, 75, 178; “Economic Possibilities for Our Grandchildren,” 153, 155; The General Theory of Employment, Interest and Money, 178, 229; on Gesell, 349; on inflation, 318; on Knapp, 103, 104; on the liquidity premium, 125, 347, 349; on Marx, 59; in Minsky, 117, 119; on money, 125; on money of account, 8, 109–10, 297; on the paradox of thrift, 347; “Social Consequences of Changes in the Value of Money,” 318; A Treatise on Money, 104, 112 Keynesianism, 74–75, 117, 125, 192, 208, 265; privatized, 76 Kierkegaard, Søren, 228n20 Kiva, 316, 358, 380 Kiyotaki, Nobuhiro, 92n Klossowski, Pierre, 172n; on living coin (la monnaie vivante), 194, 203–4, 388 Knapp, Georg Friedrich, 12, 20n, 102–4, 105–6, 108, 121, 255; definition of money, 103 Knorr Cetina, Karin, 230, 233n, 293 Kocherlakota, Narayana, R, 309n Kojève, Alexandre, 172n Krämer, Jörg, 206 Krippner, Greta, 10–11, 280, 285, 289 Krugman, Paul, 127, 129, 198–99, 347; on Bitcoin, 367; on Minsky, 119–20 Kula ring, 31 La Rochelle, Drieu, 172n labor, 74, 78, 98, 129, 139, 144. 176, 192, 195, 228, 229, 239, 240, 298, 353; abstract, 248; and capital, 70, 71, 72, 232, 238, 337; and consumption, 85; crises of, 67; depersonalization of, 340; exploitation of, 67; as a fictitious commodity, 57n16, 280, 311; and money, 56, 245, 343; ownership of, 63; productivity of, 70, and value, 69, 156, 189, 191, 328, 344; vitality of, 343.


pages: 144 words: 43,356

Surviving AI: The Promise and Peril of Artificial Intelligence by Calum Chace

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3D printing, Ada Lovelace, AI winter, Airbnb, artificial general intelligence, augmented reality, barriers to entry, bitcoin, blockchain, brain emulation, Buckminster Fuller, cloud computing, computer age, computer vision, correlation does not imply causation, credit crunch, cryptocurrency, cuban missile crisis, dematerialisation, discovery of the americas, disintermediation, don't be evil, Elon Musk, en.wikipedia.org, epigenetics, Erik Brynjolfsson, everywhere but in the productivity statistics, Flash crash, friendly AI, Google Glasses, industrial robot, Internet of things, invention of agriculture, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, life extension, low skilled workers, Mahatma Gandhi, means of production, mutually assured destruction, Nicholas Carr, pattern recognition, Peter Thiel, Ray Kurzweil, Rodney Brooks, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley ideology, Skype, South Sea Bubble, speech recognition, Stanislav Petrov, Stephen Hawking, Steve Jobs, strong AI, technological singularity, theory of mind, Turing machine, Turing test, universal basic income, Vernor Vinge, wage slave, Wall-E

ENDNOTES (1) The term economic singularity was first used (as far as I can tell) by the economist Robin Hanson: http://mason.gmu.edu/~rhanson/fastgrow.html (2) http://arxiv.org/pdf/0712.3329v1.pdf (3) http://skyview.vansd.org/lschmidt/Projects/The%20Nine%20Types%20of%20Intelligence.html (4) The term AGI has been popularised by AI researcher Ben Goertzel, although he gives credit for its invention to Shane Legg and others: http://wp.goertzel.org/who-coined-the-term-agi/ (5) The Shape of Automation for Men and Management by Herbert Simon, 1965 (6) Computation: Finite and Infinite Machines by Marvin Minsky, 1967 (7) http://www.internetlivestats.com/google-search-statistics/ (8) http://en.wikipedia.org/wiki/High-frequency_trading (9) The Big Switch by Nicholas Carr (p 212) (10) https://en.wikipedia.org/wiki/People%27s_Liberation_Army#Third_Department (11) The Big Switch by Nicholas Carr (p 212) (12) https://www.youtube.com/watch?v=Skfw282fJak (13) The Economist, December 4, 2003 (14) Douglas Adams, The Salmon of Doubt (15) http://www.wired.com/2014/10/future-of-artificial-intelligence/ (16) http://lazooz.org/ (17) https://www.hrw.org/reports/2012/11/19/losing-humanity (18) http://www.ifr.org/industrial-robots/statistics/ (19) “Economic possibilities for our grandchildren”: http://www.econ.yale.edu/smith/econ116a/keynes1.pdf (20) https://www.youtube.com/watch?v=HW5Fvk8FNOQ (21) http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf (22) http://www.dailymail.co.uk/sciencetech/article-2981946/Self-driving-cars-30-cities-2017-Pilot-projects-aims-mass-roll-driverless-vehicles-safe-they.html (23) http://www.alltrucking.com/faq/truck-drivers-in-the-usa/ (24) http://www.bls.gov/ooh/transportation-and-material-moving/bus-drivers.htm (25) http://www.bls.gov/ooh/transportation-and-material-moving/taxi-drivers-and-chauffeurs.htm (26) http://www.cristo-barrios.com/discografia/iamus-2/?

It has also rendered obsolete large numbers of clerical jobs. As we saw in chapter 1, the word “computer” originally meant a person who does calculations, but the days when offices were filled with battalions of young (usually male) human computers are long gone. The humble PC has also removed the need for legions of (usually female) secretaries. The fear that automation would lead to mass unemployment is not new. In 1930, the British economist John Maynard Keynes wrote “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come – namely technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.” (19) Decades later, in the late 1970s, a powerful BBC Horizon documentary called Now the Chips are Down alerted a new generation to the idea (and showcased some truly appalling ties.) (20) Up to now the replacement of humans by machines has been a gradual process.


pages: 204 words: 67,922

Elsewhere, U.S.A: How We Got From the Company Man, Family Dinners, and the Affluent Society to the Home Office, BlackBerry Moms,and Economic Anxiety by Dalton Conley

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3D printing, call centre, clean water, dematerialisation, demographic transition, Edward Glaeser, extreme commuting, feminist movement, financial independence, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, Home mortgage interest deduction, income inequality, informal economy, Jane Jacobs, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, labor-force participation, late capitalism, low skilled workers, manufacturing employment, McMansion, mortgage tax deduction, new economy, oil shock, PageRank, Ponzi scheme, positional goods, post-industrial society, Post-materialism, post-materialism, principal–agent problem, recommendation engine, Richard Florida, rolodex, Ronald Reagan, Silicon Valley, Skype, statistical model, The Death and Life of Great American Cities, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, women in the workforce, Yom Kippur War

“Cybernation,” which the authors argued resulted from “the combination of the computer and the automated self-regulating machine,” was “already reorganizing the economic and social system to meet its own needs”—in 1964, no less. Others, who put a more optimistic spin on the work-saving impact of automation (and later computers), worried about what Americans would do with all their new leisure time. John Maynard Keynes famously fretted in a 1930 essay, “Economic Possibilities for Our Grandchildren,” over how humans would spend their time in a meaningful way when work was no longer necessary. And it was true—at least at first: Over the course of the 1950s and 1960s, average work hours decreased as Americans became more productive and the economy grew at a good clip. But, as history actually played out, these worries about how to fill the hours of the day with something more important than spectator sports, bridge, bingo, or backgammon were a tad premature.


pages: 413 words: 119,587

Machines of Loving Grace: The Quest for Common Ground Between Humans and Robots by John Markoff

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A Declaration of the Independence of Cyberspace, AI winter, airport security, Apple II, artificial general intelligence, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, Bill Duvall, bioinformatics, Brewster Kahle, Burning Man, call centre, cellular automata, Chris Urmson, Claude Shannon: information theory, Clayton Christensen, clean water, cloud computing, collective bargaining, computer age, computer vision, crowdsourcing, Danny Hillis, DARPA: Urban Challenge, data acquisition, Dean Kamen, deskilling, don't be evil, Douglas Engelbart, Douglas Hofstadter, Dynabook, Edward Snowden, Elon Musk, Erik Brynjolfsson, factory automation, From Mathematics to the Technologies of Life and Death, future of work, Galaxy Zoo, Google Glasses, Google X / Alphabet X, Grace Hopper, Gödel, Escher, Bach, Hacker Ethic, haute couture, hive mind, hypertext link, indoor plumbing, industrial robot, information retrieval, Internet Archive, Internet of things, invention of the wheel, Jacques de Vaucanson, Jaron Lanier, Jeff Bezos, job automation, John Conway, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, knowledge worker, Kodak vs Instagram, labor-force participation, loose coupling, Mark Zuckerberg, Marshall McLuhan, medical residency, Menlo Park, Mother of all demos, natural language processing, new economy, Norbert Wiener, PageRank, pattern recognition, pre–internet, RAND corporation, Ray Kurzweil, Richard Stallman, Robert Gordon, Rodney Brooks, Sand Hill Road, Second Machine Age, self-driving car, semantic web, shareholder value, side project, Silicon Valley, Silicon Valley startup, Singularitarianism, skunkworks, Skype, social software, speech recognition, stealth mode startup, Stephen Hawking, Steve Ballmer, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, strong AI, superintelligent machines, technological singularity, Ted Nelson, telemarketer, telepresence, telepresence robot, Tenerife airport disaster, The Coming Technological Singularity, the medium is the message, Thorstein Veblen, Turing test, Vannevar Bush, Vernor Vinge, Watson beat the top human players on Jeopardy!, Whole Earth Catalog, William Shockley: the traitorous eight

Interview with Dr. Norbert Wiener, Noted Scientist,” U.S. News & World Report, February 24, 1964, http://21stcenturywiener.org/wp-content/uploads/2013/11/Machines-Smarter-Than-Man-Interview-with-Norbert-Wiener.pdf. 20.Defense Science Board, “The Role of Autonomy in DoD Systems,” U.S. Department of Defense, July 2012, http://www.acq.osd.mil/dsb/reports/AutonomyReport.pdf. 21.John Maynard Keynes, “Economic Possibilities for Our Grandchildren,” in Essays in Persuasion (New York: W.W. Norton & Co, 1963), 358–373. 22.Jeremy Rifkin, The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era (New York: Putnam, 1995), xvii. 23.John Markoff, “Armies of Expensive Lawyers, Replaced by Cheaper Software,” New York Times, March 4, 2011, http://www.nytimes.com/2011/03/05/science/05legal.html?

Over the next decade the consequences of creating autonomous machines will appear more frequently as manufacturing, logistics, transportation, education, health care, and communications are increasingly directed and controlled by learning algorithms rather than humans. Despite Wiener’s early efforts to play a technological Paul Revere, after the automation debates of the 1950s and 1960s tailed off, fears of unemployment caused by technology would vanish from the public consciousness until sometime around 2011. Mainstream economists generally agreed on what they described as the “Luddite fallacy.” As early as 1930, John Maynard Keynes had articulated the general view on the broad impact of new technology: “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.


pages: 364 words: 104,697

Were You Born on the Wrong Continent? by Thomas Geoghegan

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Albert Einstein, American Society of Civil Engineers: Report Card, banking crisis, Berlin Wall, collective bargaining, corporate governance, cross-subsidies, dark matter, David Brooks, declining real wages, deindustrialization, ending welfare as we know it, facts on the ground, Gini coefficient, haute cuisine, income inequality, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, labour market flexibility, laissez-faire capitalism, low skilled workers, Martin Wolf, McJob, minimum wage unemployment, mittelstand, offshore financial centre, payday loans, pensions crisis, Plutocrats, plutocrats, purchasing power parity, Ralph Waldo Emerson, Robert Gordon, Ronald Reagan: Tear down this wall, Saturday Night Live, Silicon Valley, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Wolfgang Streeck, women in the workforce

When that person has 700 more hours a year, to learn an extra language, to go to Sri Lanka, or just to read, it’s that high achiever who may be best off under the European model. There is a new skepticism about GDP per capita, at least from a few economists. But we still need someone who can show us how to keep the books. Long dead now is the one who might have done it: I mean John Maynard Keynes, who wrote the haunting essay “Economic Possibilities for Our Grandchildren.” In that long-ago essay (1930), he talked of a world in which his grandchildren would not really have to work. Or not in the old way. We’d write. Read. We’d have long afternoons full of cigarettes and novels. “It was Keynes at his silliest,” or so his biographer writes. But was he so silly? I am old enough to be one of Keynes’s grandchildren. And of course, we have to work!

Denmark children in poverty elderly poor GDP per capita hours worked jobs/employment percent of adults holding an associate degree percent of adults self-employed purchasing power ratios/disparities unemployment rates for college graduates Despres, Leon Dewey, John Diamond, Jared Disney The Disposable American (Uchitelle) Le Divorce (Johnson) DIY (Berlin think tank) Dutschke, Rudi Earned Income Tax Credit (EITC) East Asia Economic Policy Institute’s State of Working America[Shouldn’t there be more here? The tables?] “Economic Possibilities for Our Grandchildren” (Keynes) The Economist The Education of Henry Adams education system (Germany) apprenticeships college tuitions college-attendance rates Dual Track system high school graduates/postgrads and reading law students learning mastery and skill political identity/education study of topics over a lifetime education system (U.S.) college tuition costs college-attendance Einstein, Albert Eisenhower, Dwight elderly poor Emerson, Ralph Waldo “The End of Retirement” (Ghilarducci) English language Europe France Germany and global competition Erhard, Ludwig ethnic diversity in Europe European Central Bank European model of social democracy (background) affluence and order and the bourgeois and capitalism and Catholic Church children in poverty civil society (public opinion and unifying “idea”) comparisons/contrasts with U.S.


pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

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Affordable Care Act / Obamacare, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land reform, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population, World Values Survey

The idea that ‘permits to pollute’ can be bought and sold may still sound alien to many non-economists. But the market for these permits is already a thriving one, with an estimated value of trade in 2007 at $64 billion. 17. They are named, ‘Marx the Prophet’, ‘Marx the Economist’, ‘Marx the Sociologist’ and ‘Marx the Teacher’. 18. Over time – in his grandchildren’s generation, as Keynes put in a famous article titled ‘Economic Possibilities for Our Grandchildren’ (though he himself had no children) – living standards in countries like Britain will have risen sufficiently that not much new investment would be needed. At such a point, he envisaged, the focus of policy should be switched to reducing working hours and increasing consumption, mainly by redistributing income to poorer groups, which spend larger proportions of their incomes than the richer ones. 19.

.* Having said that, the (neo-)Schumpeterian school may be criticized for focusing overly on technology and innovation and relatively neglecting other economic issues, such as labour, finance and macroeconomics. To be fair, other schools too focus on particular issues, but the Schumpeterian school exhibits a narrower focus than most. The Keynesian School One-sentence summary: What is good for individuals may not be good for the whole economy. Born in the same year as Schumpeter and sharing the honour of having a whole school named after him is John Maynard Keynes (1883–1946). In terms of intellectual influence, there is no comparison between the two. Keynes was arguably the most important economist of the twentieth century. He redefined the subject by inventing the field of macroeconomics – the branch of economics that analyses the whole economy as an entity that is different from the sum total of its parts. Before Keynes, most people agreed with Adam Smith when he said, ‘What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.’


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The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (The Princeton Economic History of the Western World) by Robert J. Gordon

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3D printing, Affordable Care Act / Obamacare, airline deregulation, airport security, Apple II, barriers to entry, big-box store, blue-collar work, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, deindustrialization, Detroit bankruptcy, discovery of penicillin, Donner party, Downton Abbey, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, feminist movement, financial innovation, full employment, George Akerlof, germ theory of disease, glass ceiling, high net worth, housing crisis, immigration reform, impulse control, income inequality, income per capita, indoor plumbing, industrial robot, inflight wifi, interchangeable parts, invention of agriculture, invention of air conditioning, invention of the telegraph, invention of the telephone, inventory management, James Watt: steam engine, Jeff Bezos, jitney, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, Loma Prieta earthquake, Louis Daguerre, Louis Pasteur, low skilled workers, manufacturing employment, Mark Zuckerberg, market fragmentation, Mason jar, McMansion, Menlo Park, minimum wage unemployment, mortgage debt, mortgage tax deduction, new economy, Norbert Wiener, obamacare, occupational segregation, oil shale / tar sands, oil shock, payday loans, Peter Thiel, pink-collar, Productivity paradox, Ralph Nader, Ralph Waldo Emerson, refrigerator car, rent control, Robert X Cringely, Ronald Coase, school choice, Second Machine Age, secular stagnation, Skype, stem cell, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, Thomas Malthus, total factor productivity, transaction costs, transcontinental railway, traveling salesman, Triangle Shirtwaist Factory, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, urban decay, urban planning, urban sprawl, washing machines reduced drudgery, Washington Consensus, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, working poor, working-age population, Works Progress Administration, yield management

Jr. (1964). “Electronic Computer Flashes Answers, May Speed Engineering,” The New York Times, February 15. Kenny, Charles. (2013). “What the Web Didn’t Deliver,” Bloomberg Business Week, June 20, pp. 10–11. Kesslar-Harris, Alice. (1982). Out to Work: A History of Wage-Earning Women in the United States. New York/Oxford, UK: Oxford University Press. Keynes, John Maynard. (1931). “Economic Possibilities for Our Grandchildren,” in Essays in Persuasion. London: MacMillan, pp. 358–74. Khan, B. Zorina, and Sokoloff, Kenneth L. (2004). “Institutions and Technological Innovation During Early Economic Growth: Evidence from the Great Inventors of the United States, 1790–1930,” NBER Working Paper 10966. Kidwell, Claudia B. (1979). Cutting a Fashionable Fit. Washington, DC: Smithsonian Institution Press.

Massachusetts textile workers continued to work eleven and a half to twelve hours per day until an 1874 law mandated no more than ten.11 In the late nineteenth century, the typical worker labored ten hours per day for six days per week. By 1920, this had declined to eight hours per day for six days and by 1940 the same number of hours for five days per week. The standard forty-hour full-time work week has remained surprisingly stable during the postwar period, seven decades of stability after such radical change in the century before 1940.12 The rapid decline in working hours led John Maynard Keynes in 1931 to make a famous prediction that turned out to be quite wrong—that society would be so productive that each worker would only need to work for fifteen hours per week: For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines.